Banks

Swiss $17 bln CoCo case could bite UBS on the tail

21 Jun 2023

Bondholders are suing regulator FINMA for ordering the writedown of funky hybrid bonds to smooth a Credit Suisse deal. If they win, the debt may come back to life, giving UBS a capital hole. Or the government may pick up the tab, creating new political headaches.

Mega-merger gives Indian lender new lease on life

20 Jun 2023

HDFC Bank will, after combining with its parent and largest shareholder next month, become a $140 bln mortgage giant in a credit-starved market. That’s an enticing prospect for foreign investors - assuming the bank’s tech and culture get a needed overhaul.

JPMorgan fails Jeffrey Epstein stress test

15 Jun 2023

The mega-lender sails through its yearly financial exams, but lawsuits and a $290 mln settlement over its sex-trafficking client suggest operational lapses. Boss Jamie Dimon says he’d barely heard of Epstein until 2019. If so, it’s a sign his bank is too big to manage.

Capital Calls: Funky bank debt

14 Jun 2023

Concise views on global finance: Credit investors are increasingly willing to buy quasi-equity instruments known as AT1s, despite a near-death experience for the asset class amid the Credit Suisse crisis in March.

Kyiv courts risk with oligarch bank takeover plan

12 Jun 2023

Ukraine wants to nationalise Sense Bank, owned by sanctioned tycoons Mikhail Fridman and Petr Aven. The political move lacks a strong economic logic. The state already owns four of the country’s top lenders. Finding a new private owner for the bank would be more sensible.

Capital Calls: UBS, Brookfield

9 Jun 2023

Concise views on global finance: The Swiss bank’s state loss guarantee is structured like an insurance policy against an unlikely event; the Canadian investment group teams up with UAE and Saudi investors to beat CVC’s consortium and win payments provider Network International.

Tiny tech bank defies US massacre of the minnows

8 Jun 2023

After a string of failures, consolidation is inevitable among the country’s 4,100 lenders. But $1 bln Live Oak, with no branches and lashings of technology, punches well above its weight. Even though rising rates may hurt, the bank shows that bigger isn’t necessarily better.

UBS’s $10 bln state guarantee is a useful fantasy

7 Jun 2023

The bank is getting Swiss taxpayers to shield it against some losses on its Credit Suisse deal. It allows the government to smooth a controversial takeover, and helps UBS boost a stretched capital ratio. Both sides are making a calculated bet that the backstop is never needed.

President Dimon would be square peg in Oval hole

2 Jun 2023

JPMorgan’s longtime boss could get a head start on a 2024 White House run by capturing the powerful capitalist constituency. Beyond that, there are too many pitfalls. For one thing, he is an avowed free-enterpriser, a quality ill-suited for this particular executive office.

Wall Street faces life in China’s second tier

1 Jun 2023

Morgan Stanley, Goldman Sachs and rivals are trimming jobs in Greater China due to a slow recovery and US tensions. Even when activity picks up, boosting market share in the world’s second-largest economy will be tough. The usually dominant financiers will remain fringe players.

Russia writedown is Raiffeisen’s best option

30 May 2023

The Austrian bank may spin off its profitable Moscow-based unit. The new Vienna-listed lender could struggle to operate given sanctions, shrinking its depressed value further. Stomaching a 4.1 bln euro loss would force Raiffeisen to atone for years of mindless Russian expansion.

How risky bank debt makes customers safer

25 May 2023

Protecting depositors is at the top of regulators’ list of priorities after recent bank failures. Big banks already derive extra protection by issuing loss-absorbing bonds. Getting mid-sized US players to do so too could be the key to promising clients their cash is risk-free.

Citi slinks rather than marches out of Mexico

24 May 2023

The US bank will IPO rather than sell the Mexican retail business CEO Jane Fraser once ran. It’s the wiser path after a year of haggling and dramatic market moves. Given Citi’s dismal valuation and past underinvestment, what Fraser does closer to home matters more anyway.

Mediobanca chief’s 20-year race has one more lap

24 May 2023

For two decades, Alberto Nagel has fought market and boardroom crises while diversifying the Italian bank and booking fat returns. His new business plan lacks fireworks. But fear of destabilisation will prompt restless core investors to back the veteran banker for one more term.

Capital Calls: JPMorgan’s rich pickings

22 May 2023

Concise views on global finance: The giant lender’s investment day laid out benefits from buying parts of defunct bank First Republic. Boss Jamie Dimon gets more than just the fuzzy glow from stabilizing the industry. Snagging more wealthy clients should please his investors too.

Mizuho will find M&A history rhymes at Greenhill

22 May 2023

The Japanese giant is expanding rapidly in merger advice by acquiring the boutique for $550 mln. Striking during a dry spell means a lower cost and less chance of bankers leaving. Dealmakers blind to the risks of their own deals, however, has caused decades of disappointment.

UBS kitchen sink has protection from further leaks

17 May 2023

The bank reckons it might write down the assets on Credit Suisse’s balance sheet by $10 bln, inflate its liabilities by $3 bln, and take a $4 bln litigation hit. Those numbers could get bigger over time. But a low purchase price gives CEO Sergio Ermotti a chunky margin of error.

Wells Fargo gives three-part lesson in atonement

16 May 2023

After a $1 bln class action settlement, the US bank has spent over $20 bln on past bad behavior since 2018. For financial firms, mis-steps come in three types: the bad, the foolish and the sloppy. Wells Fargo has had all three, but it’s the last that leaves the toughest stains.

Ukraine rebuilding would be small wager for Europe

16 May 2023

The Ukrainian economy shrank by 30% last year but the war didn’t break it. Reconstruction will cost $410 bln over a decade, according to the World Bank. The European Union could fund the bulk of those efforts by spending just 0.1% of annual GDP. That would be a shrewd investment.

Paying by plastic gets problematically popular

15 May 2023

Credit card debt hit $1 trln among US borrowers and is growing at the fastest rate in two decades. The number of new accounts keeps rising, too, as Chase, Capital One and other fee-hungry banks race to sign up customers. The trend stores up trouble, and not just for cardholders.