Banks

Rescuing US banks can be lucrative, after all

26 Jul 2023

PacWest, a regional lender battered by investors, is merging with tiny Banc of California at an apparent 20% discount and ceding management control. The $2 bln deal sounds painful, but all sides should be better off. Backers Warburg Pincus and Centerbridge stand to benefit most.

Government’s NatWest meddling crosses risky line

26 Jul 2023

The UK bank ditched CEO Alison Rose hours after backing her, amid pressure from its 39% state shareholder. It’s right for Rose to go. But voters may now wonder why politicians can’t also intervene in setting mortgage rates, and NatWest may find it hard to find a top replacement.

NatWest goof is a boon for sketchy bank clients

21 Jul 2023

The UK lender’s CEO apologised to right-wing talking head Nigel Farage amid an account-closure row. Britain will now force banks to respect freedom of expression. Yet that may make it harder to ditch other, more problematic clients – and weaken the fight against money laundering.

Goldman is losing Wall Street’s popularity contest

19 Jul 2023

Own goals dragged the investment bank’s return on equity down to 4% in the second quarter, half of Morgan Stanley’s level. Though Goldman Sachs still rules markets, its relative valuation has sagged under CEO David Solomon. He lacks his rival’s bold plan to win over investors.

Banks peer at fun-house mirror version of normal

18 Jul 2023

Bank of America reported interest, trading gains and deposits well above pre-Covid levels, still with lower losses on its $1 trln of loans. Peers talk of normalization, but conditions are still far from normal. From capital to expenses, banking may look different for a while yet.

Citi cheers into the valuation void

14 Jul 2023

Even amid shrinking revenue and weak markets, CEO Jane Fraser is thumping the pulpit on the bank’s turnaround, sticking by a target of an 11% return on tangible equity. One problem is that investors don’t seem to believe it; the other is that rivals are already getting far more.

New bank capital rules fix roof while sun shines

11 Jul 2023

Regulatory proposals might further constrict big banks like JPMorgan following a financial crisis that wasn’t their fault. Fed rulemaker Michael Barr at least chose a good moment, rather than waiting for the next catastrophe. But banks can easily gripe that nothing needs fixing.

Capital Calls: US job market’s shifting balance

7 Jul 2023

Concise views on global finance: American job-hoppers’ pay bumps are shrinking, promising lower inflation as labor costs ease. Workers have avoided widespread layoffs, but they’ve traded some bargaining power along the way.

UK could borrow a leaf from Canada’s mortgage book

7 Jul 2023

High levels of housing debt have left British borrowers exposed to rising interest rates. One way to avoid this problem is to fix payments as a proportion of the loan. Some Canadian lenders offer such adjustable-term mortgages, Edward Chancellor writes. The UK could follow suit.

How UBS can cling on to its Swiss purchase

6 Jul 2023

CEO Sergio Ermotti is under pressure to offload Credit Suisse’s local unit to ease political anger over the mega bank merger. But selling it could jettison prized wealth assets and $1-2 bln in annual savings. If UBS avoids mass layoffs it will have a stronger case for keeping it.

Ghost of Silicon Valley Bank turns up in Italy

4 Jul 2023

Like the bust US lender, insurer Eurovita bought up long-dated state bonds. A mix of losses from rising rates and redemptions mean banks that sold its wares have had to extend 6 bln euros of guarantees. As with SVB it’s a special case, but one that will still worry regulators.

Capital Calls: China’s central bank, Generali

3 Jul 2023

Concise views on global finance: The People’s Bank of China plays it safe by earmarking Pan Gongsheng as its new governor; the Del Vecchio family gets the green light to own more than 10% of the 30 bln euro Italian insurer.

Canary Wharf’s pivot looks like a tall order

3 Jul 2023

HSBC’s exit has set tongues wagging about the London financial hub’s demise. To thrive, its main landlord needs to manage a refinancing hump, and the estate needs a sustainable Plan B. Absent these, the Docklands may see the sort of upheaval it experienced in 1992, 2004 and 2015.

Austrian bank short attack is watchdog’s nightmare

30 Jun 2023

BAWAG shares fell 8% after hedge fund Petrus said the lender had a shoddy business model and poor governance. Sector-beating returns make it a tough target. But following this year’s bank runs, regulators will fret that such campaigns could become a self-fulfilling prophecy.

US banks gird for dose of post-stress-test trauma

29 Jun 2023

Big lenders breezed through their annual examinations but will soon be walloped with new rules that could force them to hold one-fifth more capital. Some of that looks like overkill. But watchdogs bruised by recent bank failures may see that as a feature, not a bug.

Central banks’ calls for pay restraint ring hollow

29 Jun 2023

Western central bankers want workers to ask for lower raises unless firms cut their margins to compensate staff. With salaries growing less than inflation, that’s a harsh demand. Past rate rises will in time cool labour markets. Officials need to talk less and wait longer.

Hong Kong’s market promotions get shrill

28 Jun 2023

The city’s bourse is trying to lure foreign listings from Europe and the Middle East while regulators push local lenders to bank crypto exchanges. The first initiative is worthwhile but unlikely to yield much new business; the latter creates fresh headaches for HSBC and peers.

UK banks are appropriate airbag for mortgage crash

27 Jun 2023

British politicians are starting to call out lenders that have delayed passing on higher rates to savers, even as they charge borrowers more. Bank share valuations already implied such windfalls might be temporary. The sector’s rising margins justify some political arm-twisting.

Capital Calls: Eli Lilly gorges on obesity options

27 Jun 2023

Concise views on global finance: The drugmaker found patients losing an incredible 24% of their weight on one of its latest treatments. First-movers don’t always win out in pharma, however, as Pfizer proved with Lipitor. That’s why Lilly is wise to keep investing in alternatives.

Credit-card crackdown will net limited rewards

22 Jun 2023

Over 80% of Americans have one, yet plastic’s complexity rivals financial derivatives. A Biden administration plan to cut late fees to $8 sounds like a step toward simplicity and a savvy vote-winner. Banks will probably be no worse off, however, and consumers scantly better.