Neil's Feed
Mar 21, 2013
via Breakingviews

Cyprus exit risk is real – and manageable

Photo

By Neil Unmack

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

Is the European Central Bank ready to start a Cyp-riot? It has threatened to cut off Cyprus’ banks if Nicosia doesn’t take a bailout, potentially triggering the country’s exit from the euro. The ECB has threatened to cut off banks and countries before but backed off. This time it may be serious.

Mar 5, 2013
via Breakingviews

Markets wrong to downplay Italian political risk

Photo

By Neil Unmack

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

Italian bond spreads have risen nearly one percentage point since Italy’s election. It could have been worse – and considering the risks, it should.

Feb 12, 2013

Finmeccanica woes show need for radical overhaul

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

By Neil Unmack

LONDON (Reuters Breakingviews) – Political vacuums can embolden the Italian government’s criminal investigators. Last week public prosecutors raided the premises of oil company Eni’s (ENI.MI: Quote, Profile, Research) Chief Executive Paolo Scaroni over alleged bribes. They went one step further on Tuesday by arresting Giuseppe Orsi, the chief executive and chairman of Finmeccanica (SIFI.MI: Quote, Profile, Research), another state-controlled company. The move has already started a political storm, but that shouldn’t distract the next government from selling down its stake in the defence contractor, which is Italy’s second-biggest employer.

Feb 12, 2013

Dutch bank expropriation ties CDS in knots

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

By Neil Unmack

LONDON, Feb 12 (Reuters Breakingviews) – SNS Reaal’s (SR.AS: Quote, Profile, Research)
bondholders lost everything after the Dutch lender’s
nationalisation, and the holders of credit default swaps may not
get compensated. It’s not the first time that CDS language has
been found wanting.

Jan 28, 2013
via Breakingviews

Buoyant markets give ECB upper hand in Irish spat

Photo

By Neil Unmack and George Hay

 The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Buoyant markets are allowing the European Central Bank to play tough. The ECB’s governing council has rejected a plan by Dublin to restructure its 2010 bank bailout, on the grounds that it would breach its rules against funding governments. And with markets still docile from the ECB’s own bond-buying promise, the pressure to cut a special deal for Ireland is receding.

Jan 25, 2013
via Breakingviews

Could the banking union have avoided Monte’s mess?

Photo

By Neil Unmack

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

Derivative blow-ups of the type that happened at Banca Monte dei Paschi di Siena are here to stay – even in the brave new world of the euro zone’s planned banking union.

Jan 23, 2013

Breakingviews-Four questions Monte dei Paschi must answer

(The authors are Reuters Breakingviews columnists. The opinions
expressed are their own)

By Neil Unmack and Dominic Elliott

LONDON, Jan 23 (Reuters Breakingviews) – Banca Monte dei
Paschi di Siena (BMPS.MI: Quote, Profile, Research) is on the spot. The Italian bank – the
world’s oldest – is probing how bizarre derivatives trades
racked up hundreds of millions of euros of losses. It is
promising to come clean about how it got into the mess. Here are
the four questions that investors and taxpayers need answered.

Jan 17, 2013

Governments on right side of credit cycle for once

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

By Neil Unmack

LONDON, Jan 17 (Reuters Breakingviews) – Governments are on
the right side of the credit cycle, for once. Investor hunger
for funky contingent capital securities is allowing Ireland and
Belgium to recoup cash from costly bank bailouts. Weak growth
prospects make raising bank equity expensive, but they leave
bond investors desperate for yield. Governments should take the
money and run.

Dec 28, 2012
via Breakingviews

Draft obit for 2020: 2-and-20 fee structures

Photo

By Neil Unmack and Richard Beales
The authors are Reuters Breakingviews columnists. The opinions expressed are their own. 

Anticipated publication around 2020.

The most surprising thing about the demise of two-and-20 hedge fund fees is how long it took. Neither losses in the 2008 credit crunch nor the feeble returns during the ensuing seven-year euro zone crisis did much to bring down the archetypal fee structure: 2 percent management fee and 20 percent of gains. Now, though, it can finally be said: two-and-20 is dead.

Dec 28, 2012
via Breakingviews

Mario Draghi’s three challenges

Photo

By Neil Unmack

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

Mario Draghi’s words were enough to keep the euro zone together in 2012. In 2013, his actions will have to speak louder to consolidate the fragile state of the monetary union. The president of the European Central Bank will have to make good on his bond-buying pledges, guide the new common banking regulator’s tentative first steps, and show what he can do to foster growth in the region.
Draghi’s mere promise of “outright monetary transactions” (OMT) – unlimited buying of the bonds of indebted countries struggling with highs yields – were enough to calm markets. But it raises a problem: a country such as Spain is now under less pressure to request that new type of bailout. Yet Spanish borrowing costs haven’t come down enough and still hurt the economy. Draghi’s task is to convince Madrid to accept the ECB’s intervention. Even then, he won’t be in a risk-free zone. He must make sure that Madrid won’t slow down on reforms. Then there’s the question of how northern European countries will react if bond-buying becomes massive.