Europe’s terrible banks look their best in years

November 25, 2015

Capital levels, profitability and lending rose in the six months to June, the European Banking Authority says. Bad loan ratios are almost double those of U.S. banks, and more EU quantitative easing could be bad for business. Even so, lenders are proving surprisingly healthy.

Italy’s zero-cost bailout is too good to be true

November 23, 2015

The Italian bank resolution fund will cough up 3.6 billion euros to restructure four failing lenders. Officially, public funds won’t be used, but the burden will hit a sector already struggling with low rates and weak demand. Rome could find itself on the hook too.

Portugal’s ropey bank rescue comes home to roost

November 16, 2015

The “good bank” part of bust lender BES needs another 1.4 bln euros, EU regulators say. If it ends up being sold cheaply, fellow banks that part-financed its rescue could suffer. Had Lisbon taken a tougher line with senior creditors last year, it would be in less of a mess.

Molson gets tasty chaser in giant beer deal

November 11, 2015

The Coors owner is paying SABMiller $12 bln for its 58 pct stake in their U.S. venture. By helping ease antitrust pressure on the UK-listed brewer’s $105 bln sale to AB InBev, Molson avoids a premium. Some $200 mln of annual cost savings, plus a sizeable tax perk, are pure gold.

StanChart shakeup turns screws on India’s tycoons

November 5, 2015

The lender plans to offload some of its share of loans worth $3.5 bln to Essar Global. The steel-to-ports conglomerate backed by the Ruia brothers is one of India’s most indebted. It’s an overdue warning to the country’s tycoons that suppliers of cheap credit are becoming rare.

StanChart faces years of pain for humdrum gain

November 3, 2015

New CEO Bill Winters is dumping risky loans, cutting costs, and raising $5.1 bln in capital. He thinks the loss-making lender can rebound by serving affluent consumers in emerging markets. But even if all goes to plan, a modest 10 pct return on equity is still five years away.

Greek banks get marginally more investable

November 2, 2015

ECB stress tests revealed a 14 bln euro capital hole. The tests were doubly tough: the pass mark was high, and the state will not prevent shareholder dilution. Yet banks are stuck with bad loans and the economic outlook is unclear. Greek bank equity is still a bet for the brave.

Dixon: Tsipras’ biggest stress tests yet to come

By Hugo Dixon
November 2, 2015

A central bank verdict that the top Greek lenders must raise only 14.4 billion euros is welcome news for the prime minister. But he has to implement more tough measures before he can secure debt relief from his euro zone creditors. Until then, he faces political risks.

Hadas: The world would be better off without debt

By Edward Hadas
October 22, 2015

Why do governments borrow instead of just creating money? Mostly because they always have. Why do companies feel the need to take on leverage? Foolish tradition. If the financial world were designed for today’s economy, fixed-rate reimbursable debt wouldn’t be created.

Renzi shrinks Italy’s political risk premium

October 14, 2015

Prime Minister Matteo Renzi achieved an important step in his plan to reform Italy’s upper house. That should mean more stable governments. Italy’s bond yields are already close to pre-crisis levels. Narrowing the discount to France or Germany requires further economic reform.