Breakingviews

Edward Hadas: Why Lehman Brothers lives on

By Edward Hadas
May 27, 2015

Almost seven years after the U.S. investment bank failed, the reputations of financial markets, central banks and economic theorists remain deeply tarnished. Worse, the shock permanently damaged already-weak governments, ever-fragile labour markets and the frayed social fabric.

Rob Cox: Bolivarian bank dream faces Andean climb

May 26, 2015

Brazilian lender Itaú has pursued a strategy to create the first truly pan-Latin America financial institution. Its biggest effort to date is at an impasse. The merger it thought it cleverly struck with Chile’s CorpBanca is backfiring in ways that may cost it treasure and face.

Bankers get ammo but no ally in regulation tussle

May 22, 2015

Financiers unhappy with tougher regulation can cite new analysis from the BIS. The central banks’ own central bank says new standards will probably change how economies and markets work. But the BIS is firmly focussed on coping with the new paradigm, not returning to the old one.

UK taxpayers hurt more by EU split than HSBC exit

May 19, 2015

Deutsche Bank and its rivals could move operations out of London if Britons vote to leave the EU. That would dent the main source of UK tax from the financial sector - income tax on bankers. It’s a bigger loss than reduced bank levy receipts from HSBC moving its head office.

China’s lodestar is not reform but avoiding chaos

May 18, 2015

The authorities want banks to show mercy to stressed local government-linked borrowers. The plan seems to be to avoid chaotic deleveraging. Though it’s a step back from reform and market forces, until a clear line has been drawn between good and bad, it’s the right thing to do.

Australian bank crisis-proofing takes toll on NAB

May 7, 2015

The lender is bracing for higher capital demands by raising $4.4 bln from investors. With valuations still high despite a slowing home market, rivals may follow. Reinforcing a healthy sector is prudent. For shareholders, though, the era of supercharged returns is ending.

UBS pulls ahead of both activist and rivals

May 5, 2015

The Swiss lender’s Q1 profit leapt 88 pct to 2 bln francs. A strong return at the leaner investment banking unit further discredits Knight Vinke’s case for an exit. And with better capital ratios on both main metrics, UBS is piling pressure on less decisive competitors.

Banks are designated drivers at China market party

April 30, 2015

Bad debt levels are rising and earnings at the biggest lenders barely grew in the first quarter. Soon, they may be summoned to help clean up government debts, fund China’s global ambitions and sacrifice their margins to save the economy. Investors’ sober view is the right one.

French investment banking has less than meets eye

April 23, 2015

Returns at BNP Paribas’ and Societe Generale’s trading and advisory businesses are better than peers. But the pair’s divisions carry less equity against gross assets than rivals. Before dashing in, investors should consider what the return would be with greater leverage restraint.

India’s poor state banks will test investor limits

April 22, 2015

State Bank of India is leading the rush to raise capital with a $2.4 bln share sale. A stronger economy makes bad debts look less bad. Investors will also have to believe a government pledge to meddle less in lending decisions. Even so, few banks look tempting.