Financial Services

Capital Calls: U.S. labor market softens, slowly

8 Dec 2022

Concise views on global finance: Joblessness data suggests Americans are taking longer to find work. That’s good for inflation, but sluggish progress means the Fed will have to keep tightening monetary policy.

BlackRock’s activist investor fights passive tide

7 Dec 2022

A tiny shareholder says boss Larry Fink’s climate-change position falls short and that the $8 trln asset manager shouldn’t impose its beliefs on companies. Some customers agree, but the firm’s solid performance makes it a tough target. When things are going well, inertia reigns.

Capital Calls: DWS fixes what it can

7 Dec 2022

Concise views on global finance: The 6 bln euro German asset manager unveiled some punchy new targets, but its biggest challenge will be to unshackle itself from controlling shareholder Deutsche Bank.

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.

UniCredit CEO Orcel has leverage in pay debate

6 Dec 2022

The veteran dealmaker has hit his bank’s targets this year and narrowed a valuation gap to peers. Andrea Orcel may therefore deserve his maximum annual bonus. A pay hike beyond that is less obviously required, but legitimate fears he may jump ship may tip the board to offer one.

Mukesh Ambani will take credit where it’s due

6 Dec 2022

The Reliance boss is pushing into consumer lending and might trim his stake in the $220 bln conglomerate to fund the move. A star-banker hire, and huge customer base are pluses. Still, there’s good reason for the tycoon to play down his ambition in this booming corner of finance.

Circle’s SPAC flop does the public market a favor

5 Dec 2022

The stablecoin that CEO Jeremy Allaire runs is meant to have a predictable, steady price. But the company, which scrapped a merger with a blank-check firm, defies valuation. That could change, but only if the crypto storm calms and Circle can remain profitable until then.

Aussie energy woes put miners in windfall hole

5 Dec 2022

Canberra may cap the soaring price of coal or tax profits to reduce electricity costs. That’s a potentially explosive new risk for producers like Whitehaven, which is buying back up to a third of its stock at near record highs. Such short-term largesse could come back to burn.

Blackstone’s BREIT slump looks nasty but not fatal

2 Dec 2022

The buyout goliath’s market value fell nearly $8 bln on news that investors were fleeing its flagship property fund. That doesn’t look like an augur of crisis for Steve Schwarzman’s firm. But it does suggest a nasty black eye to one of Blackstone’s best earners.

U.S. stock pickers win by not picking stocks

2 Dec 2022

Active funds are set to deliver their best performance since 2007, Goldman says. But they gained an edge by ditching stocks like Tesla and Amazon and moving into cash. Success hasn’t diverted flows away from passive funds. Fees are one problem. Lack of consistency is the other.

Salesforce shakeup puts co-CEOs under a cloud

1 Dec 2022

Bret Taylor is stepping down after just a year of running the $140 bln software developer alongside founder Marc Benioff. Another former copilot lasted less than two years. Because entrepreneurs typically struggle to surrender the reins, sharing them is often a terrible idea.

Credit Suisse banks needn’t break too big a sweat

1 Dec 2022

The lender’s battered shares are now trading just 7% above the price of its $2.4 bln rights issue. A further slump could leave Deutsche, Morgan Stanley and 18 other underwriters with unwanted stock. But they have a margin of safety, and Credit Suisse may have backup options.

EU makes partial retreat in clearing crusade

30 Nov 2022

Brussels may make banks clear some euro swaps on the continent, rather than stop them using venues like London altogether. The move avoids the disruption of a blanket ban, but would still push up costs. Clearing risks are best tackled through closer regulatory cooperation.

UK banks’ Big Bang thankfully looks like big flop

30 Nov 2022

Prime Minister Rishi Sunak wants to use Brexit freedoms to boost the City’s appeal. Yet supervisors plan to introduce tougher bank capital rules than in Europe, and so-called ringfencing will remain for big lenders. That’s good: strong regulation can be a competitive advantage.

HSBC’s $10 bln Canada sale is ad for bank breakups

29 Nov 2022

The British lender is selling its Vancouver-based unit to Royal Bank of Canada for an eye-watering 3 times tangible book value. The buyer is paying up because it hopes to slash 55% of costs. If that’s plausible, investors should ask what else global retail banks should sell.

Juventus drama calls for an Exor exit strategy

29 Nov 2022

Chair Andrea Agnelli and the rest of the soccer club’s board quit amid an accounting scandal. For top investor Exor, controlled by the Agnelli clan, it’s a chance to rethink long-held ties to the loss-making team. After a cleanup, a 2.3 bln euro price tag looks plausible.

Private equity’s pay boom may have peaked

29 Nov 2022

The average European buyout partner has 20 mln euros of outstanding carried interest in their current fund, reckons Heidrick & Struggles, up a quarter from 2021. Junior wages soared. Yet a possible fundraising slowdown and layoffs elsewhere in finance will slow the gravy train.

Crypto winter highlights gold’s warming qualities

25 Nov 2022

The collapse of the FTX cryptocurrency exchange has institutional investors fleeing and regulators closing in. True believers argue their vision of decentralised digital money still holds. In a less dystopian world, the yellow metal may have more appeal, says Edward Chancellor.

FTX collapse consigns crypto to fringes of finance

24 Nov 2022

Sam Bankman-Fried’s failed crypto exchange is a huge blow to the ailing sector. In this Viewsroom podcast, Breakingviews columnists discuss how firewalls helped protect banks, how the saga will embolden regulators, and what the future looks like for digital currencies.

Credit Suisse rot infects wealth-management core

23 Nov 2022

The prized division lost 10% of its assets in six weeks, though the outflows have slowed. That undermines CEO Ulrich Körner’s narrative that the group’s problems are all in investment banking. Clients don’t make that distinction, and it’s easier to lose money than win it back.