Financial Services

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.

UK watchdog name-and-shame plan is worth the risk

3 May 2024

City leaders hate a Financial Conduct Authority proposal to reveal the identity of firms it probes. In theory, it could taint a company that later gets cleared. But the FCA’s cautious track record offers comfort, and it needs tools to cut a 41-month average investigation period.

M&A-shy EU bank investors are own worst enemy

2 May 2024

BBVA’s shares fell 8% over three days after it pitched an all-share acquisition of $10 bln Spanish rival Sabadell. But the returns look good, and the combined group’s capital ratio will remain high. If investors sink this deal, other CEOs in the fragmented sector may think twice.

EU bank holdouts are playing with fire in Russia

1 May 2024

Two years after the invasion of Ukraine, lenders Raiffeisen and UniCredit still have sizable businesses based in Moscow. Fearing lack of scrutiny in a sanctions-hit nation, the ECB is ratcheting up pressure to leave. A costly exit looks suddenly preferable to penalties.

Overdue $80 bln Spain bank merger has new hurdles

30 Apr 2024

BBVA broached an all-share deal with $10 bln Sabadell. The smaller lender’s valuation has improved since the same merger was discussed in 2020, which could make it easier for the board to agree a sale. Yet it also makes the sums harder for the buyer, whose investors are spooked.

CEO departure puts HSBC at risk of strategy drift

30 Apr 2024

Noel Quinn is retiring from the $164 bln bank after less than five years in charge. If Chair Mark Tucker picks an internal replacement the new broom risks looking like a second choice. Appointing an outsider could leave HSBC without clear medium-term targets for a year or longer.

CVC’s Darwinian pay policy puts rivals on the spot

26 Apr 2024

The buyout shop, which manages $200 bln, allocates 40% of fund profits to staff on a deal-by-deal basis, rather than pooling the spoils. Rivals say it hurts teamwork, but CVC’s returns suggest it works. If the newly public firm keeps out-raising peers, others may follow suit.

European banks have little to lose from rate cuts

25 Apr 2024

Tighter monetary policy boosted revenue at BNP Paribas, Deutsche and Barclays, who now face ECB and BoE loosening. Markets expect some 50 basis points of rate cuts, but that shouldn’t hurt bank income much. Deposits may get cheaper, while old loans keep rolling onto higher rates.

EU Fannie Mae idea is bad answer to good question

25 Apr 2024

A report led by former French central banker Christian Noyer advocates more securitisation to help fund $1 trln of annual green and digital investments. He’s right that bank balance sheets need unclogging. But subsidising the slicing and dicing of mortgages isn’t worth the risk.

New Hong Kong bourse CEO needs everyone onside

24 Apr 2024

Anaemic trading activity has halved the market operator’s share price, and first-quarter earnings show it can no longer count on investment income to cushion the blow. There are early signs Bonnie Chan may get support from Beijing to turn things around. Hong Kong can do more too.

World economy’s star athlete may run out of puff

23 Apr 2024

The IMF crowned the United States as the champion of global growth at last week's summit. A predicted rise in GDP of 2.7% this year is welcome as Europe and China struggle. But high debt and hard-to-repeat gains in productivity and the workforce will limit American staying power.

China trading-data restrictions are self-defeating

23 Apr 2024

The Shanghai and Shenzhen bourses will cease real-time updates of when overseas investors buy and sell shares. It looks like a ploy to shore up market sentiment. Reversing the decade-long practice, though, will decrease market transparency and undermine shareholder confidence.

Blackstone’s cash pile will buy only so much time

18 Apr 2024

The investment giant is reaching into its $200 bln war chest, but selling less. Higher-for-longer rates also threaten to slow down deals. A protracted mismatch would sharpen the divide between fund backers focused on profit and shareholders benefiting from capital deployment.

Wells Fargo has worn its dunce cap long enough

18 Apr 2024

In 2018, the US bank was banned from growing beyond $2 trln in assets as punishment for its flagrant customer abuses. Even if warranted, the Fed’s decision has led to market distortions. It’s time to scrap the limit, explain why it remains, or – if the rot persists – get tougher.

Gulf bank’s M&A hunt risks shareholder injury

15 Apr 2024

First Abu Dhabi, worth $40 bln, may be eyeing Turkish lenders following a short-lived pursuit of Standard Chartered. An overseas deal would help to diversify away from corporate and investment banking, but the cost savings look slim. Better to focus on growing at home.

MUFG and Indian credit scratch each other’s backs

15 Apr 2024

Taking a $2 bln stake in an Indian shadow lender backed by HDFC would be punchy at five times book value. Still, the South Asian country's non-banks are growing super fast. Japan's financial institutions aren’t waiting around for a payday at home from rising borrowing costs.

Société Générale CEO is pruning a decaying tree

11 Apr 2024

Slawomir Krupa agreed to sell an equipment-financing unit to local French rival BPCE for 1.1 bln euros. It’s a good price, and Krupa is right to clear out peripheral assets that languished under his predecessor. The problem is that the bank’s core isn’t alluring either.

Swiss too-big-to-fail rules are too timid to work

10 Apr 2024

Following the Credit Suisse disaster, Finance Minister Karin Keller-Sutter will give the country’s bank regulator more teeth and raise capital requirements for $100 bln UBS. It all helps. However, there’s no sign authorities will be any more willing to wind down a big bank.

Jamie Dimon sends missive from political Neverland

8 Apr 2024

The JPMorgan boss’s annual letter is a manifesto for the middle. From climate to regulation, diversity to deficits, he argues for keeping the US on top and markets working - but no more. It’s a vision a shareholder should love. But this fairytale centrism is not on the ballot.

Central banks’ noise helps dollar – and Joe Biden

28 Mar 2024

In February, traders’ hopes of rate cuts by the Federal Reserve sent the currency lower. But it has risen 1.8% in March, partly due to policymakers’ mixed messages. Until the fog clears, the greenback will rule forex markets. That curbs US inflation and may benefit the president.