Posts from Thursday Jun 17 2010

EU nears stress test accord

European Union leaders moved closer on Thursday to approving the publication of ‘stress test’ results for European banks amid the continent’s sovereign debt crisis, the FT reports. José Manuel Barroso, the European Commission president, told the EU’s 27 national leaders at their Brussels summit on Thursday that he supported full disclosure of the test results on a bank-by-bank basis.

Bouton to face Kerviel in court

Daniel Bouton, former chairman and chief executive of Société Générale , will testify next week at the trial of Jérôme Kerviel, the former trader blamed by the French bank for €4.9bn of losses. Bouton, who called Kerviel a “terrorist” after discovering the trader’s €50bn of unhedged bets against futures markets in January 2008, had initially refused to attend the trial, the FT reports.

China warns G20 on currency

China moved to pre-empt a potential showdown ahead of Thursday’s G20 summit in Toronto when it warned other large economies against using the meeting as a platform to criticise its currency policy, the FT reports. Highlighting fears about G20 criticism of its policy to peg its currency to the dollar, Chinese officials said the June 26-27 summit was not the correct place to discuss the renminbi’s level and cautioned against an outbreak of “finger-pointing”.

Business leaders wary of UK regulatory upheaval

UK chancellor George Osborne must show how his radical overhaul of banking regulation will improve the flow of credit to companies, business leaders said on Thursday amid concern about the impact of any upheaval during the transition period. Richard Lambert, director-general of the CBI employers’ group, told the Financial Times: “I never thought that the structure was the critical issue here in terms of regulation. There is no evidence in the banking crisis that one system was better than another.”

StanChart ties up with China’s ABC

Standard Chartered is set to take a stake in Agricultural Bank of China and is forming a strategic alliance with the Chinese lender, which is seeking to raise more than $23bn in what could be the world’s biggest IPO. As the FT notes, the agreement is StanChart’s first significant partnership with a big Chinese lender and brings the UK bank closer into line with rivals such as HSBC that have already established tie-ups on the mainland.

Blow for Dubai World asset sale

Dubai’s sale of a flagship asset was set back after prospective bidders learnt of a US probe into the business, the FT reports. Dubai World has been seeking to sell Inchcape Shipping Services, a port and shipping agent, as the state-owned conglomerate seeks to raise cash for a restructure of its $23.5bn of debts. But several buy-out groups withdrew after discovering in due diligence what they believe is a US Department of Justice probe into Inchcape’s contract to service the US navy’s Fifth Fleet in the Middle East.

RBS sells units for £200m

Royal Bank of Scotland is accelerating its withdrawal from Asia and the Middle East with the sale of a number of small businesses set to be agreed on in the next two weeks, the FT reports. The part UK state-owned bank on Wednesday announced the disposal of units in Pakistan and the United Arab Emirates and is understood to be on the verge of selling its operations in Kazakhstan.

Japanese pay disclosure said to force Shinsei departures

Four foreign senior executives at Shinsei Bank are expected to resign this month, according to the WSJ – the first major casualties of a new Japanese rule forcing greater disclosure of executive pay. Japanese firms are being required to reveal details of those executives earning more than 100m yen and the new rule is expected to expose a long-suspected pay gap between Japanese executives and their foreign counterparts. The Shinsei departures are said to be at the behest of Japan’s financial regulator, the FSA.

Staggered and leaky stress-tests, again

There was another intriguing leak from “EU sources” on the subject of European bank stress-tests on Thursday.

We’d already heard earlier in the day from Spanish government sources that Santander had fetched the best rating in the tests so far. Read more

How to profit from long-tail journalism

Google may be stepping into the business of content production and journalism.

As the FT scooped on ThursdayRead more

More on Spanish credit lines

Spain’s latest auction of 10- and 30-year bonds was by all accounts pretty well received on Thursday, in the context of recent jitters about its sovereign debt.

So why the need for statements like this? As Reuters reportsRead more

Live on Capitol Hill: Tony Hayward

BP’s chief executive is testifying before a Senate panel on Thursday:

Click the picture to watch on C-Span. FT Energy Source is also live-blogging.

Mammon and Montrachet

What do eastern mysticism, violence, mammon, and am dram have in common? They are all dinner and drinks topics of conversation amongst hedge fund managers in Monaco.

Networking – or at least, meeting old colleagues – is half the reason, if not more, for coming to the GAIM conference. Most of the important stuff hedge fund managers come here to achieve happens in the evenings at places like Jimmyz or Sass Cafe. Or the Casino. Or even, if you’re managing a few bil, Le Louis XV. Racking up massive dinner or drinks costs is de rigueurRead more

Tarp-edoed dividends

Last week the US Treasury released its May Tarp report.

