Investment Banking

It isn’t easy being Barclays’ Jes Staley

12 May 2017

The UK bank chief is yet again in the spotlight after falling for an email spoof. After recent controversies involving whistleblowers and the blurring of work and outside interests, he is no doubt walking on eggshells. Breakingviews imagines a typical day.

Italian banks offer way to play Macron boost

11 May 2017

Both Credit Agricole and UniCredit beat first-quarter expectations and have more to come. Yet the French bank trades above tangible book value, while its Italian peer languishes. If the new president reforms both France and Europe, UniCredit’s shareholders could get more upside.

Morphing Macquarie powers ahead

5 May 2017

The Australian bank is a master of reinvention, relentlessly encouraging its financiers to move sideways into profitable new ventures. The result is record full-year earnings of $1.6 bln, a fat return on equity, and stock at 10-year highs – with a rich valuation that is justified.

French banks’ foreign strength cuts both ways

4 May 2017

Strong first-quarter growth in BNP Paribas and SocGen’s foreign markets offset weaker showings at home. Still, SocGen’s 963 mln euro Libyan settlement shows how overseas adventures can go awry. And if Sunday’s election delivers a surprise, French banks face redenomination risk.

Credit Suisse bonus vote exposes two problems

28 Apr 2017

Two-fifths of shareholders at the bank’s AGM rejected its short-term bonuses. Yet 91 pct approved the reappointment of Chairman Urs Rohner. Credit Suisse lacks two things a good company needs: a chair who holds the CEO to account, and investors who kick up a fuss if he doesn’t.

UBS valuation lead over Barclays looks too wide

28 Apr 2017

The Swiss bank trades at 1.3 times tangible book value, while its UK peer languishes at 0.7 times. First-quarter results, which saw UBS beat expectations and Barclays disappoint, support investors’ logic. But Barclays is on the mend, while wealth management is not trouble-free.

RBS return goal hinges on ambitious cost cuts

28 Apr 2017

The state-owned UK bank reported its first quarterly profit since 2015. To reach its target of a 12 pct return on tangible equity by 2020, however, it will need to push through further savings. Given many of the obvious efficiencies have been found, that seems a stretch.

Deutsche Bank shares are cheap for a reason

27 Apr 2017

The German lender's investment bank had weaker first-quarter revenue growth than peers. Deutsche has raised capital, cut costs and survived a torrid 2016. But the more the top line struggles, the tougher it will be to get its valuation above book value.

Lloyds hits peak Horta-Osorio

27 Apr 2017

The UK bank is outperforming on things investors care about: costs, net interest margins and capital generation. Its recovery under boss Antonio Horta-Osorio has been impressive. From here, his efforts start to matter less in relative terms than what happens to Britain’s economy.

Credit Suisse’s Thiam picks capital over returns

26 Apr 2017

The bank’s CEO has rightly opted to raise $4 bln in a rights issue, ditching a plan to list its Swiss unit. Strong first-quarter earnings mean he is doing so from the front foot. But an uncertain outlook poses questions over when Credit Suisse can make an economic profit.

StanChart’s springtime revival is premature

26 Apr 2017

A sharp drop in bad loan charges helped the emerging market bank double pre-tax profit in the first quarter. Revenue growth was less impressive, though. Shaky assets and intense competition mean the lender is still some way from hitting CEO Bill Winters' modest return target.

How tech pushed finance into a status crisis

21 Apr 2017

Top programmers are outdoing dealmakers in pay, rivaling them in political clout and even stealing their reputation for hard graft. Cue hand-wringing from banks worried about retaining the brightest and best. They shouldn't worry: post-status industries make for better employers.

Deutsche offers investors a too-big-to-fail test

21 Apr 2017

The German lender’s latest U.S. regulatory thwack comes as it asks creditors to swap bail-in bonds for SEC-registered ones with clearer terms. It implicitly tests Berlin’s model for resolving banks. It’s also a reminder of the benefits Deutsche gets from being a global bank.

Credit Suisse pay retreat puts chairman on spot

18 Apr 2017

The Swiss bank has bowed to investor pressure by proposing cuts to 2016 bonuses awarded last month and a cap on payouts for this year. New say-on-pay rules necessitated the climbdown. The episode shows an embarrassing lack of foresight by the board and Chairman Urs Rohner.

M&A code names can be a warning in themselves

13 Apr 2017

Bankers and companies chose "Star Wars" and "Game of Thrones" references, among others, as cryptic project titles to shield deal talks. Their choices reveal much about their own hubris. To Breakingviews' ears, some popular names seem particularly apt for certain transactions.

Cowen’s China play involves more than just money

29 Mar 2017

Peter Cohen’s banking boutique is selling a stake to energy group CEFC China and raising $275 mln. Cowen needs capital to keep growing and its partner’s modest securities business could use expertise. Unlike some recent China-U.S. finance deals, the logic here just might add up.

Chinese broker offers investors a fair IPO trade

27 Mar 2017

Guotai Junan Securities is selling Hong Kong stock at a 25 pct markdown versus its mainland shares. That should be enough to entice buyers to the $2.1 bln offer. Investors would purchase one of China's strongest brokers, and at a bigger discount than the wider sector.

Big brokerage IPO requires faith in Chinese reform

22 Mar 2017

Guotai Junan Securities is poised to raise $2 bln in Hong Kong. The sector is crowded, margins are thin, and regulators are fickle. But Guotai's scale and breadth position it well to benefit from more liberalisation and better enforcement.

HSBC’s new chairman ticks the right boxes

13 Mar 2017

The emerging markets bank has picked AIA boss Mark Tucker to succeed Douglas Flint. He brings deep understanding of Asia, good contacts with regulators, and finance sector knowledge. As the first external chair in HSBC’s 152-year history, he will need all those skills – and more.

Aramco fails to make a mountain out of Moelis

8 Feb 2017

The boutique's role advising the oil giant's mooted IPO added over $100 mln to its market value. That may seem like a big jump off one mandate. The opposite could be true though – investors may be underestimating the boost to Moelis's stature from its trophy deal.