Financial Services

Tiny tech bank defies US massacre of the minnows

8 Jun 2023

After a string of failures, consolidation is inevitable among the country’s 4,100 lenders. But $1 bln Live Oak, with no branches and lashings of technology, punches well above its weight. Even though rising rates may hurt, the bank shows that bigger isn’t necessarily better.

Warren Buffett – he invests just like us!

7 Jun 2023

The Nebraskan billionaire has come to embody the idea of buying and holding for the long-term. It’s true where Berkshire Hathaway acquisitions like See’s Candies are concerned. When it comes to sizeable equity stakes such as TSMC, however, he can be as fickle as anyone else.

UBS’s $10 bln state guarantee is a useful fantasy

7 Jun 2023

The bank is getting Swiss taxpayers to shield it against some losses on its Credit Suisse deal. It allows the government to smooth a controversial takeover, and helps UBS boost a stretched capital ratio. Both sides are making a calculated bet that the backstop is never needed.

Sequoia breakup will expose go-local consequences

6 Jun 2023

The venture capital firm, which manages more than $100 bln, is splitting into three. The rebranded China and India arms will operate independently from the US and Europe. It speaks to geopolitical tensions, but runs contrary to natural evolution. And untangling comes with risks.

President Dimon would be square peg in Oval hole

2 Jun 2023

JPMorgan’s longtime boss could get a head start on a 2024 White House run by capturing the powerful capitalist constituency. Beyond that, there are too many pitfalls. For one thing, he is an avowed free-enterpriser, a quality ill-suited for this particular executive office.

EU-UK clearing drama heads for prosaic finale

2 Jun 2023

The bloc is stalling on allowing UK firms to clear euro derivatives after 2025. That has set off a round of financial-stability finger-pointing. Costs may rise but systemic fears are overdone. If there were real danger, London could just pledge to follow Brussels’ rules.

Wall Street faces life in China’s second tier

1 Jun 2023

Morgan Stanley, Goldman Sachs and rivals are trimming jobs in Greater China due to a slow recovery and US tensions. Even when activity picks up, boosting market share in the world’s second-largest economy will be tough. The usually dominant financiers will remain fringe players.

Russia writedown is Raiffeisen’s best option

30 May 2023

The Austrian bank may spin off its profitable Moscow-based unit. The new Vienna-listed lender could struggle to operate given sanctions, shrinking its depressed value further. Stomaching a 4.1 bln euro loss would force Raiffeisen to atone for years of mindless Russian expansion.

Citi slinks rather than marches out of Mexico

24 May 2023

The US bank will IPO rather than sell the Mexican retail business CEO Jane Fraser once ran. It’s the wiser path after a year of haggling and dramatic market moves. Given Citi’s dismal valuation and past underinvestment, what Fraser does closer to home matters more anyway.

Mediobanca chief’s 20-year race has one more lap

24 May 2023

For two decades, Alberto Nagel has fought market and boardroom crises while diversifying the Italian bank and booking fat returns. His new business plan lacks fireworks. But fear of destabilisation will prompt restless core investors to back the veteran banker for one more term.

Capital Calls: JPMorgan’s rich pickings

22 May 2023

Concise views on global finance: The giant lender’s investment day laid out benefits from buying parts of defunct bank First Republic. Boss Jamie Dimon gets more than just the fuzzy glow from stabilizing the industry. Snagging more wealthy clients should please his investors too.

Revolut-SoftBank fight exposes VC share artifice

22 May 2023

The fintech group may only win a UK banking licence if it gets rid of preference stock held by the Japanese investor. Similar structures are common in startup land, and help justify puffed-up valuations like Revolut’s $33 bln price tag. The fracas shows they also have a downside.

Lazard’s next CEO should channel James Gorman

19 May 2023

Ken Jacobs will leave the storied advisory shop much the way he found it, ceding ground to new rivals in the process. Over the same 13-year span, Morgan Stanley’s retiring boss shrewdly and successfully reshaped his bank. A similarly bold approach would help recharge Lazard.

UBS kitchen sink has protection from further leaks

17 May 2023

The bank reckons it might write down the assets on Credit Suisse’s balance sheet by $10 bln, inflate its liabilities by $3 bln, and take a $4 bln litigation hit. Those numbers could get bigger over time. But a low purchase price gives CEO Sergio Ermotti a chunky margin of error.

Wells Fargo gives three-part lesson in atonement

16 May 2023

After a $1 bln class action settlement, the US bank has spent over $20 bln on past bad behavior since 2018. For financial firms, mis-steps come in three types: the bad, the foolish and the sloppy. Wells Fargo has had all three, but it’s the last that leaves the toughest stains.

Capital Calls: GAM takeover saga

16 May 2023

Concise views on global finance: The stricken fund group is an unlikely target for activists led by billionaire telecoms tycoon Xavier Niel.

Ukraine rebuilding would be small wager for Europe

16 May 2023

The Ukrainian economy shrank by 30% last year but the war didn’t break it. Reconstruction will cost $410 bln over a decade, according to the World Bank. The European Union could fund the bulk of those efforts by spending just 0.1% of annual GDP. That would be a shrewd investment.

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.

Ambani’s finance listing will measure disruption

11 May 2023

The fledgling venture mostly comprises a 6% stake in $200 bln parent Reliance. Yet it may be floated as soon as September. It’s easier to spin out than the conglomerate’s digital and retail businesses. How it’s valued will signal whether investors reckon he can shake up lending.

Rebuilding Ukraine depends on luring private money

10 May 2023

International agencies and allied governments are taking care of the war-torn country’s immediate needs. An estimated $400 bln reconstruction bill, however, requires additional investors. Economic incentives and new laws would help attract them even before Russia’s invasion ends.