Banks

SocGen’s valuation salvation may lie in a breakup

29 Jul 2024

The 19 bln euro French bank trades at a 60% discount to rivals – the widest gap in a decade. None of its core units are particularly attractive, making a revival tough. But selling listed holdings, worth 8 bln euros, could fund a deeper restructuring and make M&A more plausible.

Euro-banks offer glimpse of possible bad-debt wave

24 Jul 2024

Deutsche upped its forecast loan-loss charge, contributing to a 7% share-price fall. BNP’s default provision spiked, and UniCredit’s has too in Germany. Most of the bad news relates to just a few specific corporate clients. But there will be more if rates stay higher for longer.

Sabadell surfs interest-rate wave away from BBVA

23 Jul 2024

The Spanish bank reckons it can generate at least a 13% return on tangible equity this year and next. It makes BBVA’s 12 bln euro hostile all-share bid less attractive. Sabadell will still suffer if rates fall fast, but a higher offer seems more necessary by the day.

As rates fall, European banks can still rise

22 Jul 2024

Tight monetary policy turbocharged returns for lenders like $68 bln UniCredit. Yet lower interest rates don’t have to do the opposite. Central-bank cuts may boost loan demand and investment-banking fees, while keeping bad debt low, which should push up valuations.

China rate cuts usher in next stimulus stage

22 Jul 2024

Days after Party leaders unveiled sweeping pledges to revive the $17 trln economy, the central bank unexpectedly cut key lending rates. It's a modest move but helps the PBOC establish a new benchmark and signals Beijing's urgency to speed up reforms. More policies will follow.

Cyber meltdown points to downsides of efficiency

19 Jul 2024

A software update by $83 bln CrowdStrike grounded flights and disrupted financial markets. That’s possible because businesses work with a small number of providers, seeking lower costs. It supports rich tech valuations, but also heightens the risks of a catastrophic failure.

HSBC makes right call on CEO, three months late

17 Jul 2024

Georges Elhedery, the $160 bln bank’s new boss, always looked the best available option. HSBC’s current CFO will have a job managing slower growth and tricky Chinese relations. Had the lender endorsed him in April alongside Noel Quinn’s exit, he would be on a firmer footing.

Banks prep for this-time-it’s-different deal boom

16 Jul 2024

Morgan Stanley’s 51% pop in investment banking revenue rounds out a strong quarter for Wall Street rainmakers. Peers like Goldman Sachs and JPMorgan are also eyeing a pick-up in M&A and underwriting. But the clients look different now, and so do the banks – not all in a good way.

India’s rescued Yes Bank is ripe for a new owner

16 Jul 2024

A sale of the $10 bln lender could realise a chunky return for its 2020 saviours led by State Bank of India, especially if a strong global player follows Singapore's DBS into the market. But success in the country demands more patience than overseas banks have shown.

Now is least-bad time for JPMorgan CEO to move on

12 Jul 2024

Jamie Dimon’s 18-year tenure has rarely enjoyed such a benign backdrop: record-high profit, a revival underway for Wall Street’s dealmakers, and a regulatory hammer-blow forestalled. As successors stake out a higher profile, his steady hand might be useful elsewhere - like in DC.

UniCredit-ECB spat could sharpen watchdog’s teeth

10 Jul 2024

The 60 bln euro bank is contesting in court the regulator’s demand for a faster Russia exit. At issue is whether the European Central Bank can base orders on hypothetical risks. If the supervisor wins, it may be emboldened to take tougher action on issues like climate change.

China’s central bank is stuck in a policy dilemma

9 Jul 2024

The PBOC is now intervening in short-term debt markets. Ideally it should be cutting rates to help spur more investment in the economy. But that would mean giving in to traders parking their money in government bonds – and would conflict with its mandate to foster a strong yuan.

China’s banker pay crackdown risks Pyrrhic victory

8 Jul 2024

State-backed financial firms will face orders to cap salaries at about $400,000. The move reverses a drive to pay for performance, will alienate staff, create stodgier institutions and kill Beijing's dream of creating "top class" global investment banks - all for little benefit.

India’s chase of foreign shorts hits close to home

3 Jul 2024

The regulator targeted Hindenburg Research for poor disclaimers in its attack on industrial giant Adani. Fresh details show the short seller and a Wall Street fund manager profited, but also how Indian lender Kotak facilitated the trade. Pursuing sceptical investors can backfire.

Riches of Japan wealth push will be thinly spread

26 Jun 2024

After decades of deflation, rising prices threaten to erode the nation's savings. The urgent official task of turning citizens into investors offers a $37 bln revenue opportunity. But megabanks and firms including Nomura will share the spoils with aggressive younger upstarts.

UBS deal reflects resilient demand for China trade

25 Jun 2024

Its sale of Credit Suisse’s Chinese securities JV stake to a state-run firm greases the Swiss bank’s plan to take control of another unit, and snubbed bidder Citadel still looks keen to enter the market. Conditions are tough but firms are shoring up their future on the mainland.

Revolut’s desired $40 bln price tag is a stretch

24 Jun 2024

The UK fintech group wants to sell $500 mln of shares at a valuation far above its last level. To get to $40 bln, investors need to assume it’s like payment giant Adyen. With a lower margin and discounts warranted in other areas, Revolut’s value looks more like $20 bln.

UBS deal exposes Swiss trustbusters’ inadequacy

19 Jun 2024

Despite competition concerns, the $100 bln bank has escaped antitrust blowback from last year’s purchase of troubled Credit Suisse. Any doubt could have undermined the deal, and hence the rescue. But Swiss legal tools to monitor further competition risks look especially weak.

Japan’s value push is starting to lose momentum

14 Jun 2024

Notwithstanding big activist campaigns, tallies of shareholder proposals tabled for company annual meetings this month look underwhelming. The stock rally is fast fading too. Japan has a long history of disappointing investors. The stakes for how fund managers vote are rising.

China banks walk narrow path past property crisis

14 Jun 2024

The country's lenders have $22 trln, or 38% of their assets, in real estate-linked loans. But bad debt disposals and low exposure to developers have protected balance sheets. The bigger headache now may be falling net interest margins. Beijing's latest property fix won't help.