Banks

IASB rethinks fair-value accounting for derivatives

20 Jun 2003

International accounting standard setters are offering to soften new rules forcing banks to marktomarket their full derivatives exposure. Banks will still have to show when derivatives are in the red. But compliance costs will be less. Banks should not reject this olive branch.

Don’t fear a Credit Agricole share glut

19 Jun 2003

Investors are nervously eyeing the shedloads of new CA shares that are now on the market after the Credit Lyonnais takeover. In fact, several factors mean buyers should be standing by to absorb a large proportion of them.

Morgan Stanley continues to surf trading boom

18 Jun 2003

It is still making pots of cash from trading and this is covering up for the squeeze that s hitting the rest of the business. Investors seem to assume that the equity business will recover before fixed income fizzles. That may be a bold assumption.

Knife out again for investment banking jobs

18 Jun 2003

UBS and Morgan Stanley are cutting jobs. Citigroup is also whetting the knife. But this may well be the last round. Any more job cuts, and the big banks ability to cover clients will suffer.

Another black mark against Abbey National

18 Jun 2003

The UK mortgage bank has said it may take charges relating to capitalising certain expenses under previous management. These aren't material or fraudulent. They just show differences in opinion between old and new bosses. But it's another hit to sentiment.

BNL resignation opens way for mergers

16 Jun 2003

The Italian bank has had onoff talks about a merger for years. Davide Croff s resignation could break the logjam. That s a common supposition, at any rate. Yet consolidation among second tier Italian banks may be as far away as ever.

Convicted insider dealer gets top bank job

16 Jun 2003

In most countries, this would be unthinkable even if the sentence is being appealed. But this is Italy. And Emilio Gnutti, returning to the vice chairmanship of MPS, is well connected even to Silvio Berlusconi, Italy's prime minister.

Competition squeezes private equity returns

16 Jun 2003

Too much private equity money is chasing a small number of deals, driving up prices. This is depressing returns. Investors in private equity are also tightening their fund selection criteria. This makes it harder for private equity firms to raise money.

Investment banks only want rocket scientists

16 Jun 2003

Job losses have peaked, but the downturn has raised the bar for new applicants. They need a PhD more than the traditional charm. This may just reflect a countercyclical demand for riskmanagement rocket scientists. But the quantitative revolution cannot be undone.

Citigroup not interested in shareholder activism

16 Jun 2003

That s a shame. Its fund management arm argues there s a freerider problem where other fund managers benefit from its efforts. But the only way to deal with the freerider problem is for the industry s leaders, like Citigroup, to take a lead.

Heard the one about negative commissions?

9 Jun 2003

Some brokers offer to pay, not charge, commission to win orders during index reshuffles, like the one to follow this week s FTSE rejig. The practice pays off because they can jack up spreads. The victims are the endinvestors.

Italian banks face misselling probe

9 Jun 2003

Some of what has gone on doesn't look good. And with banks, reputation really matters. The stock market regulator and the Bank of Italy fear that some banks pushed overly risky investments to their retail clients.

Handover time at central banks

5 Jun 2003

So heaven forbid that the latest ECB and BoE decisions had anything to do with office politics.

US prosecutors brandish Mortons Fork

5 Jun 2003

The Feds are rounding up Martha Stewart, Frank Quattrone & Co on charges of obstructing justice. That may seem weak compared to insider trading or fraud. But today's equivalent of Morton's Fork may lead to similarly grim penalties.

Vodafone banker quits Goldman

5 Jun 2003

Scott Mead has decided that the M&A game isn't as exciting as it was just like Vodafone's Gent. Retiring M&A bankers fall into two categories: those, like Mead, who want to get into politics; and those who become commercial bankers.

JP Morgan sells protection against tumbling equities

5 Jun 2003

The US investment bank has pioneered the "equity default swap", an equity derivative contract that pays out when stocks crash. But if investors think equities are back on the up, they may be unwilling to surrender higher returns for the sake of a bit of protection.

New Mediobanca gets honeymoon

4 Jun 2003

There s little evidence of that just yet. What s clear is that the new Mediobanca will inherit many of the problems of the old. Investors seem to believe that the new management will eschew power politics and focus on creating value.

SEC takes probe up the food chain

3 Jun 2003

Clamping down on managers who breached existing rules on Wall Street should instil more confidence than passing new ones. This will be especially true if the latest probes lead to frying bigger fish than the Blodgets and Grubmans.

Banks wise up on backup lending

3 Jun 2003

Using relative value pricing, lenders can now force companies to pay the going market rate if they dig into unfunded commitments. While borrowers in trouble might have to pay higher rates just when they can least afford it, they still get their money.

Landesbanks add to Germany’s banking woes

2 Jun 2003

The landesbanks don't pose the same threat to the system that private sector banks do. But they are responsible for the mess.