Financial Services

UK wealth buyout requires elbow grease and luck

9 Aug 2024

After an intense courtship, CVC and Abu Dhabi have snapped up investment platform Hargreaves Lansdown for $7 bln. The rich price tag means the new owners will have to slash costs while cranking up sales to make a decent return. That may be tricky if interest rates keep falling.

UK financial watchdog’s H2O thwack has a downside

8 Aug 2024

The fund group will repay 250 mln euros after the FCA said it bought esoteric bonds and didn’t declare conflicts. The deal gets money to investors quicker than if a fine had been levied. But, at just a fraction of what some clients are claiming, the settlement risks looking soft.

DBS CEO aces succession, sets high bar

8 Aug 2024

Piyush Gupta is leaving the $72 bln bank after 15 years in charge. He put it on the Asian map, logged stellar returns, and ensured a Singapore-style drama-free transition of power. Incoming boss Tan Su Shan is a solid choice to steer DBS through its next trickier growth phase.

BNP’s AXA deal is a logical use of spare cash

2 Aug 2024

The French bank will buy the insurer’s fund unit for 5.1 bln euros, using money from its BancWest sale. It’s a big deal, but the price looks fair. And while BNP Paribas investors may prefer buybacks, a capital-light target makes more sense than a rash swoop on another lender.

HSBC’s growth engine has insufficient horsepower

31 Jul 2024

Wealth revenue is rising at the $167 bln lender, but not necessarily fast enough to offset the hit from falling rates. The key transaction-banking unit, meanwhile, is stagnant. To fix it, new CEO Georges Elhedery will need investors’ patience and a dose of economic good luck.

Ether ETFs spotlight crypto’s big ask for Trump

30 Jul 2024

Mainstream investors now have access to the second-largest cryptocurrency after a slew of new funds raised $100 mln. But they don’t yet match the perks of owning ether outright. As the presidential contender cozies up to the crypto crowd, it offers a clear deregulatory target.

Posh UK wealth group flaunts takeover credentials

30 Jul 2024

St. James’s Place is drawing in new client money and cutting costs. That eases concerns that well-heeled Brits would abandon its high-priced service after a recent fee overhaul. Even after a 25% stock pop, the 3.8 bln pound group is cheap. A takeover or buyout looks plausible.

SocGen’s valuation salvation may lie in a breakup

29 Jul 2024

The 19 bln euro French bank trades at a 60% discount to rivals – the widest gap in a decade. None of its core units are particularly attractive, making a revival tough. But selling listed holdings, worth 8 bln euros, could fund a deeper restructuring and make M&A more plausible.

India wants to be China’s gateway to the West

26 Jul 2024

Rather than integrate into its neighbour’s supply chain, the South Asian country wants to court Chinese investment. Its annual economic survey lays out a way for firms from Shein to BYD to keep selling in Western markets. A lot rides on how the Sino-American trade war plays out.

Euro-banks offer glimpse of possible bad-debt wave

24 Jul 2024

Deutsche upped its forecast loan-loss charge, contributing to a 7% share-price fall. BNP’s default provision spiked, and UniCredit’s has too in Germany. Most of the bad news relates to just a few specific corporate clients. But there will be more if rates stay higher for longer.

Sabadell surfs interest-rate wave away from BBVA

23 Jul 2024

The Spanish bank reckons it can generate at least a 13% return on tangible equity this year and next. It makes BBVA’s 12 bln euro hostile all-share bid less attractive. Sabadell will still suffer if rates fall fast, but a higher offer seems more necessary by the day.

As rates fall, European banks can still rise

22 Jul 2024

Tight monetary policy turbocharged returns for lenders like $68 bln UniCredit. Yet lower interest rates don’t have to do the opposite. Central-bank cuts may boost loan demand and investment-banking fees, while keeping bad debt low, which should push up valuations.

Cyber meltdown points to downsides of efficiency

19 Jul 2024

A software update by $83 bln CrowdStrike grounded flights and disrupted financial markets. That’s possible because businesses work with a small number of providers, seeking lower costs. It supports rich tech valuations, but also heightens the risks of a catastrophic failure.

UK growth fix can start with pampered rich savers

19 Jul 2024

New Prime Minister Keir Starmer wants to unblock Britain’s dismal economy. One aid would be to raise revenue by cutting superfluous tax perks for wealthy savers. Another is to find a way to deploy UK savings in more growth-enhancing assets than is currently the case.

EQT hit carries warning for buyout-firm investors

18 Jul 2024

The $40 bln private equity group’s shares sank after it missed analysts’ forecasts. The lesson is that predicting profits from selling companies is tough. It also suggests that a recent valuation run-up for listed managers is out of whack with tricky dealmaking conditions.

HSBC makes right call on CEO, three months late

17 Jul 2024

Georges Elhedery, the $160 bln bank’s new boss, always looked the best available option. HSBC’s current CFO will have a job managing slower growth and tricky Chinese relations. Had the lender endorsed him in April alongside Noel Quinn’s exit, he would be on a firmer footing.

Banks prep for this-time-it’s-different deal boom

16 Jul 2024

Morgan Stanley’s 51% pop in investment banking revenue rounds out a strong quarter for Wall Street rainmakers. Peers like Goldman Sachs and JPMorgan are also eyeing a pick-up in M&A and underwriting. But the clients look different now, and so do the banks – not all in a good way.

India’s rescued Yes Bank is ripe for a new owner

16 Jul 2024

A sale of the $10 bln lender could realise a chunky return for its 2020 saviours led by State Bank of India, especially if a strong global player follows Singapore's DBS into the market. But success in the country demands more patience than overseas banks have shown.

BlackRock’s Larry Fink won’t be able to sit still

15 Jul 2024

He’s struck two deals this year and restructured his company that manages $10 trln. Organic growth and profit margins are solid to boot. But BlackRock’s stock badly trails Blackstone, where Fink got his start. That’s plenty incentive to find new ways to push onto the same turf.

Now is least-bad time for JPMorgan CEO to move on

12 Jul 2024

Jamie Dimon’s 18-year tenure has rarely enjoyed such a benign backdrop: record-high profit, a revival underway for Wall Street’s dealmakers, and a regulatory hammer-blow forestalled. As successors stake out a higher profile, his steady hand might be useful elsewhere - like in DC.