Banks

Saving depositors is exercise in squaring circles

11 May 2023

Big US banks will pay a one-off $16 bln levy to cover the windup of SVB and Signature Bank. Lenders that benefited most will bear the heaviest burden but are also the most vulnerable. That trade-off is just an aperitif for bigger deposit-insurance dilemmas that lie in store.

Ukraine banks’ robust health masks big challenges

11 May 2023

After previous central bank reforms and an influx of deposits, the Ukrainian financial sector remains strong. But bad loans are at 38% and the three largest banks are state-owned. To support Ukraine’s reconstruction they will need more balance sheet cleanups, and privatisations.

Credit Suisse debacle raises oversight question

9 May 2023

Swiss authorities hailed the state-backed rescue of the stricken lender by UBS as a commercial solution that will be light on domestic taxpayers. Banking professor and former SNB official Urs Birchler tells The Exchange podcast why the quick fix is far from ideal.

Macquarie energy boost reignites valuation dilemma

5 May 2023

The $46 bln financial powerhouse posted record earnings thanks to market ructions supercharging commodities. Strip that out and it’s hard to justify the bank’s book-value premium. Yet Macquarie has a track record of having at least one such lumpy business a year outperform.

Banks get sucked into Biden’s M&A black box

4 May 2023

TD Bank's $13 bln bid to buy First Horizon fizzled after watchdogs hadn't approved it in 15 months. Outsiders can only guess why. American companies are used to seesawing regulations and political antipathy to mergers, but in the fraught world of banks the stakes are much higher.

First Republic’s rescue cements ‘too big to fail’

4 May 2023

JPMorgan rode to the rescue of the mid-sized lender, which recently became the latest US bank to keel over. In this Viewsroom podcast, Breakingviews columnists discuss the impact of lending giants bulking up further, and whether that itself stores up future risks.

Aussie banks face do we, don’t we dance conundrum

4 May 2023

Top-four lender NAB is slowing its heels on making housing loans below its cost of capital. Others are probably doing the same. It’s smart, not least as a slowing economy is likely to push up losses. But the 5% drop in NAB’s stock shows they’re under pressure to keep going.

It’s time HSBC’s top owner calms down or sells up

4 May 2023

Ping An’s fight for a rejig is going nowhere, more so after the $150 bln lender’s bumper profit. Continuing risks hurting the Chinese insurer, HSBC and maybe even Hong Kong. Better to peacefully reap the benefits of boss Noel Quinn’s overhaul - and rejoin the fray if he falters.

Capital Calls: Europe’s JPMorgan, UniCredit

3 May 2023

Concise views on global finance: BNP Paribas is sucking up deposits while other rivals lose them, but its 12% return on equity goal looks uninspiring; the Italian bank’s CEO Andrea Orcel raised his financial targets for 2023, but may not rush a BPM swoop.

Buyout barons make bloody return in Europe

3 May 2023

Silver Lake and Bain are facing off to buy German company Software AG amid a revival in takeovers. Cheap stock prices mean deals can work despite debt constraints. But a limited pool of targets will make it hard to deploy $2 trln of dry powder, and stay disciplined.

First Republic collapse fires up capitalist elite

2 May 2023

Bank failures, rapidly rising interest rates and looming recession are dominating the agenda among finance types gathered at onetime junk-bond king Michael Milken’s annual Beverly Hills summit. Where there’s distress, however, there’s also opportunity. At least up to a point.

HSBC puts its shareholders on the spot

2 May 2023

Boss Noel Quinn reckons last quarter’s eye-popping 19% equity return is somewhat sustainable. If he’s right, investors are undervaluing the bank, and top owner Ping An is wrong to push an Asia spinoff. But it requires everything from interest rates to asset sales to play nice.

Capital Calls: BP, Japanese M&A

2 May 2023

Concise views on global finance: The oil giant will buy back $1.8 bln of shares over the next three months, which is less than investors hoped for; Astellas Pharma is making the most of cheap debt for its $5.9 bln pounce on U.S. eye-treatment specialist Iveric Bio.

Jamie Dimon bails out First Republic – and FDIC

1 May 2023

Even after JPMorgan’s boss vowed never to ride to the rescue again, he’s leading another one. His mega-bank gets nearly $229 bln of assets at a discount, a government loan and a loss-sharing deal. It’s good for shareholders but also entrenches the too-big-to-fail mentality.

Fed’s SVB review finds there’s no “I” in “blame”

28 Apr 2023

Its postmortem of the collapse of SVB Bank calls out timid supervisors, loopholes that made it hard to keep tabs on fast-growing firms and previous vice chair Randal Quarles’ push to cut red tape. The result is a prescription for lots of change, but not much accountability.

Deutsche’s Numis swoop more logical than it looks

28 Apr 2023

The lender’s $500 mln purchase of the UK broker seems an odd move for CEO Christian Sewing, who once aimed to shrink investment banking. But the valuation isn’t silly, and a deal may boost Deutsche Bank’s corporate lending arm. Numis’s smaller peers may also now seek a new home.

Digital “Chicago Plan” fixes many financial woes

28 Apr 2023

In the 1930s, economists drew up a radical blueprint to create safer banks. The advent of digital currencies issued by central banks is an opportunity to revisit the idea, writes Edward Chancellor. A shift could stabilise banking, reduce inflation, and even lower government debt.

Capital Calls: Exxon, US regional banks

28 Apr 2023

Concise views on global finance: Exxon’s two golden eggs are the Permian and Guyana; market composure gives time for a First Republic fix.

Sumitomo triples down on Jefferies at right time

28 Apr 2023

The $8 bln Wall Street firm’s earnings have slumped with deal flow, so SMFG boss Jun Ohta can boost his stake to 15% at roughly the same price he paid two years ago. This time he has the benefit of knowing his partners better and can get ahead of any boom in investment banking.

First Republic could make failure safe again

27 Apr 2023

Unless it can tempt a white knight, the US lender holding $230 bln of assets looks doomed. Either way insured depositors should be fine, with something left for others too. It’s important that regulators show not every bank can hold the system to ransom. This may be their chance.