Corporate Governance

Merrill’s bonus caper adds to the stench for BofA

22 Jan 2009

The Herd thundered off with bonuses just days before the bank s rescue takeover closed and news of a $15bn fourthquarter loss emerged. Worse, Merrill pay fell by a mere 6% in spite of a disastrous 2008. BofA shareholders and staff should be livid with both banks bosses.

Insider buying by bankers only half bullish sign

22 Jan 2009

Bosses Jamie Dimon and Ken Lewis snaffled up millions of dollars of shares in JPMorgan and BofA respectively. It s great that they see value. But bankers have historically timed the dumping of stock better than predicting the upturn.

Parsons has much to prove as Citi’s new chairman

21 Jan 2009

The former Time Warner boss built a tottering conglomerate, too. And as a Citi board member since 1996 and lead director since last summer he s part of the old guard. Parsons must prove his worth. But at least the bank is keeping the role separate from that of chief executive.

Ecclestone is unwise to start F1 revenue row

20 Jan 2009

The Formula One boss has suggested that teams should receive a reduced share of the sport s profits. He may be feeling the squeeze, but giving already financiallystretched teams another reason to follow Honda out of motorracing is counterproductive.

FSA capital clarification eases bank pressure

19 Jan 2009

The UK regulator has said there is no new elevated benchmark for minimum capital. It expects Tier 1 ratios to slide back as recession losses bite. The clarification is welcome, but overdue: banks should not be trying to build up a cushion against a cushion they have already.

Schröder’s Putin links may tip balance at TNK-BP

16 Jan 2009

The former German chancellor is to be a supposedly independent director of TNKBP, the divided AngloRussian oil major. But his ties to Russian prime minister Vladimir Putin, and his chairmanship of a Gazprombacked pipeline, raise fears that Russia will call the shots.

Heathrow runway comes with welcome safeguards

12 Jan 2009

Few like the idea of more planes over London. But in approving a new Heathrow runway, the UK government has made important concessions to the environmental lobby and its own dissidents, including a limit on flight numbers. Expansion might also make Heathrow more efficient.

Satyam’s $1bn fraud isn’t just an Indian problem

9 Jan 2009

The Indian IT software firm was also supposed to meet US accounting standards. Something clearly went wrong and the excuses are already flowing thick and fast. The history of high profile fraud suggests the accountants, PricewaterhouseCoopers, will find it hard to escape blame.

Bob Rubin leaves Citi with head hung low

9 Jan 2009

Sandy Weill scored a PR coup hiring the former Treasury secretary and Goldman boss as consigliere in 1999. But Rubin s advice didn t prevent Citi lurching from crisis to crisis. And during the credit crunch he has become a lightning rod for criticism of Citi s continuing woes.

RBS has greatest need for Philip Hampton

8 Jan 2009

The City grandee has barely settled in as chairman of the UKFI government agency managing UK bank stakes. Yet he is now a frontrunner to chair RBS. It shows how few real candidates there are for the vacancy, and how much the Treasury needs a credible figure heading the bank.

Financial crisis brings dark days to India

7 Jan 2009

When the chairman of Satyam, India s fourthlargest software exporter, couldn t meet margin calls, he had to admit to fiddling the books for years. It s a dire revelation from a bellwether stock in a flagship industry and a big blow to confidence in Indian capitalism.

Merckle shows liquidity is a slippery concept

7 Jan 2009

The suicide of German billionaire Adolf Merckle, blamed on financial woes, raises a question: how could a man with E7bn of assets run aground over a mere E400m loan? A double bet on company shares may be one reason along with the difficulty of turning assets into cash.

ECB should expand its remit

5 Jan 2009

The vice president of the eurozone central bank wants his institution to have more authority over banks. He s right. The crisis has shown monetary policy needs to be integrated with institutional regulation. But Eurozone governments may not be ready for a truly powerful ECB.

Madoff scandal underlines need for SEC overhaul

5 Jan 2009

The alleged mother of all Ponzi schemes happened under the dilapidated US regulator s nose. Its mishandling of the case, excoriated today in Congressional hearings, is the ultimate moralebuster. To rebuild the SEC will require political backing and more industry expertise.

Unicredit/Mediobanca deal would bode ill

5 Jan 2009

Italians have been roused from the last of their holidays by an unsourced report predicting a merger between the country s second largest bank and its most powerful advisory boutique. The putative deal makes little sense.

Financial crisis turns political

23 Dec 2008

The banking meltdown has toppled an already shaky Belgium government. It s not a first. Without a recession, there might be a Presidentelect McCain. The list of fallen leaders will lengthen, as others are ensnared by terrible economic news and risky government initiatives.

Anglo Irish Bank scandal strikes at worst possible time

19 Dec 2008

Investors have been wary about the bank s ability to endure the downturn. Now the chairman has revealed hidden personal loans with the bank going back 8 years. The shareprice fall underscores the hit to confidence, and makes it tougher for the bank to raise capital privately.

How does a PR firm handle its own bad PR?

19 Dec 2008

Brunswick, a top financial PR firm, is about to demonstrate. A New York employee s spouse faces charges of handing inside M&A info to traders, and a Playboy bunny, who made millions. Brunswick isn t part of the charges. But how it handles the mess will test its PR credentials.

Madoff shows madness of paper investment strategy

17 Dec 2008

The hedge fund s strategy could have delivered solid returns. But it wrongly assumed that a stack of options could be bought at market rates without moving the price. That s a key lesson. With liquidity scarce, the gap between what works on paper and in reality is widening.

Bankers’ new worry: bond-for-debt swaps

17 Dec 2008

Metals trader Glencore may draw down a line of credit to buy back its own bonds at a discount. That s a neat trick for companies with lines of credit they are sure won t be needed. For banks, bondfordebt swaps add to the strain on already overloaded balance sheets.