Financial Services

Credit Suisse debacle raises oversight question

9 May 2023

Swiss authorities hailed the state-backed rescue of the stricken lender by UBS as a commercial solution that will be light on domestic taxpayers. Banking professor and former SNB official Urs Birchler tells The Exchange podcast why the quick fix is far from ideal.

Macquarie energy boost reignites valuation dilemma

5 May 2023

The $46 bln financial powerhouse posted record earnings thanks to market ructions supercharging commodities. Strip that out and it’s hard to justify the bank’s book-value premium. Yet Macquarie has a track record of having at least one such lumpy business a year outperform.

Beijing expects foreigners to trust, not verify

5 May 2023

Officials say they welcome overseas investors while they raid due-diligence firms and restrict corporate and economic data. China’s confidence in its attractiveness and ability to fund its own companies is not baseless. Yet it’s a risky time to take foreign cash lightly.

First Republic’s rescue cements ‘too big to fail’

4 May 2023

JPMorgan rode to the rescue of the mid-sized lender, which recently became the latest US bank to keel over. In this Viewsroom podcast, Breakingviews columnists discuss the impact of lending giants bulking up further, and whether that itself stores up future risks.

Aussie banks face do we, don’t we dance conundrum

4 May 2023

Top-four lender NAB is slowing its heels on making housing loans below its cost of capital. Others are probably doing the same. It’s smart, not least as a slowing economy is likely to push up losses. But the 5% drop in NAB’s stock shows they’re under pressure to keep going.

Carl Icahn will struggle to play tough defense

2 May 2023

The same short-seller that ripped Indian tycoon Gautam Adani is now targeting the pushy US investor’s listed $14 bln fund. Other activists like Nelson Peltz have caved to vocal critics. The nature of this attack, however, puts the 87-year-old billionaire in a tight spot.

First Republic collapse fires up capitalist elite

2 May 2023

Bank failures, rapidly rising interest rates and looming recession are dominating the agenda among finance types gathered at onetime junk-bond king Michael Milken’s annual Beverly Hills summit. Where there’s distress, however, there’s also opportunity. At least up to a point.

HSBC puts its shareholders on the spot

2 May 2023

Boss Noel Quinn reckons last quarter’s eye-popping 19% equity return is somewhat sustainable. If he’s right, investors are undervaluing the bank, and top owner Ping An is wrong to push an Asia spinoff. But it requires everything from interest rates to asset sales to play nice.

Capital Calls: BP, Japanese M&A

2 May 2023

Concise views on global finance: The oil giant will buy back $1.8 bln of shares over the next three months, which is less than investors hoped for; Astellas Pharma is making the most of cheap debt for its $5.9 bln pounce on U.S. eye-treatment specialist Iveric Bio.

Hot money is cold comfort for China shares

2 May 2023

Foreign interest in Chinese equities revived in the start of 2023. Yet recent routs in New York, Hong Kong and Shanghai suggest inflows came mostly from fickle quick-hit traders. Beijing wants long-term investors to stabilise the market, but reassuring them will be tricky.

Fed’s SVB review finds there’s no “I” in “blame”

28 Apr 2023

Its postmortem of the collapse of SVB Bank calls out timid supervisors, loopholes that made it hard to keep tabs on fast-growing firms and previous vice chair Randal Quarles’ push to cut red tape. The result is a prescription for lots of change, but not much accountability.

Deutsche’s Numis swoop more logical than it looks

28 Apr 2023

The lender’s $500 mln purchase of the UK broker seems an odd move for CEO Christian Sewing, who once aimed to shrink investment banking. But the valuation isn’t silly, and a deal may boost Deutsche Bank’s corporate lending arm. Numis’s smaller peers may also now seek a new home.

Capital Calls: Exxon, US regional banks

28 Apr 2023

Concise views on global finance: Exxon’s two golden eggs are the Permian and Guyana; market composure gives time for a First Republic fix.

Sumitomo triples down on Jefferies at right time

28 Apr 2023

The $8 bln Wall Street firm’s earnings have slumped with deal flow, so SMFG boss Jun Ohta can boost his stake to 15% at roughly the same price he paid two years ago. This time he has the benefit of knowing his partners better and can get ahead of any boom in investment banking.

First Republic could make failure safe again

27 Apr 2023

Unless it can tempt a white knight, the US lender holding $230 bln of assets looks doomed. Either way insured depositors should be fine, with something left for others too. It’s important that regulators show not every bank can hold the system to ransom. This may be their chance.

Resolving Credit Suisse: an alternative history

27 Apr 2023

Swiss authorities merged the bank with UBS, rather than risk a financial panic by bailing in bondholders. Yet Credit Suisse was arguably unique and small enough to be wound down. Breakingviews imagines that scenario, which may serve as a template if the enlarged group ever fails.

Capital Calls: US GDP, Eli Lilly, EU budget

27 Apr 2023

Concise views on global finance: Consumer spending provided fragile support for the US economy in the first quarter. Meanwhile pharma group Eli Lilly is racing against rising obesity expectations, and the European Commission faces German hurdles to replacing its budget rules.

Capital Calls: Plan C for Teck Resources

26 Apr 2023

Concise views on global finance: The Canadian miner withdrew a shareholder vote to split coal from copper as it looked set to fail. If a promised “simpler” breakup plan also falls short, the $24 bln takeover bid from Glencore may become more appealing.

StanChart shareholders look too blinded by history

26 Apr 2023

The $22 bln bank’s near-12% equity return last quarter breezed through boss Bill Winters’ 2024 target. His mostly unimpressive track record is a concern, as is slowing economic growth. But investors value the lender at just half its book value. That’s overly pessimistic.

Coinbase will force SEC to quit ghosting crypto

25 Apr 2023

It’s been eight months since Coinbase asked securities watchdogs to clarify how digital assets will be regulated. Now the world’s second-largest crypto exchange is suing for an answer. The legal battle will decide the fate of the trillion-dollar cryptocurrency industry in the US.