Deutsche makes investors offer they should refuse

February 12, 2016

The German bank is offering to buy back 5 billion euros of bonds. A big take-up means more capital for Deutsche, but could also imply a lack of confidence in the bank’s solvency. Given the potential for bond prices to snap back, it may be better for investors to sit it out.

Dear Draghi: Time to buy bank bonds

February 12, 2016

Bank shares have slumped and bank bond yields are up. ECB chief Mario Draghi can stop the rout from damaging the economy by buying lenders’ debt. The moral hazard concerns are big, but manageable. Breakingviews imagines a memo from a bank CEO.

Credit Suisse is making a meal of its turnaround

February 4, 2016

The Swiss bank would have made a fourth-quarter net loss even without 6 bln Swiss francs of one-off and restructuring costs. Its Asian bit alone grew revenue, yet boss Tidjane Thiam is wary over China’s future. Pre-tax profit targets look ambitious: pay cuts can only do so much.

Fed stress-tests idea of negative interest rates

February 2, 2016

That’s part of the “severely adverse” scenario that big U.S. banks have to run this year to satisfy regulators. The ECB and now the Bank of Japan are giving it a try. The Fed has started pushing rates upward – but going negative is becoming a very plausible downturn assumption.

Lesson from UBS: Who’d be an investment bank CEO?

February 2, 2016

Andrea Orcel has made the Swiss bank’s broker-dealer arm the envy of rivals, but it could only squeeze out a 4.4 pct return in the fourth quarter. With deal volumes at rock bottom, the industry as a whole looks beset. Alternative careers may never have looked so appealing.

Deutsche Bank risks its own “keep dancing” moment

January 28, 2016

Despite a rotten quarter in investment banking, Germany’s biggest lender will keep adding risk and rainmakers. CEO John Cryan is entitled to see fixed-income issues as cyclical. But in time his stance may echo ex-Citi boss Chuck Prince’s 2007 pledge to stay at the subprime ball.

Santander has been punished enough

January 27, 2016

It has been easy to construct a bear case around the Spanish bank based on its Brazilian exposure, weak capital and frail home market. But with shares trading below those of peers, the bad news is already priced in.

Ireland has limited shelter against Brexit storm

January 26, 2016

The Irish state is right to fret about a UK exit from the EU. It could knock 20 pct off trade between the two countries and hit Ireland’s economic recovery. Rebranding Dublin as a financial hub would help – but requires Germany to beef up the euro zone’s half-done banking union.

Finance wrestles with post-millennial tension

January 22, 2016

Youngsters dominate the workforce, and the conversation at Davos. Fearful of losing talent, investment banks are giving millennials fewer hours, faster promotion and more leisure. What looks like a new trend is just a reversion to the mean – with some confused thinking thrown in.

Goldman and rivals’ pay cut may have bright side

January 20, 2016

Staff compensation at the Wall Street firm is 8 pct less on average than in 2014 and down almost 11 pct at Morgan Stanley. JPMorgan workers fared better but still took a hit. With share values way down, though, those paid in stock may get a great deal – barring another crash.