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from Breakingviews:

Goldman’s new conflict rules raise bigger question

By Jeffrey Goldfarb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Another day, another conflict of interest situation for Goldman Sachs. New internal rules at the securities firm impose fresh limits on bankers investing in specific stocks, bonds and hedge funds. Goldman knows too well how easy it is to cross a line when treading at its edge. The new policy raises a bigger question, though: Why are Wall Street dealmakers allowed to own individual securities at all?

No financial institution gets more attention for its handling of delicate, potentially hazardous relationship conundrums than Goldman. Its British advisers, for example, received a notorious “spank from Hank” – Lloyd Blankfein’s predecessor at the helm, Hank Paulson – back in 2006 when they followed a pitch to defend BAA with the possibility of Goldman buying a big stake in the operator of London’s Heathrow airport.

More recently, it was a U.S. court that took umbrage at Goldman’s unbecoming presence on both sides of a deal. Delaware Judge Leo Strine in 2012 called it “furtive” and “troubling” that Goldman owned a multibillion-dollar stake – and one of its senior energy bankers a smaller one – in Kinder Morgan while advising the pipeline operator’s takeover target El Paso. The bank surrendered its fee on the transaction after El Paso shareholders sued.

from Breakingviews:

Sovereign doom loop haunts EU bank stress tests

By George Hay

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The euro zone’s nascent banking union was supposed to unpick the “sovereign doom loop” by which ropey banks endangered weak countries, and vice versa. Its first task was to be a rigorous test of how much capital each lender could count on in adverse scenarios. Yet the new single banking supervisor’s exercise could tighten, rather than loosen, the state/bank co-dependency.

from Breakingviews:

SoftBank and Shrek may lack on-screen chemistry

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

SoftBank’s acquisition strategy is nothing if not animated, but it’s not always easy to see a clear plot. The Japanese conglomerate’s next move could be a bid for DreamWorks Animation worth $3.4 billion, according to The Hollywood Reporter. SoftBank’s giant balance sheet could easily absorb the hit and miss earnings of film production. Yet with each big buy, it becomes less clear how the group’s parts fit together.

from Breakingviews:

Santander has a 6 bln euro capital opportunity

By Fiona Maharg-Bravo

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Santander looks light on capital. The euro zone’s largest bank doesn’t disclose its current Basel III “fully loaded” common equity Tier 1 capital ratio, and no wonder: it seeks 9 percent by year-end, way off the 11 percent average of European peers. Ana Botin, Santander’s new chair, can probably get away with inaction. But given her bank’s toppy valuation, she’d be better off moving now.

from Breakingviews:

BNP Paribas needs a chair to shake up its board

By Dominic Elliott

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

A new chairman at BNP Paribas should start by refreshing the board. Baudouin Prot is set to step down as the chairman of France’s biggest bank, with technocrat Jean Lemierre his expected successor. Lemierre is an acceptable, if not quite perfect, replacement. But whoever succeeds Prot, his or her most important task is to shake up BNP’s non-executive directors.

from Hugo Dixon:

Capital markets union needs deregulation

By Hugo Dixon

Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.

One of the biggest projects for the next European Commission, which takes office in November, will be to create a “capital markets union.” President-elect Jean-Claude Juncker last week gave Britain’s Jonathan Hill the task of creating such a union “with a view to maximising the benefits of capital markets and non-bank financial institutions for the real economy.”

from Breakingviews:

RBS/Lloyds moving plans leave key questions opaque

By George Hay

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Scotland’s largest banks have moved to head off a crisis. Royal Bank of Scotland and Lloyds Banking Group say they will shift their Edinburgh-domiciled operations to London, should Scots vote for independence on Sept. 18. That’s a step towards financial stability – but not if you’re a Scottish consumer.

from Breakingviews:

Botin’s swashbuckling hid a conservative streak

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Emilio Botin transformed Santander from regional Spanish lender into global giant. He was a merger mastermind who usually got the upper hand. With slicked-back hair and red tie, he flew in a private jet, conferring with presidents and prime ministers as easily as bankers and chief executives. Yet unlike many of his peers during European banking’s boom years, Botin also had a cautious streak. It is that, rather than his swashbuckling style, which allowed him to keep his grip on Santander until his death at the age of 79.

from Breakingviews:

Santander loses a leader and gains an opportunity

By George Hay and Fiona Maharg-Bravo

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Santander has lost its figurehead, but gained an opportunity. The death of Emilio Botin at the age of 79 means the euro zone’s biggest bank is no longer run by the euro zone’s most lauded banker. The share price fell 1.4 percent in response. But Santander now has a chance to take its corporate governance into the 21st century.

from Hugo Dixon:

Gas and bank security have similarities

Europe is currently conducting two stress tests. One is on its energy suppliers, to see how badly they would fare if Russian gas was disrupted. The other is on euro zone banks, to ensure they are strong enough to finance economic recovery.

It is hard to know which of the two is the more important. But it is clear that an effective regime for energy security requires many of the same elements as financial stability.

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