Financial Services

Commerzbank’s UniCredit defences are built on sand

17 Sep 2024

German politicians fret that a key domestic lender may end up under foreign control, now its Italian rival holds 9%. Berlin’s 12% stake complicates that. But it has no legal mechanism to block a deal the ECB may support, and Deutsche Bank makes for a problematic white knight.

For global firms, India IPOs are a honey trap

17 Sep 2024

Hyundai and LG Electronics are each keen to float their local subsidiary on Mumbai bourses. Rich valuations are on offer. Companies have been burnt, though, by chasing additional listings around the world. The risk of getting hurt looks particularly bad in India.

OpenAI’s value on human destruction short circuits

16 Sep 2024

The cutting-edge artificial intelligence outfit may be worth $150 bln, a 74% jump from its last benchmark. Take AI boosters’ claims at face value and it’s easy to justify wildly more still. The problem: that would mean OpenAI is no mere company but a force shoving aside humanity.

India’s mortgage IPO builds on many riches

16 Sep 2024

Shares of Bajaj Housing surged 125% on their debut. That reflects faith in its $56 bln investor darling parent and robust demand for expensive homes. It also hints at deep scepticism among sellers about the sustainability of rich valuations in the country's equities market.

The UK’s finance-business chasm is as wide as ever

13 Sep 2024

British investors and regulators are fretting that capital markets do not adequately serve local companies. The long-running issue is rooted in the country’s outsized financial sector, which brings in 12% of GDP. Recent reforms will struggle to address the underlying problem.

China mortgage cut is start of confidence rebuild

13 Sep 2024

Beijing may significantly lower rates on existing home loans, per Bloomberg. That might convince property owners that there are better alternatives than stepping up mortgage repayments. It is a step toward fixing a $1 trln headache for officials, and improving consumer sentiment.

Buyout barons’ dirty secret shows hard times ahead

12 Sep 2024

Since 2013, 47% of the value created by private-equity dealmakers came from selling companies at higher multiples than they paid. That boon is fading now that valuations seem stretched. KKR, Blackstone and others face lower returns or fights over high-growth targets instead.

Orcel uses hammer to unpick UniCredit-Commerz lock

11 Sep 2024

The Italian bank’s CEO is eyeing a full takeover of the $16 bln German lender. Andrea Orcel is taking a blunter route than past M&A talks between the two banks, which used structures like a Frankfurt-listed subsidiary to appease Berlin. His way is more rewarding, but riskier.

UK bank tax would fall on shrinking shoulders

11 Sep 2024

Lenders fear that finance minister Rachel Reeves will tap them to help plug a fiscal ‘black hole’. Reversing a tax cut from the last government would be the simplest option. The high returns of NatWest, HSBC and Lloyds suggest they can afford it, but rate cuts may change that.

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.

Fed’s Basel climbdown leaves foot on rules ladder

10 Sep 2024

Facing intense industry opposition, top US regulator Michael Barr proposed softer new capital rules for lenders like JPMorgan. There’s good reason to revisit many pain points. But despite shaving maybe $100 bln off the burden on the biggest banks, a philosophical shift remains.

China brokerage deal has more bark than bite

9 Sep 2024

The merger of Guotai Junan and embattled rival Haitong will create the country’s largest brokerage with assets of $225 bln. The overcrowded sector needs consolidation, but this deal probably won’t aid Beijing’s goal to foster a squad of world-beating investment banks.

Germany gets timing wrong with Commerzbank sale

4 Sep 2024

At first glance, the decision to offload shares in the 16 bln euro lender seems smart given a 130% share-price jump in three years. But the valuation is still low. And if long-rumoured M&A materialises, Berlin will forego its special influence and miss out on a takeover premium.

Deutsche’s UK broking adventure takes early detour

3 Sep 2024

The German bank’s $500 mln acquisition of Numis brought relationships with London-listed firms like Rightmove. Now it’s suspended work with the property portal after opting to advise Rupert Murdoch’s REA on a possible bid. Other UK clients may discount future claims of loyalty.

Aussie exports could do without education squeeze

30 Aug 2024

The government wants to cap visas for new overseas learners, its fourth-largest source of foreign income. The policy has some merit but makes immigration, which includes student visas, a scapegoat for economic woes. With top exports like iron ore under pressure, it’s ill timed.

How HSBC can heal the scars of its CEO battle

29 Aug 2024

The $160 bln lender’s retail and wealth head Nuno Matos left after losing out on the top job to Georges Elhedery. The bank now has an empty CFO post, and a lack of potential future leaders. Recruiting heavy-hitting outsiders, like Citi’s Jane Fraser has done, would help.

Robinhood finds riskier ways to take from the rich

22 Aug 2024

Having recovered from a post-IPO slump, the $18 bln online brokerage is thinking big. Founder Vlad Tenev wants to lure millennial wealth, including trillions left behind by boomers, with new products at low prices. The catch: putting more of the company’s own money on the line.

Deutsche’s legal seesaw flags investor blind spot

22 Aug 2024

The German lender shocked shareholders in April by setting aside 1.3 bln euros for a 14-year-old Postbank M&A case, only to settle with most plaintiffs for half the claimed amount. It’s a case study in the opacity of bank legal risks, which plays into the sector’s value discount.

Europe’s dealmakers begin tough redemption journey

19 Aug 2024

The market share of BNP, Barclays, UBS, SocGen and Deutsche seems to have troughed at around 8% in M&A and 6% in equity underwriting. The days of ever-increasing US dominance may be over. Getting investors to attach more value to these volatile units, though, is the harder job.

Growth is missing piece in UBS valuation puzzle

14 Aug 2024

The $100 bln lender is speeding up its cost cuts and shrinkage of Credit Suisse’s investment bank. But the bits of UBS investors like, such as wealth management and Swiss banking, seem sluggish. Changing that will be key to closing the value gap with rivals like Morgan Stanley.