Commentaries

Rights and wrongs at Lloyds Banking

November 25, 2009

If you’ve ever wondered how the big-shot investment bankers “earn” their bonuses, the document launching Britain’s biggest rights issue will give you a clue. Lloyds Banking Group is issuing 36,505,088,579 new shares, to add to the 27,161,682,366 currently in issue.

Is UBS’s 8 million pound fine enough?

November 6, 2009

Not long ago, UBS was the pride and joy of its Swiss home. There it was, slugging it out with the big boys, and making a fair fist of joining the bulge bracket banks from New York.

UBS’ days of wine and CDOs

September 14, 2009

Expensive wines and toxic assets are rarely mentioned in the same breath.

But that was the talk at UBS during the summer of 2007, when the Swiss banking giant sold some $35 million in soon-to-be rotten collateralized debt obligations to Pursuit Partners, a Connecticut hedge fund, which is now suing the bank.

Wall Street may find itself on the hook

September 10, 2009

Sometimes legal fishing expeditions pay off.

A year ago, a Connecticut hedge fund sued UBS, contending that it knowingly sold toxic mortgage-backed securities to institutional investors but never disclosed that information.

How global cities rank after the financial crisis

August 24, 2009

London bus passes Swiss Re Gherkin building Reuters photoLondon, once one of the world’s most expensive cities, now ranks in the middle of the pack of European cities in terms of the cost of living. The sharp drop in the value of British pound largely is to blame for the decline of London’s ranking from the second priciest city three years ago to No. 22, according to a study of comparative purchasing power by UBS of 73 cities around the globe.

Swiss score UBS share sale goal

August 20, 2009

After the debacle of UBS’s American tax row, Berne can chalk up a small victory.

UBS settlement leaves Switzerland scarred

August 19, 2009

UBS, Switzerland and the United States can all claim a sort of victory from the settlement on Wednesday of their tax dispute.

Time to get America’s Cup back on the water

August 5, 2009

SAILING-AMERICAS/Sometimes you have to wonder if it wouldn’t be better for everyone concerned if Larry Ellison and Ernesto Bertarelli slugged it out in the boxing ring rather than the courts to decide who should lift the America’s Cup.

from Neil Unmack:

Losses slow on UBS’ dodgy assets

August 4, 2009

Losses seem to be slowing on the 26 billion swiss francs of leveraged loans, asset-backed debt and other exotica UBS shifted last year from its trading to its loan book to avoid having to mark them to market.

from Neil Unmack:

Finance’s 80s experiment shows cracks

July 29, 2009

We may never see mullet hairstyles or other weird fashions again, but in finance, there is a 1980s revival.
    The International Accounting Standards Board has gone back to the future, allowing banks to reclassify assets they previously had to mark to market as loans and receivables, valued at amortized cost. That effectively allowed them to avoid the embarrassment of mark-to-market and return to the historic cost accounting of a quarter-century ago.
    The reasons are plausible enough: many asset classes were quoted at nominal, distressed sale prices only. But you ignore market prices at your peril: problems loans are left to fester, exposing investors to the cost of loan managers (understandably) taking a rosy view of advances they may have approved.
    Many European banks took advantage of the IASB's lenience to whip doubtful assets off their trading books -- not just plain debt, but collateralized loan obligations, leveraged loans and other doubtful exotica. Now Deutsche Bank <DBKGn.DE> has indicated how this stuff is doing, and the answer is: badly.
    Deutsche's pretty figures would have been quite spoiled had it taken a further 1.4 billion euros of unrealized losses on the 37 billion euros of assets it reclassified since last October.
    The discrepancy between the carrying value and fair value shouldn't be a surprise -- that was the whole point of the changes. Unfortunately, the market is proving to have been right in pricing some of these assets as junk, because the losses in the reclassified book are starting to show.
    More than half of Deutsche's 1 billion euro provisions for credit losses in the second quarter derived from these reclassified assets. Some 2 billion euros of the 3.2 billion euro rise in problem loans had previously been reclassified.
    Deutsche is not alone. RBS' <RBS.L> impairment losses on reclassified assets rose to 747 million pounds in the first three months of the year, up from 466 million at the end of last year. UBS is carrying assets reclassified last year at 24.7 billion Swiss francs, versus the fair value of 20.6 billion.
    The accounting changes are not designed to bamboozle investors, even though that is frequently the result. Losses may have been deferred, but they will happen. The question for banks is whether they can generate profits quickly enough to offset them. Market prices that seemed ridiculous in the depths of the panic may turn out not to have been the equivalent of the mullet after all.