The department was quick to herald a milestone in the programme; Tarp repayments to taxpayers had, for the first time, surpassed the total amount of Tarp funds outstanding. But underneath the headline lay a continuing deterioration in the ability of some banks and thrifts to actually pay their dividends. Read more

The Fed’s last QE experiment…

The latest edition of the St Louis Fed’s Monetary Trends note — of off-the-chart monetary base growth fame — has a short and punchy section on the United States’ first bout of quantitative easing, in the, err, 1930s. The key difference appears to have been the timing, reports FT Alphaville. Where the 1930s Fed did not start QEasing until 1932 — about three years after the recession had started — Ben Bernanke’s Fed started QE-like programmes, such as the Tarp and MBS-buying, just a few weeks after Lehman collapsed. Read more

Brave Punt

Tip of the hat to Heidi Moore for this one.  A contract just posted on Intrade:

 Read more

Swiss intervention, exiting stage left

Is the Swiss National Bank throwing in the towel on EUR/CHF intervention?

IFR Markets’ Divyang Shah thinks so: Read more

The waft of burnt fingers over Mansion House

Some burnt fingers in the UK banking sector on Thursday morning:

 Read more

Epita-FSA-tic

Related link:
The FSA will cease to exist in its current form – FT Alphaville

Markets Live transcript 17 Jun 2010

Live markets commentary from FT.com 

Misfortune or carelessness at Macquarie Bank?

To lose one investment banker might be regarded as a misfortune; to lose dozens looks like carelessness, to paraphrase Oscar Wilde.

In the case of Australia’s endlessly ambitious Macquarie Bank, however, it might look more like a second successive weak bonus season. Read more

Vigilant traders push on with business as usual

Oil trading houses and large banks were watching their exposure to BP closely yesterday but said they continued trading as usual in spite of the company’s woes, the FT reports. “No change but watching carefully,” said an executive at one of the five largest oil trading companies. A senior trader at another big company added: “We are monitoring it closely, but trade remains as normal.” BP is central to commodities markets such as oil, gasoline and natural gas. It is the largest trader among the big oil companies, with far more complex activities on physical and derivatives markets than rivals such as ExxonMobil.

Flying bonos

Spain sold €3bn of 10-year bonds at a yield of 4.864 per cent on Thursday. According to FT Alphaville, that was a jump from the 4.045 per cent paid at its last 10-year auction, on May 20. Quite a jump. To put that first figure into some context, 4.86 is above the benchmark bond’s long-term average, but still 100 basis points below the 5.8 per cent yield Spain was paying back in 2000 — though European Central Bank repo rates and 10-year bund yields were a lot higher then too. Read more

European debt fears return to nag investors

The optimism of the past several days faltered on Thursday as a pullback in the euro signaled that eurozone debt fears were once again nibbling at confidence, the FT reported. Traders questioned the prospects for the global economy following recent weak household-focused data out of the US. The FTSE All-World index was down 0.2 per cent, breaking a seven-day winning streak during which it had risen 6.6 per cent. Commodities fell, while the dollar and Treasuries rose higher on a more risk averse mood.

BP – a line in the sand?

There’s been a mixed reaction from City analysts to BP’s decision to halt dividend payments for the rest of the year and pay $20bn into a Gulf of Mexico claims fund, reports FT Alphaville. House broker UBS is hopeful that BP will now be able to normalise its relationship with the White House, while Citigroup says BP has taken a pragmatic decision and the creation of the Independent Claims Fund (ICF) should help calm nerves. Read more

Recapitalise, or resisting the lure of liquidity

Presenting . . .

. . . the European predicament in 500 words, by the liquidity-averse analysts at Morgan Stanley. Read more

All eyes on Spain – and not in a football sense [updated]

As in World Cup football, so in the bond market?

 Read more

From blue chip to hot tip

BP’s London stock rocketed to the heady heights of 358p on Thursday:

 Read more

Further reading

Elsewhere on Thursday,

- Is oil and gas leaking from cracks in the seabed? Read more

Pink picks

Comment, analysis and other offerings from Thursday’s FT,

John Gapper: Oil has become the new tobacco
When Tony Hayward, BP’s chief executive, testifies to the US Senate on Thursday about the company’s Gulf of Mexico oil leak disaster, he will be only the latest corporate leader in the Washington hot seat, writes the FT columnist. The contest on show on Thursday – also evident in President Barack Obama’s televised address this week – will not be Americans against Brits but US politicians, channelling the mood of voters, versus big corporations. Read more