Loans

India’s microfinance trouble goes mainstream

28 Oct 2024

IndusInd Bank shares dropped 19%, wiping out $2 bln or over half the value of its loans to the poor. Investors are pricing in an asset quality meltdown far worse than the lender’s rising delinquencies imply, and a possible throwback to the 2010 crisis that blew up the industry.

China’s banks have a nasty case of indigestion

11 Sep 2024

For decades, Beijing leaned on lenders to fuel growth in the $17 trln economy. But it will take years for them to digest problem IOUs from firms and local governments. Officials will have to find new ways to boost GDP, or the financial dyspepsia could turn into something worse.

China’s mounting bad debts have fewer places to go

7 Aug 2024

StanChart-backed Bohai Bank is selling $4 bln-worth of non-performing assets. It underscores the pressure lenders are under as property-linked loans sour. Yet distressed-asset managers like Cinda are feeling the strain too. Disposing banks' $470 bln bad debt pile will get harder.

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.

Sotheby’s next hot auction: a Picasso-backed bond

11 Apr 2024

The auctioneer owned by Patrick Drahi is selling securities backed by collectors’ hoards. With only $34 bln of art-based lending, there’s scope to reach more borrowers. But there are good reasons why art, which is hard to verify and value, has resisted slice-and-dice financing.

Big banks turn inflationary lemons into lemonade

11 Apr 2024

Stubbornly high consumer prices may delay US monetary easing, a boost to lenders like JPMorgan or Citi that thrive amid high rates. Further relief could come from the dilution of tough new capital rules. For smaller banks, exposed to stressed borrowers, life tastes more sour.

Ukraine loan is matter of politics and accounting

25 Mar 2024

Lending the country $300 bln backed by its claim for war damages against Russia has several benefits compared to rival ideas for unlocking support. Kyiv’s allies would still need to find the cash, though. Here is how they could navigate the political and financial obstacles.

IMF’s Egypt bailout chooses hope over experience

11 Mar 2024

Cairo has received an $8 bln IMF loan after a $35 bln cash injection from the United Arab Emirates. If President Sisi does not justify the Fund’s optimism about reforms, a painful restructuring of the $165 bln external debt lies ahead.

Klarna IPO now makes less sense than one later

28 Feb 2024

Decent growth and lower losses mean the Swedish buy now, pay later group can justify a $20 bln valuation. Given that’s three times the level of its last cash injection, there’s an argument for a speedy listing. Still, Klarna’s messy governance suggests a 2025 IPO is more logical.

US real estate is a micro-drama set to turn macro

15 Feb 2024

So far, loans on isolated buildings by individual banks and funds have gone bad. As mortgages worth $1.5 trln come due in the next two years, strains will also spread from offices to apartment blocks. A correction is inevitable, but its impact can still be contained.

Uncle Sam risks recession by a thousand cuts

22 Sep 2023

A government stoppage would shave a sliver from US economic expansion. Restarting student loan payments will have a similar effect. Add striking autoworkers, high oil prices and costly mortgages, and 0.8% growth forecast for the fourth quarter and 0.5% in early 2024 look shaky.

Auto strike may put Carvana’s turnaround on detour

7 Sep 2023

A walkout at Detroit’s Big Three automakers may freeze new-car supply, pushing up old vehicles’ prices. Yet that’s bad news for the used-car dealer, which books fatter profit when inventory is cheap. Supply snarls threaten a re-run of post-pandemic woes that tanked shares by 99%.

Ukraine banks’ robust health masks big challenges

11 May 2023

After previous central bank reforms and an influx of deposits, the Ukrainian financial sector remains strong. But bad loans are at 38% and the three largest banks are state-owned. To support Ukraine’s reconstruction they will need more balance sheet cleanups, and privatisations.

Why retail bankers are beating dealmakers

26 Jan 2023

JPMorgan, Citigroup and Goldman Sachs’ earnings revealed that the basic business of lending money is thriving, while investment banking is not. In this Viewsroom podcast, Breakingviews columnists debate what this says about the U.S. economy and what to expect from the Europeans.

Euro crisis shield is stuck in hedge fund mode

21 Dec 2022

The European Stability Mechanism, set up to help troubled euro countries, aspires to be the bloc’s debt manager. But member states’ distrust of perceived German control and stigma around its aid make this unlikely. Managing old bailout loans is the fund’s best hope.

New buy-now-pay-later fad runs old-school risks

8 Dec 2022

After Klarna and others saw their valuations slashed, venture investors are now pouring money into business-focused lenders like Wayflyer. It sounds like digital trade finance, which has a patchy past. There’s often a good reason that small borrowers can’t get money elsewhere.

Banks’ buyout-debt machine defies quick jumpstart

8 Dec 2022

SocGen, BNP and Deutsche are buying slices of their own European collateralised loan obligations, which turn private-equity loans into bonds. That has echoes of 2008-style excess, but it’s not too risky. Their bigger problem is that the $1 trln market may be inexorably slowing.

ECB’s bank loan-loss worries look overdone

7 Dec 2022

Chief supervisor Andrea Enria fears that BNP, ING and others are flying blind into a 2023 default storm. But rate hikes will give the 10 largest lenders a 120 bln euro profit buffer before their capital gets hit. The big banks can afford to keep going with dividends and buybacks.

ECB $2 trln bank-loan unwind is fraught with peril

25 Oct 2022

The European Central Bank may tweak a funding scheme to stop lenders minting money at its expense. Fiddling with the terms is legally dubious. Other options could undercut its fight against inflation. But the status quo, indirectly costing taxpayers billions, is unsustainable.

Capital Calls: Buffett’s Berkshire successor

4 Oct 2022

Concise views on global finance: The Omaha oracle owns $100 bln of stock in his conglomerate. His potential successor Greg Abel’s purchase of $68 mln of stock last week – after selling shares in a subsidiary for $870 mln in June – is too small a move toward Buffett’s standard.