Investment Banking

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.

EU deposit freeze idea is counterproductive

31 Jul 2017

A proposal to stop customers’ withdrawing funds from a failing bank is under discussion. That may give regulators more time to work out a stricken lender. But extending the scheme to insured depositors would only make retail clients jumpier and bank failures more likely.

Barclays gets scant credit for new trimmer figure

28 Jul 2017

The bank is retreating from Africa, shrinking quickly to focus on its core business and has a new returns target of 10 percent. There’s no timeframe to hit the goal, which may explain why shares are trading well below book value. CEO Jes Staley can fix that by losing more fat.

Thiam has yet to move Swiss banking mountains

28 Jul 2017

The Credit Suisse boss has made the bank much more like its wealth management-heavy rival UBS. Yet his returns are less than half as good, and investors see it in second place. Lingering unwanted assets are one reason. The lender’s past U-turns in strategy may be another.

M&A shops become Wall Street’s new black boxes

27 Jul 2017

Lazard, Evercore and Moelis beat earnings estimates by wider margins than their bulge-bracket peers. Yet advice ought to be easier to track than trading. That suggests the problem lies with an under-resourced sell-side. Investors, though, appreciate the boutique business model.

Politics are a bar to faster AIB selldown

27 Jun 2017

Shares in the Irish bank rose 8 percent after a heavily oversubscribed IPO. The government - still the lender’s majority owner - may be tempted to rethink a self-imposed cap on how fast it can offload its remaining stake. But political wrangles make a speedy exit unlikely.

Italian bailout is setback for Europe bank regime

26 Jun 2017

Intesa Sanpaolo is taking over the good bits of two smaller failed lenders, leaving taxpayers to foot a bill of up to 17 billion euros. Protecting savers is politically expedient. But the rescue exposes a gaping hole in Europe’s new regime for dealing with troubled banks.

Brexit one year on: an alternative history

23 Jun 2017

It has been a year since Britain voted narrowly to remain in the EU, a (fake) bank CEO writes in a memo to staff. Few expected uncertainty would linger so long after the referendum. Austerity and populism point to challenges in the UK. Thankfully, the euro zone looks attractive.

Cox: Milan is dark horse in post-Brexit bank race

22 Jun 2017

The city that taught London about lending lags Paris and Frankfurt in pitching its appeal as a financial center. Fashionable lateness is a Lombard charm. So are fine universities, clever financiers, tax incentives, a strong work ethic – and easy access to beaches and mountains.

Europe’s next bank rescue may be Italian fudge

8 Jun 2017

Italy’s big banks may pump 1.2 bln euros into small lenders to help enable a government rescue. The banks see a bailout as the least bad option. Yet after the failure and resolution of Spain’s Banco Popular, it’s a backward step that punishes good banks for the sins of others.

Spanish bank rescue poses several big questions

8 Jun 2017

Seizing Banco Popular and selling it to Santander averted a panic without a bailout. But it’s not clear how regulators calculated the hole on the lender’s balance sheet, or why they previously deemed it solvent. Investors need answers to have faith in Europe’s resolution regime.

Macron has chance to make France a better investor

8 Jun 2017

President Emmanuel Macron wants to use some of the shares the state owns to finance an innovation fund. That’s tinkering at the margin. The Republic is too activist a shareholder in some cases, too passive in others. Better to fix clearer goals for a totally revamped portfolio.