Banks

China shadow bankers pray to be systemically risky

23 Aug 2022

Auditors are investigating the country’s $3 trln trust industry that caters to wealthier investors. Falling property prices are stressing such non-bank lenders. But securing a bailout for rich clients would require a miracle given President Xi Jinping’s “common prosperity” push.

Bank living wills could rise from the dead

16 Aug 2022

New U.S. watchdogs may be tougher on how lenders unwind in a crisis. A breakup is one penalty for failing the exercise. But it’s odd timing given JPMorgan and others just increased capital buffers. Resurrecting the stick would make Wells Fargo the most vulnerable.

Banks’ LBO debt hangover may leave lasting scars

16 Aug 2022

Dicey markets forced Goldman Sachs and peers to take a hit on $80 bln of buyout loans that got stuck on their balance sheets. Calmer conditions mean the worst may be over. But the trauma, along with rising rates and competition from private lenders, adds to the case for job cuts.

Anshu Jain’s influence still lingers at Deutsche

15 Aug 2022

The Indian banker, who has died aged 59, was an industry icon who pushed the German group to go toe-to-toe with Wall Street. His stint as CEO was beset by solvency and conduct woes. But Deutsche Bank’s latest strategy is about as reliant on trading as Jain’s plan a decade ago.

Aussie banks’ “fortress” balance sheets win kudos

10 Aug 2022

Jamie Dimon coined the phrase to highlight JPMorgan’s strength during the 2008 financial crisis. But it applies best to Australian lenders like Commonwealth Bank, which now carry 50% more capital than U.S. peers. That does crimp returns, but has bolstered shareholder value.

Ray-Ban heirs inherit wasteful Mediobanca feud

9 Aug 2022

Eyewear tycoon Leonardo Del Vecchio, who died in June, bought nearly 20% of the Italian bank as part of a fight with CEO Alberto Nagel. Making a return on the $1.5 bln stake will test his successors. Backing Nagel in his hunt for a target may be the more prudent choice.

Banks’ private-credit fightback may underwhelm

4 Aug 2022

JPMorgan and Deutsche are trying new ways to fend off lenders like Ares, who are displacing them in funding buyouts. Holding onto loans for longer or launching funds mean lower returns and tough competition. Their best hope is that the booming $1.2 trln sector deflates by itself.

TD buys Cowen, and hopefully its people too

2 Aug 2022

The Canadian bank’s $1.3 bln purchase of investment bank boutique Cowen gives it a toehold in the U.S. market. Together the securities units are roughly the size of Jefferies. But successful investment banking deals always come down to employees – and paying enough to keep them.

HSBC’s cross-border ties are paying dividends

1 Aug 2022

CEO Noel Quinn promised a 12% return on tangible equity and higher payouts to shareholders as the global bank rebuffed Ping An’s breakup call. Higher U.S. interest rates help, but if the Chinese insurer has spurred the $125 bln bank to raise its game, all investors will benefit.

People’s Bank of China is victim of own success

1 Aug 2022

The central bank sustained growth without aggressive easing through Covid and war in Ukraine, keeping inflation in check. However, its attack on financial risk tipped over the $52 trln housing market, and other fundamentals are wobbling. Unfortunately, the PBOC can’t help much.

Cheery bank CEOs have the edge on gloomy investors

29 Jul 2022

Santander, BNP, ING, Lloyds and SocGen have lost 27% of their value since mid-February, on fears higher rates will cause defaults to rise. Chief executives, meanwhile, expect returns to stay high. Share prices implying steeper losses than 2020 suggest the selloff is overdone.

Jack Ma’s exit would smooth Ant’s IPO march

29 Jul 2022

The Alibaba founder may cede control of the fintech giant. This could mark a big advance in Ant's efforts to clean up governance and placate the officials who derailed its $37 bln float in 2020. A simpler ownership structure puts the company one step closer to a revived listing.

Cerberus, J.C. Flowers put Indian bad debt on map

29 Jul 2022

The two investment firms are vying for $6 bln of soured client loans Yes Bank is selling, the country’s largest-ever such deal. The winner will bag a leading role in Indian debt workouts just as more lenders consider embracing market solutions. That deserves a premium fight.

Macquarie shareholders throw caution to the wind

28 Jul 2022

The richly valued Australian mega-bank lost a quarter of its market cap after it warned in May that trading and investment gains would fall. A bit of fresh good news has investors overlooking similar caution from boss Shemara Wikramanayake, adding to an unjustified stock rebound.

Credit Suisse revamp risks being bad copy of UBS

27 Jul 2022

Like its rival in 2012, the $14 bln group is shrinking its trading businesses and cutting costs to focus on wealth management. Yet heavy losses and dicey markets will constrain new CEO Ulrich Koerner, who has never run an investment bank. A respectable valuation may take longer.

Next Credit Suisse CEO’s focus: costs and capital

26 Jul 2022

Thomas Gottstein will soon leave the $14 bln bank, the Wall Street Journal reported. A lack of internal candidates and the need for a strategic rethink argue for a heavyweight outsider. The first job will be to shrink debt trading, a costly effort that may require fresh equity.

UBS’s growth dip cements discount to U.S. rivals

26 Jul 2022

Shares in Ralph Hamers’ $50 bln bank fell 6% after wealthy clients all but stopped investing new money in the second quarter. It’s a setback for his strategy, which rests on boosting revenue. Reversing the trend is key to earning a valuation multiple closer to Morgan Stanley’s.

Review: Lex Greensill epitomised post-2008 finance

22 Jul 2022

The Australian’s firm was one of many loosely regulated shadow banks that sprang up after the last crisis. Duncan Mavin’s “The Pyramid of Lies” explains how Greensill duped big lenders, investors and politicians. As interest rates rise, he’s unlikely to be the last failure.

Fintech crash is an M&A opportunity for bold banks

21 Jul 2022

Financial technology groups like $8 bln Affirm, Klarna and Robinhood have plunged in value. Heavy losses and obstinate founders make them tough takeover targets. But lenders like Goldman Sachs could in theory run them more profitably – and boost their own growth in the process.

ESG is more of a muddle than a fiddle

19 Jul 2022

Environmental, social and governance investing is under the spotlight. In this episode of The Exchange podcast, Bridgewater’s sustainable finance gurus Karen Karniol-Tambour and Carsten Stendevad explain how ESG’s main problem is a lack of clarity over its goals.