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from Breakingviews:

ICBC takes slow-burn approach to global expansion

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By John Foley

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

ICBC’s purchase of Standard Bank’s UK trading division has moved at a glacial pace, and gives rivals little to fear. That’s the best sign that China’s largest lender knows what it’s doing.

To describe the deal as “cautious” would be an understatement. ICBC’s agreement to buy 60 percent of the South African group’s London subsidiary for around $765 million has been over a year in the making. The Chinese group also gets the right to buy a further 20 percent between two and seven years after the deal closes. Six months after that, Standard Bank has five years to sell it the remainder. In extremis, it could be 2027 before ICBC takes full ownership of a business which currently has a bit more than a hundred client-facing staff.

The logic of the deal is equally tentative. ICBC can mobilise its offshore yuan deposit funding, and the proceeds of a 2 billion yuan ($330 million) bond issue in London, to facilitate trading in yuan,  which is now the world’s second most used for trade. But the bulk of ICBC’s massive liquidity will remain locked up behind capital controls, out of reach of Western clients. Even when China’s own commodity markets open up, for example through the launch of Shanghai’s new free trade zone, it’s hard to see ICBC having much to offer that global rivals like HSBC can’t.

from Breakingviews:

Predictions 2014: Reversals and Revivals

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By Breakingviews columnists

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

Breakingviews’ annual compendium of financial foresight sets the agenda for the next 12 months. From Wall Street to the Great Wall, who has most potential to surprise, where are markets heading, and which are the companies to watch? Plus, we predict the winner of soccer’s World Cup.

from Breakingviews:

China is moving closer to its “Dubai moment”

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By Peter Thal Larsen

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

China’s reform drive is getting closer to its “Dubai moment”. The emirate’s 2009 refusal to bail out its flagship holding company shocked lenders who had assumed all debt carried an implicit state guarantee. As China introduces market forces to its financial system, it will also have to draw a clearer line between public and private lending.

from Breakingviews:

Banks’ taper rehearsal gives emerging markets hope

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By Andy Mukherjee

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

The banking industry’s dress rehearsal for tapering by the Federal Reserve has given emerging markets hope.

from Breakingviews:

Benefits of being “G-SIFI” seem to outweigh costs

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By Peter Thal Larsen

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

The benefits of being labeled “too big to fail” may just outweigh the costs. Since regulators first published their list of global systemically important financial institutions, or G-SIFIs, the banks concerned have boosted capital and tamped down balance sheets. But smaller lenders, particularly in Europe, have done the same without joining the club. And shareholders seem not to notice much of a difference.

from Breakingviews:

“Secular stagnation” lament revives wealth paradox

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By Andy Mukherjee

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

Larry Summers reckons rich countries are suffering from long-term stagnation. If accurate, the former U.S. treasury secretary’s view is chilling. It has also revived an old, unresolved puzzle: Why doesn’t the world’s capital willingly go where it’s most needed?

from Breakingviews:

Iran deal offers the world a ray of hope

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By Una Galani

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

Iran’s nuclear deal offers the world a ray of hope. It won’t be easy to turn the agreement to curb Tehran’s nuclear activities from a six-month accord into a lasting solution that assures the world the country’s nuclear programme is peaceful. But the resulting diplomatic goodwill should make it harder to go backwards.

from Breakingviews:

Britain can gain from China’s empire builders

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By John Foley

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

Britain once had nothing to offer China but silver and opium. Now it has holidays, banks and building sites. George Osborne, the UK Chancellor of the Exchequer, and London’s mayor Boris Johnson are using visits to Beijing to say just how welcoming the UK is likely to be. It’s a triumph of openness, and provided the UK chooses its partners carefully and the Chinese are tactful, both sides will benefit.

from Breakingviews:

Review: The puzzle of Fred Goodwin’s rise and fall

By Peter Thal Larsen

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

Early in 2009, the British government was preparing to bail out Royal Bank of Scotland for the second time in four months. An emergency injection of capital in October 2008 had failed to shore up confidence. Now taxpayers were being asked to cover potential losses on almost 300 billion pounds of toxic RBS assets. Yet as the details of the rescue were finalised, British public opinion was in uproar over a much, much smaller sum: the 700,000 pound a year pension being paid to Fred Goodwin, the bank’s former chief executive.

from Breakingviews:

Emerging markets’ foreign debt is no time bomb

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By Andy Mukherjee

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

Emerging markets are sitting on a $5.8 trillion pile of debt to foreign lenders. Yet they are far less vulnerable to sudden capital flight than they were two decades ago.

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