Loans

UniCredit NPL glitch muddies Italian bank cleanup

31 Oct 2017

The ECB is reportedly examining whether the bank inflated the price of a $21 bln bad-loan sale, a move that could hurt its capital. It’s surprising as UniCredit’s valuations were less rosy than peers. Regulatory confusion gives lenders more reason to cling on to dud loans.

Lloyds capital gusher suffers regulatory blockage

25 Oct 2017

Robust third-quarter earnings should enable Britain’s largest retail bank to pay a hefty dividend. But increased capital requirements have raised doubts about how much it can distribute. That, along with the sluggish UK economy, puts a question mark over the lender’s valuation.

Portuguese banks face long exit from bad-debt woes

6 Oct 2017

The three biggest banks plan to jointly manage their bad debts rather than selling them off. They have little choice. With common equity Tier one capital ratios averaging 11 percent and earnings depressed, lenders can ill-afford further hits to capital.

Fintech deal suggests everything old is new again

5 Oct 2017

Navient is buying student-loan refinancer Earnest for less than half its 2015 valuation. Even then, it'll eat into the buyer’s earnings and buybacks. Worse, Navient faces a fresh lawsuit over dodgy practices. Modern finance is feeling a lot like the kind it's supposed to replace.

ECB bad-loan blitz to spur Italy insolvency reform

4 Oct 2017

The European Central Bank wants lenders to fully provision against new bad loans within seven years. That could be painful in Italy, where repossessing collateral can take even longer. The new rules give Rome a short window to finally get its bankruptcy law into shape.

UK banks are trapped in a pincer movement

25 Sep 2017

The Bank of England says lenders will face higher capital requirements – and all the more so if they are vulnerable to consumer loans souring. Meanwhile the opposition Labour party wants to cap credit card interest. Investors may have to give up hopes of ever-larger dividends.

Goldman’s biggest asset in UK banking is lateness

11 Sep 2017

The investment bank will start taking British deposits under the Marcus brand next summer. A startup with Wall Street infrastructure is an appealing mix. Sure, it’s a sign Goldman’s main business is looking limp – but baggage-laden UK lenders should not be too dismissive.

Italy’s latest bank bailout is gentle on taxpayers

11 Sep 2017

The country’s deposit fund is forking out 640 mln euros to clean up three small banks before they are sold to Credit Agricole. Prepping a target for a foreign rival looks generous and the fund’s returns are uncertain. At least taxpayers will be spared a hit this time.

China’s big banks dig deeper into housing market

31 Aug 2017

ICBC, Bank of China, CCB and AgBank are extending new credit, though not as quickly as the wider financial system. Their restraint is welcome, as are signs of improving bad loans. But continuing to lend heavily into the country’s property boom could be storing up fresh trouble.

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.

Provident Financial kneecaps cash-greedy investors

22 Aug 2017

The door-to-door lender slashed its profit forecast, ousted its CEO and is under investigation from the UK authorities. Worse still, the dividend yield just fell from 8 percent to zero. Yield-chasing funds had fair warning the company was living beyond its means.

Bondholders can play hardball with Portugal’s Novo

18 Aug 2017

Bailed-out lender Novo Banco wants creditors to take a haircut, to smooth a sale to Lone Star. But creditors have numbers to block the swap, and could recapitalise the bank themselves. Novo has a history of scrapping with bondholders. This time creditors may have the upper hand.

UK bank upstarts are already priced for downturn

17 Aug 2017

Shares in buy-to-let lenders, such as Aldermore, have fallen in the past three months due to fears about the housing market. Even if more loans sour, these newcomers can grow earnings by wresting market share from older high-street peers. The drop in their valuation is overdone.

Breakdown: Killing Libor is a long, messy business

14 Aug 2017

Obituaries for the discredited global benchmark are premature. Its successors will take years to become as ubiquitous as a rate that is still the basis for trillions of dollars of financial contracts. Breakingviews spells out the legal pitfalls – and the trading opportunities.

Sunac and Wanda charm market with trust loan magic

12 Jul 2017

Property giant Dalian Wanda has lent its credit profile to rival Sunac to help it buy $9.3 bln of Wanda's own properties. Investors are enthusiastic, but the deal relies on a class of shadow financing that is increasingly unpopular with regulators for good reason.

Lessons from Europe’s tricky trio of bank rescues

29 Jun 2017

Creditors saved Britain’s Co-operative Bank, Spain’s Popular was sold, and two Italian lenders received a bailout. Though circumstances differ, the common theme is that regulators remain wary of winding down troubled banks. New capital rules will eventually make the task easier.

China underscores new hard line on outbound M&A

22 Jun 2017

The banking regulator is probing loans made to serial acquirers Anbang, Fosun, HNA and Wanda, reports say. Following the detention of Anbang's chairman, the message is clear: bold foreign M&A is out of bounds. The puzzle is why the authorities let the splurge last for so long.

Chinese firms are running short on funding options

15 Jun 2017

A regulatory crackdown on the rapid surge of shadow banking is bearing fruit, central bank data shows. Yet corporate bond issuance has also plummeted, and regulators are slowing IPO approvals. The economy risks overdependence on bank lending once again.

Santander picks up Europe’s regulatory roadkill

7 Jun 2017

Europe’s resolution board wound Banco Popular down and sold it to the Spanish lender for one euro. It’s a neat solution that avoids taxpayer support or financial chaos. While Banco Popular may be a unique case, this will leave creditors and other weak banks feeling anxious.

Accounting change could punish Chinese lenders

7 Jun 2017

Banks everywhere must take loan provisions upfront from 2018 under new IFRS 9 rules. In Asia, China’s smaller banks have the most to lose. They will probably need to set capital aside against shadow-credit and mortgage portfolios. That could dent earnings and capital ratios.