Financial Services

Deutsche hits bad-debt snag on road to growth

23 Oct 2024

The German lender returned to profit in the third quarter but also said its full-year loan-loss provision would jump to 1.8 bln euros. It’s the second quarter in which CEO Christian Sewing has surprised investors on bad debt. The shock distracts from investment-banking growth.

New CEO clicks HSBC Rubik’s cube into right place

22 Oct 2024

The $160 bln lender’s new boss is tackling the bank’s unwieldy structure. Separating the top performing UK and Hong Kong units from everything else globally looks smart. But it may one day invite questions about why these retail units are inside HSBC in the first place.

India’s lenders face the end of lazy banking

22 Oct 2024

Gold, real estate and a booming stock market are sapping deposit growth. That's hurting earnings at banks like SBI and HDFC that rely heavily on interest income. But it can also be a spur for the industry to follow Western peers and bulk up in businesses that charge fees.

Swiss finish would take shine off UBS’s M&A gift

21 Oct 2024

The bank’s $3.8 bln takeover of Credit Suisse was described as the 'deal of the century'. But $19 bln of extra capital charges so far, and another looming hit from local regulators, will lower the returns. The next time a bank rescues a rival, it may push for even sweeter terms.

Growth-hungry EQT boss faces an M&A puzzle

17 Oct 2024

The $40 bln buyout group’s CEO Christian Sinding is practically shouting from the rooftops that he wants to buy a private-markets peer. So-called secondaries targets, the biggest of which is Ardian, make sense. But it’s a sellers’ market and EQT’s Swedish stock may be a turnoff.

Wall Street nemeses revitalize clash of titans

16 Oct 2024

A 56% surge in deal fees helped propel Morgan Stanley shares to a record high and intensify an investment banking arch-rivalry. Goldman, in turn, is battling back in wealth management. Closing the valuation gap depends on its strategy faring better than chasing everyday savers.

Banks look for new normal, find they don’t need it

15 Oct 2024

High rates and busy markets turbocharged revenue at $325 bln Bank of America, Goldman Sachs, Citi and others. The question is how long it can last. Strong third-quarter results raise the tantalizing prospect that solid results are here to stay, especially if M&A and IPOs pick up.

Jamie Dimon verges on overprotecting his fortress

11 Oct 2024

JPMorgan’s boss is hoarding the mega-bank’s capital, warning of 'treacherous' geopolitical risks. A 19% return on tangible equity and premium valuation attest to the laudable prudence. Before long, however, the stockpile may become excessive, and give rise to a special dividend.

Direct lenders’ golden moment is over

10 Oct 2024

The core of private credit that’s focused on buyout debt surged after the pandemic, spurring the industry to $850 bln in assets. Yet with public markets roaring, returns will fall. Rather than replacing Wall Street banks, private players like Ares will have to cooperate instead.

HSBC cost cuts expose new CEO’s bigger problem

10 Oct 2024

Georges Elhedery may slash $300 mln of expenses in a plan to combine investment and commercial banking, the FT says. Yet the savings are modest and a new super-division may have downsides. Investors will be more interested in how Elhedery keeps the top line growing as rates fall.

Hey team: Weaker hiring means back to the office

8 Oct 2024

About 100 mln people in North America and Europe now work remotely at least some days. More CEOs, like Amazon’s Andy Jassy, want to end the practice altogether. The tension is upsetting staff and spurring defections, but a rise in joblessness would shift power back to employers.

Debt feast helps buyout firms through IPO gloom

7 Oct 2024

Dividend recaps, where private equity managers pile debt onto a company to give themselves a payday, are booming, with $17 bln in the US last month. Since public offerings look tough, it’s a handy cash-raising alternative. The trend will continue, if the economy plays ball.

Commerzbank fight is stress test for EU bank union

27 Sep 2024

Regulators spent years trying to level the playing field for euro zone banks. That should clear the way for UniCredit CEO Andrea Orcel’s mooted bid for the $20 bln German lender. If Chancellor Olaf Scholz thwarts the Italian group, new barriers may soon spring up elsewhere.

China’s march to strong yuan is long and perilous

26 Sep 2024

President Xi Jinping wants a more powerful currency. This means increased usage of the renminbi in global payments and central bank reserves, rather than replacing the dollar. But Beijing’s desires for bigger forex heft clash with its need to keep a tight grip on the economy.

Commerz ills make M&A a question of when not if

25 Sep 2024

The German government backed the $20 bln bank’s quest to stay independent amid UniCredit’s approach. But lower rates and a lack of scale mean new CEO Bettina Orlopp will struggle to earn a good return, and so need a merger partner. Patience may reward would-be buyer Andrea Orcel.

Beijing’s $114 bln stock market bet rings hollow

25 Sep 2024

The central bank is hoping to jump-start a lasting stock market recovery by funding investments and share buybacks. But without a way to deal with underlying lacklustre growth, such schemes are likely to provide a short-term boost that soon fizzles out.

Germany’s fiscal obsession leads to bad deals

24 Sep 2024

Finance Minister Christian Lindner is rushing to plug short-term budget holes with a privatisation spree. But he is leaving money on the table. UniCredit only paid a 4.7% premium to buy a stake in Commerzbank. To feed its debt-reduction addiction, Berlin needs better M&A advice.

Andrea Orcel has scope to soften his Commerz raid

23 Sep 2024

The UniCredit CEO upped his stake in the German bank to 21%, after his approach met a cool reception. The brassy move, and use of derivatives, may anger Berlin further. Luckily, the high returns on offer mean Orcel can make job pledges to soothe M&A-wary unions and politicians.

Bank mega-M&A gets tantalisingly close in Europe

19 Sep 2024

UniCredit, the $68 bln Italian lender, grabbed a 9% stake in Germany’s $16 bln Commerzbank. In this Viewsroom podcast, Breakingviews columnists argue that a full merger makes financial sense, but potentially not for unions or the under-fire government in Berlin.

Larry Fink’s private index dream may be holy grail

19 Sep 2024

The boss of $137 bln BlackRock wants to create benchmarks and passive investment products for alternative assets like buyouts and direct lending. Packaging up illiquid funds will be tricky, and data quality is patchy. A repeat of Fink’s success with public markets seems unlikely.