Investment Banking

Banks’ health squeezed by rampant compliance costs

29 Sep 2017

They now spend an average of around 4 percent of revenue to comply with regulators’ requirements, according to a poll by Duff & Phelps. That is expected to increase to as much as 10 percent by 2022. Red tape will keep weighing on lenders’ margins as well as employees’ sanity.

Russia’s state banks profit from financial turmoil

22 Sep 2017

The rescue of two private lenders has raised fears about the country’s banking sector. Savers have flocked to state-owned Sberbank and VTB, which have seen deposits swell by 1.2 pct and 18 pct, respectively this year. The tumult could leave the pair with better lending margins.

Tencent heats up fintech fight with CICC stake

21 Sep 2017

The Chinese tech giant is taking a 5 pct stake in the investment bank. Tencent has already cut deeply into Alibaba's share of electronic payments. This will help Tencent grow in wealth management – and chip away at its archrival’s dominance of online money-market funds.

HBOS audit probe shows limits of bank accounting

19 Sep 2017

KPMG was right to accept the UK bank as a “going concern” shortly before its near-collapse in 2008, a watchdog has concluded. Pre-crisis audits deserve scrutiny, but accountants cannot replace regulators. Besides, publicly flagging HBOS’ frailty would have accelerated its demise.

Deutsche Bank investors are stuck with John Cryan

19 Sep 2017

Some shareholders are understandably frustrated at the lack of recovery at the German lender. But replacing the chief executive wouldn’t boost low returns on equity, and might hinder restructuring. Cryan needs an unlikely investment banking recovery to hit his targets.

Jes Staley’s share price misery is undeserved

18 Sep 2017

Though the Barclays CEO has delivered on his targets the bank’s shares are down 16 pct this year, making it the UK’s worst-performing major lender. Self-inflicted regulatory and litigation worries haven’t helped. But concerns about headwinds in the U.S. and Britain are overdone.

Review: Dalio writes ultimate baby boomer’s guide

15 Sep 2017

The Bridgewater founder is true to his generation. He wants you to decide what you want and help you get it. To that end he offers his life and work principles – all 525 of them. It's a bid for immortality, like the algorithm he's designing to run his $160 bln hedge fund.

Goldman’s biggest asset in UK banking is lateness

11 Sep 2017

The investment bank will start taking British deposits under the Marcus brand next summer. A startup with Wall Street infrastructure is an appealing mix. Sure, it’s a sign Goldman’s main business is looking limp – but baggage-laden UK lenders should not be too dismissive.

Italy’s latest bank bailout is gentle on taxpayers

11 Sep 2017

The country’s deposit fund is forking out 640 mln euros to clean up three small banks before they are sold to Credit Agricole. Prepping a target for a foreign rival looks generous and the fund’s returns are uncertain. At least taxpayers will be spared a hit this time.

Swedish banks unfairly left out in the cold

7 Sep 2017

The likes of SEB, Handelsbanken and Nordea are stable, well capitalised, and dull. Investors have spurned them in favour of eurozone banks. Yet the Swedes’ generous dividends are attractive – and if Nordea’s move to Finland leads to lighter regulation, they may get more so.

Deutsche Bank CEO tells truth to robotic employees

7 Sep 2017

John Cryan wants the German bank to embrace a “revolutionary spirit” as people lose their jobs to artificial-intelligence technology. His comments reflect the competitive reality – but Deutsche’s whopping 86 pct cost-to-revenue ratio makes its staff among the most vulnerable.

Banks would be wise to tread carefully with HNA

7 Sep 2017

Goldman Sachs has halted pre-IPO work for a unit of the acquisitive Chinese group, Reuters says. That sounds prudent. China’s private M&A machines are out of favour in Beijing and under growing scrutiny abroad. A reshuffle meant to allay concerns about ownership did more damage.

Accounting revamp does European banks a favour

25 Aug 2017

Changes that come into force in 2018 will force lenders to provision for bad loans in a new way. Banks say earnings will be more volatile as a result. Perhaps at the outset. But the switch will also make them safer and lower their cost of capital over the economic cycle.

Higher rates can end European banks’ lost decade

9 Aug 2017

Ten years since the global financial crisis started, the continent’s lenders have raised return on equity from appalling to merely pedestrian. With capital hikes out of the way, valuations have recovered from last year’s nadir. Rising interest rates would give them another boost.

ABN Amro can profit from blissful domesticity

9 Aug 2017

A thriving Dutch economy and divestments helped the state-owned lender boost first-half net income by 82 pct year-on-year. CEO Kees van Dijkhuizen wants to grow small business lending and ABN’s international operations. Cost-cutting would provide a surer route to earnings growth.

UniCredit self-help gets a recovery kicker

3 Aug 2017

Six months after launching a 13 billion euro rights issue, the Italian bank is beating its targets. CEO Jean Pierre Mustier has cut costs and sold assets, but a recovering European economy also means fewer bad debts. Following winds help it weather tougher accounting standards.

Trading pains handicap fitter European banks

2 Aug 2017

Société Générale and Commerzbank revenues fell in the second quarter. Difficult market conditions are masking the progress that European banks are making towards improved financial health. The picture will become clearer when interest rates rise but that’s out of lenders’ hands.

This may be as good as it gets for StanChart

2 Aug 2017

Despite benign economies and fewer bad debts, the emerging market lender’s first-half return on equity scraped just over 5 pct. Chief Executive Bill Winters is investing in growth, but higher returns look way off and regulatory clouds stand in the way of an early dividend.

Intesa can do more than pick over peers’ carcasses

1 Aug 2017

Profit leapt in the first half after the Italian bank was paid to save two lenders. Investors have yet to give CEO Carlo Messina enough kudos for the deal. He can also count on economic recovery, as well as growth in asset management and insurance, to boost Intesa’s valuation.

HSBC’s new chairman inherits a bank on the up

31 Jul 2017

First-half results from the global lender show robust revenue growth, cost discipline, and healthy capital. Higher interest rates should help lift return on equity above 10 pct. Though incoming Chairman Mark Tucker will doubtless make changes, a radical shakeup looks unnecessary.