Credit

China’s banks have a nasty case of indigestion

11 Sep 2024

For decades, Beijing leaned on lenders to fuel growth in the $17 trln economy. But it will take years for them to digest problem IOUs from firms and local governments. Officials will have to find new ways to boost GDP, or the financial dyspepsia could turn into something worse.

Private credit wonder drug works in limited dose

17 May 2024

The quantity of loans channelled directly to companies by funds has exploded to more than $2 trln. The economic benefits of diversified lending just about make up for the risks. The challenge is making sure financial innovation does not starve banks to death.

Why rich nations have to keep helping poorer ones

16 Apr 2024

The world faces many onerous financial and climate challenges. Still, as Axel van Trotsenburg, the World Bank’s Senior Managing Director, explains in this Exchange podcast, governments and companies in advanced economies cannot afford to stop supporting developing ones.

Credit card suit takes swipe at perks programs

27 Mar 2024

A $30 bln settlement in a decades-old lawsuit will compel payment networks Visa and Mastercard to let retailers charge customers more to use certain cards – and to tell them why. As shoppers take notice, they may cool on fancy rewards programs.

Klarna IPO now makes less sense than one later

28 Feb 2024

Decent growth and lower losses mean the Swedish buy now, pay later group can justify a $20 bln valuation. Given that’s three times the level of its last cash injection, there’s an argument for a speedy listing. Still, Klarna’s messy governance suggests a 2025 IPO is more logical.

Capital One will struggle to cash in M&A rewards

20 Feb 2024

An $80 bln deal with Discover would create a credit-card giant with a Visa-like payment network and huge cost savings. These perks can only be redeemed by overcoming political foes, regulators and the target’s conduct issues. On balance, it’s wise to buy now, and maybe pay later.

Private-asset binge exposes insurance to new risks

30 Nov 2023

US insurers hoovered up private loans from buyout firms last year in a profitable game of pass-the-parcel. Their hoard of alternative assets has swelled 65% in five years, and regulators are struggling to keep up. The March banking panic shows what can happen when firewalls fail.

Julius Baer hit undermines private-banking premium

20 Nov 2023

The pure-play Swiss wealth manager fell 12% after a profit warning, prompted partly by sharp losses against its credit portfolio. Investors didn’t sign up for that kind of risk. The private bank’s top-tier valuation may have to shrink.

Private equity superstores overstock the shelves

8 Nov 2023

Blackstone and Apollo say diversification into credit, real estate and beyond makes them better investors. They have been outraised and often outperformed, however, by more focused buyout shops like CD&R. It will take consistently higher returns to justify the conglomerate model.

Private credit partygoers reach for the hard stuff

11 Oct 2023

With rising rates crimping their LBO-financing spree, direct lenders like HPS and Blue Owl are devising ways to prop up weak borrowers. With $7 trln of debt due over the next three years, it’s a growth area. Yet returns may fail to reflect the risks private credit is running.

Buyout barons feast on excesses of last boom

21 Jul 2023

The post-pandemic M&A frenzy is long over, but its legacy lives on in the generous loans that fueled a wave of leveraged takeovers. With debt now scarcer and twice as costly, investors like Blackstone and CD&R are crafting deals that take advantage of yesterday’s cheap credit.

Discover dabbles with two types of delinquency

20 Jul 2023

Credit-card firms' investors are used to pricing in the risk that customers pay late, or not at all. But a swipe by regulators for poor compliance – not the first for CEO Roger Hochschild – is a reminder that bad behavior can erode value too, and is much harder to predict.

UK could borrow a leaf from Canada’s mortgage book

7 Jul 2023

High levels of housing debt have left British borrowers exposed to rising interest rates. One way to avoid this problem is to fix payments as a proportion of the loan. Some Canadian lenders offer such adjustable-term mortgages, Edward Chancellor writes. The UK could follow suit.

India’s push to democratise credit tests limits

30 Jun 2023

It’s shaping its digital payments system, which supports 9 bln consumer transactions a month, into a loan engine. Homegrown card operator RuPay and fintech Paytm are winners. But growth in unsecured credit is blistering and the regulator is delivering mixed messages on the risks.

Credit-card crackdown will net limited rewards

22 Jun 2023

Over 80% of Americans have one, yet plastic’s complexity rivals financial derivatives. A Biden administration plan to cut late fees to $8 sounds like a step toward simplicity and a savvy vote-winner. Banks will probably be no worse off, however, and consumers scantly better.

TPG returns to credit party fashionably late

15 May 2023

The buyout firm’s $3 bln purchase of direct-lending firm Angelo Gordon takes it back into a business it split off in 2020, and will make it look more like bigger peers like KKR. Missing the last private-credit wave is no bad thing, since TPG could catch the crest of the next one.

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.

Why retail bankers are beating dealmakers

26 Jan 2023

JPMorgan, Citigroup and Goldman Sachs’ earnings revealed that the basic business of lending money is thriving, while investment banking is not. In this Viewsroom podcast, Breakingviews columnists debate what this says about the U.S. economy and what to expect from the Europeans.

New buy-now-pay-later fad runs old-school risks

8 Dec 2022

After Klarna and others saw their valuations slashed, venture investors are now pouring money into business-focused lenders like Wayflyer. It sounds like digital trade finance, which has a patchy past. There’s often a good reason that small borrowers can’t get money elsewhere.

ECB’s bank loan-loss worries look overdone

7 Dec 2022

Chief supervisor Andrea Enria fears that BNP, ING and others are flying blind into a 2023 default storm. But rate hikes will give the 10 largest lenders a 120 bln euro profit buffer before their capital gets hit. The big banks can afford to keep going with dividends and buybacks.