Loans

Breakdown: Buy Now, Pay Later’s bill is coming due

14 Oct 2021

The instalment-lending tool is reshaping how consumers buy online and could reach $300 bln by 2024. Banks are scrambling to catch up with upstarts like Klarna and Affirm, while regulators worry about unsustainable debts. Breakingviews explains why a reckoning is on its way.

Capital Calls: Cellebrite good times

8 Apr 2021

Concise views on global finance in the Covid-19 era: The Israeli cracker of mobile-phone encryption is going public via a SPAC at a $2.4 billion valuation.

Buy-now-pay-later exposes regulation blind spot

8 Dec 2020

Sweden’s Klarna and Australia’s Afterpay both allow punters to buy goods and defer payment. Opinion is divided over how regulators should treat any loss on the enabling financing. Balancing innovation and stability is hard, but the rules right now aren’t clear enough.

India’s banks peddle bad-loan black holes

14 Jul 2020

ICICI wants to raise some $2 bln, joining peers seeking capital as customers take advantage of interest holidays on a huge one-third of borrowings. Defaults system-wide could double to a whopping 20%, or worse. Amid so much disarray, the strong will inevitably get stronger.

Buy now, pay later faces Juul-style backlash

24 Dec 2019

Companies offering the credit innovation say it can drive online sales and help retailers deal with refunds. One player, Klarna, is valued at $5.5 bln. But making it a lot easier to shop for free could prompt a reaction like that which befell the vaping heavyweight.

UK’s fallen fintech star highlights sector perils

2 Jul 2019

Funding Circle shares dropped 20% after it cut growth forecasts in half. The $600 mln peer-to-peer lender’s post-IPO decline underscores the trade-off between managing risk and meeting investors’ growth expectations. Regulators should be on the lookout for less prudent rivals.

UK bank watchdog throws wrench into hostile M&A

5 Jun 2019

Lender Non-Standard Finance scrapped its $1.4 bln bid for Provident Financial after the UK regulator took a harsher-than-expected view on capital. It didn’t help that many shareholders hated the deal. The strict approach means bankers will shy away from similar raids in future.

Sticks will help Africa debt more than carrots

5 Jun 2019

One idea to curb binge borrowing is to offer UK legal protection to creditors only if financing terms are publicly disclosed. London may lose business but those who go elsewhere will look shifty and end up paying higher rates. The proposal is better than more debt forgiveness.

Parent’s bankruptcy loosens its grip on Casino

24 May 2019

The French grocery giant’s debt-riddled controlling shareholder, Rallye, sought protection from its creditors. For now, Casino will keep sacrificing growth to pay large dividends to owner Jean-Charles Naouri. But a debt restructuring might eventually free the 3.5 bln euro group.

Metro Bank capital hike depends on luring new fans

13 May 2019

The troubled UK upstart is finalising a 350 mln pound equity issue. The prospect of buying in at 50% of book value should entice some investors. But to earn a decent return, Metro will have to persuade regulators it can safely boost lending while reassuring jittery depositors.

UK subprime M&A scrap risks bloody outcome

10 May 2019

Non-Standard Finance’s $1.4 bln takeover of peer Provident is meeting resistance from the target’s shareholders, amid competition and capital concerns. The acquirer could face a lengthy delay, or get stuck with pesky holdouts. Finance is a tricky arena for hostile dealmaking.

HSBC’s rich valuation reflects spare buyback ammo

3 May 2019

The emerging market lender’s pre-tax profit jumped a tenth in the first quarter, buoyed by a lending boom in Asia. Investors are assuming the bank will hit its 11 percent return-on-equity target in 2020. Surplus capital of $2.6 bln gives boss John Flint extra room for manoeuvre.

UK subprime M&A party closed to gatecrashers

12 Apr 2019

Provident Financial shares are trading more than 10 pct above smaller rival Non-Standard Finance’s 1.2 bln pound offer. One theory is that investors are hoping for a higher bid. But given over 50 pct have already accepted the offer, a white knight has probably left it too late.

Regulator makes Provy deal subprime in all senses

8 Mar 2019

High-interest lender Non-Standard Finance has revealed its bid for Provident Financial may fall foul of the Financial Conduct Authority. That hits the Provy’s defence strategy – but also NSF’s own post-deal outlook. Investors are entitled to wonder what the point of it now is.

Mario Draghi is boxed into being generous to banks

5 Mar 2019

The European Central Bank boss is expected to announce more cheap loans in the coming months. New regulations may otherwise cause a credit crunch just as the euro zone economy is slowing. Monetary policymakers will have little choice but to paper over a two-tier banking system.

UK subprime lender kicks down sickly rival’s door

22 Feb 2019

High-interest lender Non-Standard Finance made a hostile offer for bigger peer Provident Financial. There’s no premium, few details, and the main pitch seems to be management change. Brexit, and the $1.7 bln target’s three profit warnings, give the predatory move a good chance.

Navient lowball bid reflects lowball prospects

19 Feb 2019

The student-loan servicer spurned a $3.2 bln offer from its largest shareholder. Canyon Capital’s bid does reek of opportunism. Yet its target faces multiple suits claiming it cheated borrowers, and the risk of student debt is rising. The 7 pct premium maybe isn’t so derisory.

Germany may outdo Italy as a bank bail-in wrecker

9 Jan 2019

NordLB needs at least 1.2 billion euros to help provision dud loans after merger talks with rivals failed. Along with smaller Italian peer Carige, the regional German lender is a prime candidate for resolution. Politics means a mix of private equity and public funds is a likelier solution.

Italy’s Carige has tricky path to recovery

4 Jan 2019

The sickly lender won’t find a buyer unless it carries out a serious spring clean. That means selling at least 1.8 bln euros of dud loans, which looks hard without some government aid. The hit to public finances would be small, but a rescue could still stoke political tensions.

Greece tries “hair of the dog” bank recap plan

28 Nov 2018

Athens-based Eurobank, saddled with bad real estate debt, is buying property company Grivalia for 760 million euros. It can then use the latter’s equity to spin off 7 billion euros in dud loans. It’s a novel way to recapitalise a bank, but probably hard to copy.