Financial Services

Five reasons financial disasters are hard to avoid

6 Jun 2024

A decade and a half after the last big crisis, dangers still lurk. Regulation has shifted financial risks to different areas, while old vulnerabilities remain unfixed. Meanwhile, a growing number of voters benefit from bailouts. It’s a recipe for more turbulence in future.

Investors are hunting securitization’s oddballs

4 Jun 2024

Whether a bundt cake bakery or an internet address, if it generates steady cash, it can be diced up in the financial alchemy of securitization. In this Exchange podcast, Janus Henderson’s John Kerschner explains the promise and perils, and why the oddest assets can be the best.

Capital One scales banking’s Mount Improbable

30 May 2024

The US lender’s $35 bln bid for Discover will make it king of the hill in credit-card debt, but to realise his ambitions, boss Richard Fairbank has a lot of people to win over. That includes not just regulators and merchants but his own investors – and maybe then the world.

Korea’s short-selling aversion mars reform push

30 May 2024

Seoul doesn't want to allow the practice until it stamps out so-called naked illegal trades in the $1.9 trln market. But the problem is overstated and jars with a push to unlock shareholder value. The government's pandering to retail investors only hurts them in the long run.

Swiss wealth M&A may kill two birds with one stone

28 May 2024

Julius Baer and EFG held merger talks, Reuters and others reported. With just $640 bln of combined assets under management, they’d be unlikely to threaten UBS. Yet a deal would make financial sense, and EFG CEO Giorgio Pradelli could fill a leadership void at its larger peer.

UBS succession menu looks unnecessarily short

28 May 2024

The $100 bln bank ruled out external candidates to replace CEO Sergio Ermotti in about three years, the FT reported. Grooming home-grown successors is good planning. But none of the internal frontrunners currently offer what UBS will most need: a convincing US growth strategy.

Big banks win with FDIC head’s resignation

21 May 2024

Martin Gruenberg’s decision to vacate his post as the banking regulator’s leader leaves few possibilities for new capital rules. He could stick around long enough to usher through a watered-down version. If he’s pushed out, Republicans, who want the rules to die, take control.

Gulf bank’s growth push takes wrong turn in Turkey

21 May 2024

After briefly pursuing StanChart last year, First Abu Dhabi Bank may now pay $8 bln for 61% of Istanbul-based Yapi Kredi, Reuters reported. Deepening Turkish-UAE trade links offer a thin rationale. A high price, volatile lira and lack of cost savings make the deal a bad idea.

A confident India can afford to squeeze investors

21 May 2024

Finance Minister Nirmala Sitharaman dismissed reports the government, if re-elected, will majorly alter how asset sales are taxed. There is merit to the idea, however. It could help deepen the $550 bln corporate bond market. The buoyant rally in stocks provides an opportunity.

Ping An wrestles with its HSBC dilemma

17 May 2024

The bank's top owner may reduce its 8% stake a year after its breakup bid failed. It's a fair move given the recent bumper returns and looming succession and growth issues. But HSBC's dividends and arguable undervaluation suggest Ping An won't trim its outsized holding too much.

Private credit wonder drug works in limited dose

17 May 2024

The quantity of loans channelled directly to companies by funds has exploded to more than $2 trln. The economic benefits of diversified lending just about make up for the risks. The challenge is making sure financial innovation does not starve banks to death.

Bank treasurers hold keys to an investor mystery

15 May 2024

Executives who manage lenders’ exposure to interest-rate swings are more important than ever. But it’s tough for shareholders to pick their way through the complex hedging programmes of $570 bln JPMorgan and its peers, adding volatility to their share prices.

Brookfield’s rose sits amid growing thorns

9 May 2024

The parent company’s $929 bln asset manager has a model rivals crave: a pure fee-earning machine with stable income. Yet it sits amid a web of listed entities and its fee structure is getting complex. As deals come to the fore, its unusual model will weigh on valuation yet again.

HSBC’s big pair of shoes will be hard to fill

9 May 2024

The surprise departure of boss Noel Quinn, who dramatically reshaped the firm, puts the globe-straddling bank on the spot: appoint a steward of its strategy from within, or a new thinker from outside? In this Viewsroom podcast, Breakingviews columnists debate the $170 bln choice.

BBVA’s hostile $13 bln M&A bet faces long odds

9 May 2024

Chair Carlos Torres Vila is going ahead with his all-share offer for Sabadell despite a rebuff from the smaller Spanish bank’s board. Yet Madrid firmly opposes a deal, and BBVA’s sliding stock is denting the bid’s appeal. Success seems unlikely.

Financial elite go long American exceptionalism

8 May 2024

The US economy’s strength buoyed spirits at Michael Milken’s annual jamboree, where everyone from Elon Musk to Ken Griffin held court. More surprising is optimism that the streak has longer to run. It’s a bold consensus with inflation, deficit and property-loan threats lingering.

Spanish minnow upsets EU bank bosses’ M&A dreams

7 May 2024

Sabadell rejected BBVA’s 12 bln euro proposal, citing its strong standalone prospects. If the boards of other small lenders feel the same, it’s hard to see more deals. That’s a shame, particularly since UBS’s rescue of Credit Suisse is demonstrating the value of consolidation.

‘Be like Buffett’ mantra takes on new meaning

6 May 2024

Financial masterminds like KKR’s Henry Kravis aped Berkshire’s model by soaking up permanent capital. Yet their stocks have more recently bested the Omaha Sage, burnishing reputations that win plum deals. As Berkshire’s guard changes, New York firms may now overshadow the master.

HSBC’s ideal new boss probably doesn’t exist

6 May 2024

CEO Noel Quinn’s replacement should be familiar with the $167 bln group, have experience of Western and Asian markets, understand wholesale banking, and be available. None of the potential candidates score full marks. Chair Mark Tucker may have to compromise to fill the vacancy.

College Inc gets Stakeholder 101 crash course

3 May 2024

From Columbia to UCLA, universities are grappling with violent protests over Israel and Gaza amid final exams and graduations. As ever, a lot of money is at risk. There’s a corporate blueprint for diffusing activists, but campuses cater to an even wider array of constituents.