Breakingviews

Review: Bending over backwards to lean in

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

Sheryl Sandberg’s “Lean In” isn’t a self-help guide, corporate charter or memoir. The Facebook chief operating officer claims it’s not a feminist manifesto, either. It’s more of an amalgamation of all these genres. It ranges from intensely personal and insightful to didactic and methodical. Quoted research into how women measure themselves in the workplace and at home underpins a central Sandberg proposition – that women need to be more ambitious and men more accommodating.

Orcel bonanza shows how far banks must go on pay

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

Andrea Orcel’s signing-on package shows the scale of the pay pickle facing banks. UBS stumped up $26 million to prise its investment-bank head from Bank of America Merrill Lynch last year, making a mockery of so-called retention packages designed to stop employees jumping ship. True, Orcel received no new cash or shares for joining his Swiss rival: the award simply replaces three years’ worth of pay he forfeited for leaving BAML. And the award can still be clawed back. But it shows how aggressive behaviour by just one bank can reinforce the industry’s pay problem.

VW’s mega-profit hides risky governance weak spot

By Olaf Storbeck

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

Volkswagen is defying gravity. Even though the European car market has been in terrible shape for two years, VW’s 25.5 billion euros of 2012 pre-tax profit was the highest ever for a listed German company. While half of that profit was a one-off, thanks to a revaluation of financial derivatives related to the Porsche takeover, the actual business is performing nicely. Operating profit increased by 2.1 percent to 11.5 billion euros. But the industrial strength comes with a serious weakness – in corporate governance.

Private equity at 4-and-20? Think twice

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

Private equity with a 4-and-20 fee structure doesn’t sound too inviting. It’s what a new vehicle will charge people with only $50,000 to invest to gain entry to Carlyle Group’s private equity funds, and it’s far more than what institutions pay. While the firm’s long-term internal rates of return on private equity, after fees, are nearly 20 percent, today’s reality holds less appeal. The arrangement could be risky for Carlyle, too.

U.S. stocks may soar higher – only to crash-land

By Martin Hutchinson

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

The S&P 500 Index of U.S. stocks is nearing a new record close to eclipse the peak of 1,565.15 set in October 2007. Simple interest-rate based valuations, such as the so-called Fed model, suggest the benchmark could more than double again – but on long-term assumptions, it would then crash-land.

Stock sales make IPO rebound more than a pipedream

By Dominic Elliott

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

Two big equity deals in 24 hours have made a rebound in Europe’s new-issues market look less of a pipedream. Tuesday’s placings in landlord British Land and wealth manager St. James’s Place suggest that those with equity to sell are ready to push the button.

Which banker’s services are worth $1 billion?

By Christopher Swann and Jeffrey Goldfarb
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Which banker’s services are worth $1 billion? Apparently, those of Andre Esteves are. When fellow Brazilian billionaire Eike Batista said he was seeking financial and strategic advice from the BTG Pactual boss for his oil empire, investors initially lifted the market value of the six listed and intertwined arms by $1.3 billion. The expectations may be too high.

UK should accept its counsel on bank reform

By Dominic Elliott

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

The UK government should heed its own counsel on fixing finance. A schism has opened up between Chancellor of the Exchequer George Osborne and the MP-led commission reviewing his banking reform bill. The MPs’ latest report shows how little of its advice is being taken on board.

China starts 2013 the way it can’t hope to go on

By John Foley

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

China began 2013 with the same old economic model. Growth for the first two months of the year was driven mainly by exports and real estate. The increase in construction appears to have been fuelled by credit. The current trajectory can continue only by pumping ever more leverage, and risk, into the system.

Fed flunks crucial part of bank stress tests

By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The Federal Reserve has flunked a crucial part of its bank stress tests. The watchdog is happy enough saying what might happen to big banks if the economy tanks like in 2008: they could lose up to $462 billion. But it’s shy about revealing the effects of a sharp rise in interest rates. That’s just as real a risk that the Fed should disclose to investors.