Financial Services

Wall Street places reluctant bet on Trump

11 Jul 2024

Financial folk prefer Republicans over Democrats when it comes to political donations. They dislike President Joe Biden’s regulatory drive. But Donald Trump’s return could roil markets, widen divisions and expand deficits. No wonder some would prefer one of their own in the race.

UniCredit-ECB spat could sharpen watchdog’s teeth

10 Jul 2024

The 60 bln euro bank is contesting in court the regulator’s demand for a faster Russia exit. At issue is whether the European Central Bank can base orders on hypothetical risks. If the supervisor wins, it may be emboldened to take tougher action on issues like climate change.

China’s central bank is stuck in a policy dilemma

9 Jul 2024

The PBOC is now intervening in short-term debt markets. Ideally it should be cutting rates to help spur more investment in the economy. But that would mean giving in to traders parking their money in government bonds – and would conflict with its mandate to foster a strong yuan.

China’s banker pay crackdown risks Pyrrhic victory

8 Jul 2024

State-backed financial firms will face orders to cap salaries at about $400,000. The move reverses a drive to pay for performance, will alienate staff, create stodgier institutions and kill Beijing's dream of creating "top class" global investment banks - all for little benefit.

Guest view: Blame poor audits on absent investors

3 Jul 2024

High-profile company failures show audit firms are failing to scrutinise corporate accounts. But shareholders are also falling short, says Natasha Landell-Mills of Sarasin & Partners. They can do more to register their displeasure with weak accountants and board members.

Even smooth bank stress-test results fray nerves

27 Jun 2024

Big US lenders aced their annual checkups, and have nearly $300 bln of extra capital, per Breakingviews math. Much of it will be tied up for maybe a year until the Fed finalizes its botched revisions to Basel rules. For now, the exams just show shareholders what they’re missing.

Banks grab AI-generated tiger by the tail

26 Jun 2024

Sleeker IT systems, stronger fraud defenses and other algorithmic upgrades could yield nearly $200 bln of profit for lenders by 2028, one study finds. An efficiency revolution isn’t evident in valuations, however. The new tech may pay higher dividends to customers than investors.

UBS deal reflects resilient demand for China trade

25 Jun 2024

Its sale of Credit Suisse’s Chinese securities JV stake to a state-run firm greases the Swiss bank’s plan to take control of another unit, and snubbed bidder Citadel still looks keen to enter the market. Conditions are tough but firms are shoring up their future on the mainland.

Pru’s buyback falls way short of a comeback

25 Jun 2024

The insurer’s shares jumped 7% on its plan to repurchase $2 bln-worth of stock. But its valuation still lags nearest peer AIA. To close the gap boss Anil Wadhwani has to show he can deliver both his predecessor’s overhaul and his own revamp. That's likely to be a long slog.

India’s options trade faces a less lucrative reset

25 Jun 2024

Officials are planning tighter margin and disclosure rules in the booming equity derivatives market, where contracts clock $135 bln a month. That will help protect retail traders and pre-empt a wider bust. Losers may include upstart discount brokers and firms like Jane Street.

Revolut’s desired $40 bln price tag is a stretch

24 Jun 2024

The UK fintech group wants to sell $500 mln of shares at a valuation far above its last level. To get to $40 bln, investors need to assume it’s like payment giant Adyen. With a lower margin and discounts warranted in other areas, Revolut’s value looks more like $20 bln.

China central bank’s reform push is shrewd gambit

20 Jun 2024

Governor Pan Gongsheng hinted at a substantial revamp, including trading government bonds and simplifying interest rates. The changes will be a gradual process, but after having its wings clipped, they should help the central bank reassert its power in setting monetary policy.

UBS deal exposes Swiss trustbusters’ inadequacy

19 Jun 2024

Despite competition concerns, the $100 bln bank has escaped antitrust blowback from last year’s purchase of troubled Credit Suisse. Any doubt could have undermined the deal, and hence the rescue. But Swiss legal tools to monitor further competition risks look especially weak.

Citigroup makes unintended case for AI in finance

18 Jun 2024

The mega-bank has embarked on a PR blitz for its trade-finance business, which accounts for about half of earnings. Yet boss Jane Fraser’s persuasive plans are at risk from gaffe-prone staff and clunky systems. Tech that improves on humans and computers can’t come fast enough.

PAG’s downsized Asia fund could pay off handsomely

17 Jun 2024

China dealmaker Weijian Shan raised $4 bln for his firm's buyout fund, less than half the target, after refusing to cap exposure to the world's second-largest economy. He'll have more freedom than rivals to chase returns from discounted Chinese assets. That could be lucrative.

Japan’s value push is starting to lose momentum

14 Jun 2024

Notwithstanding big activist campaigns, tallies of shareholder proposals tabled for company annual meetings this month look underwhelming. The stock rally is fast fading too. Japan has a long history of disappointing investors. The stakes for how fund managers vote are rising.

Stock handouts might help save the US ruling class

13 Jun 2024

The top 0.1% Americans own a quarter of the $40 trln in share-based wealth while the bottom half has just $400 bln. It’s therefore encouraging to see GE, Walmart and Blackstone-backed firms giving workers equity. Less inequality will better align the interests of poor and rich.

Euro zone banks’ periphery premium is here to stay

13 Jun 2024

Lenders in Ireland, Italy, Greece and Spain on average trade with a 30% higher price-to-tangible-book value than French, German and Dutch ones. It reflects a reversal of fortunes between the old periphery and core – but also different business models, meaning the gap may persist.

Spain’s $24 bln investment giant has too many hats

12 Jun 2024

Criteria Caixa takes dividends from its big equity portfolio and sends cash to the country’s top charitable foundation. Increasingly, though, Chair Isidro Fainé is fixated on protecting national champions like Telefónica. Pleasing Madrid means sacrificing returns for the charity.

Spanish bank M&A lies in lap of interest-rate gods

7 Jun 2024

BBVA’s 12 bln euro hostile pursuit of Sabadell currently implies a slim premium to the target’s pre-bid price. If the latter’s investors think the ECB will keep rates high, returns will stay strong and they should reject BBVA. But lots of rate cuts may upend Sabadell’s defence.