Loans

Greek bad-loan rescue relies on government padding

21 Nov 2018

Greece’s central bank is working on a deal to securitise up to 42 billion euros of lenders’ bad debts. The plan uses tax credits from the over-indebted sovereign to help banks shift loans without too much pain. That will require a loose interpretation of EU state-aid rules.

Mozambique removes only part of tuna bond whiff

16 Nov 2018

The war-scarred African nation wants to restructure its defaulted obligation by linking repayments to future gas sales, giving bondholders extra security. But developing $50 bln of projects in such an exotic locale is unlikely to avoid snags. Delays could mess up creditors’ sums.

UK universities graduate to bailout candidates

1 Nov 2018

Tertiary education colleges across the UK are issuing more and more debt. The lack of an insolvency framework means any default would be messy, but lenders reckon the government would probably prevent a default. With demand for degrees waning, the bet may soon be tested.

Spanish bank tax hit not as scary as it looks

19 Oct 2018

Shares in Spanish lenders dropped sharply after a court ruled banks may have to refund mortgage taxes. That could mean a collective hit to earnings of up to 1.5 bln euros, based on the last four years of new loans. With lending rates set to rise, that’s painful but manageable.

Credit Suisse LBO defence is a hostage to fortune

3 Oct 2018

The Swiss bank’s asset management arm lauded the attractions of the leveraged loan market in a letter to clients last month, according to the FT. The pitch will do little to reassure those who are alarmed by the erosion of lenders’ rights and could backfire when the market sours.

India’s private lenders face a fiercer watchdog

1 Oct 2018

The RBI has put Bandhan in the sin bin for flouting ownership rules, sending its shares down 20 pct or some $2 bln. A central bank clampdown on these overvalued lenders, and their backers, provides welcome clarity. But the timing adds to turmoil in the country’s financial sector.

India’s financial turmoil augurs a reckoning

25 Sep 2018

Infrastructure lender IL&FS has helped trigger market mayhem, prompting regulators to step in to try to calm investors. The boss of India’s largest bank says this isn’t a “Lehman moment”. Maybe, but the amount of bad debt and short-term funding are worrisome.

UK $2 bln fintech star risks public-market curse

19 Sep 2018

Funding Circle’s IPO may value it at a lofty 15 times 2017 revenue. That’s justified if it keeps growing at a breakneck rate, and its untested models can weather a downturn. The risk is that a high valuation and investors’ rosy expectations spur the group to take too much risk.

China and Africa struggle to kick debt habit

3 Sep 2018

President Xi Jinping pledged another $60 bln to the continent while warning against the kind of binges that have led countries to default. Yet Africa shows no sign of restraint, and China’s lending remains opaque. Accusations of debt-trap diplomacy are likely to linger.

UK peer-to-peer IPO needs to shrug off dicey label

3 Sep 2018

Funding Circle’s valuation of up to $2.1 bln seems steep compared with U.S. marketplace lenders. The UK group is growing faster and, unusually for the sector, has avoided scandals. A better question is how regulation and rising competition affect its ability to turn a profit.

UK sub-prime lenders shrug off political cloud

30 Aug 2018

Amigo and Non-Standard Finance have found a smart formula: get risky borrowers’ friends and family to guarantee loans. That means cheaper rates than payday lenders, such as the struggling Wonga, and happier regulators. Yet a growing backlash could still hit their rich valuations.

China’s peer lender pain will hurt the little guy

26 Jul 2018

Scores of peer-to-peer lenders have imploded since last month thanks in part to a regulatory clampdown. Consolidation is inevitable, and helpful for big players like Lufax. But the $200 bln industry’s travails will make it harder for struggling small companies to find credit.

Caixabank wisely exits Spain property party early

29 Jun 2018

The lender has sold real estate assets worth 12.8 bln euros to Lone Star, at a better valuation than deals by Santander and BBVA. With prices recovering, Caixa could have got an even better outcome by waiting. Given the mess the sector has made, moving now makes more sense.

Dinner-table loan IPO is best bet in dicey sector

29 Jun 2018

Listing a 1.3 billion pound consumer credit group may look risky at this stage in the economic cycle. But Amigo has expanded quickly with family-guaranteed loans that are much cheaper than regular payday lenders. That helps justify its premium valuation.

Italian bad loan sale defies political risks

20 Jun 2018

Banco BPM sold 5 billion euros of dud loans for 34 percent of face value, amongst the highest prices to date. Rosy valuations and the ECB’s more lenient stance on disposals are a boon for lenders. But buyers risk downplaying the threat posed by Italy’s radical government.

Bank of Ireland reset channels Celtic Tiger ghost

13 Jun 2018

The Irish lender plans to increase its loan book by a fifth and beat a 10 percent return on equity by 2021. A booming domestic economy helps, but the challenge will be avoiding past mistakes of chasing growth at the expense of asset quality. Small wonder investors are sceptical.

Switzerland’s safe money vote is flawed but useful

6 Jun 2018

Giving the central bank a monopoly over electronic cash will not end financial crises or taxpayer bailouts, as campaigners claim. It also muddles monetary policy. However, the upcoming referendum has forced a public debate about the purpose of commercial banks. That’s overdue.

Steinhoff payout may test South Africa reform zeal

27 Apr 2018

Hedge funds piled into 1.6 bln euros of the failed retailer’s bonds betting that its healthy South African unit will honour them. The fallout from Steinhoff’s collapse may make a payout politically tricky, and challenge new President Cyril Ramaphosa’s market-friendly credentials.

Barclays’ new vigour tempers calls for shake-up

26 Apr 2018

The UK bank earned an 11 pct return on equity in the first quarter, excluding 2 bln pounds of fines and charges. A revived investment bank vindicates CEO Jes Staley’s faith in the business. His next challenge is to re-stock capital buffers to clear the way for higher dividends.

ECB has big enough stick to repel bad-loan revolt

24 Apr 2018

A political backlash may force the European Central Bank to ditch plans for stricter provisioning of 760 bln euros of dud loans. The saga has weakened chief supervisor Daniele Nouy, and may delay reform of Europe’s banking union. But the ECB has other tools to cut the loan pile.