Comment, analysis and other offerings from Thursday’s FT,
John Gapper: A healthy appetite for the right price
If British takeover battles were decided on personal chemistry and corporate culture, rather than how much money the shareholders are offered, Kraft’s hostile $16.2bn (€10.8bn, £9.8bn) bid for Cadbury would be doomed, writes Gapper. Having irritated Roger Carr, Cadbury’s chairman, by dropping in for tea and talking about money, Irene Rosenfeld, Kraft’s chief executive, felt the chill of British contempt.
Maurice Saatchi: Only competition can safeguard free markets
As the financial crisis unfolded, those who trusted most strongly in free markets watched in dismay and bewilderment, writes Saatchi, chairman of the Centre for Policy Studies. They struggled to understand how competition could possibly lead to a situation where, as President Barack Obama put it, “only the state had the resources to rescue the situation”.
Patrick Jenkins: Lloyds finds vindication
This spring, with equity markets plunging and bank results deep in the red, was probably not the best time for a banker to try giving up smoking — especially when that banker was Eric Daniels, chief executive of Lloyds Banking Group, writes the FT’s banking editor. But the stress that Mr Daniels felt then, as he grappled with his acquisition of the troubled HBOS and its vast portfolio of rapidly souring lending, was nothing compared with what he was about to go through.
Editorital Comment: Operation Stealth
Some good deeds can only be done in the dark. It was revealed this week that, in October last year, when financial markets were gripped by fear, the Bank of England lent HBOS and RBS a total of £61.6bn in a covert liquidity operation. The money, extended against more than £100bn of collateral, was repaid this January.
John Gapper: Dubai’s financial crash mirrors that of Florida
The financial crisis has come full circle. Having started in Florida, home of speculative property development and sub-prime lending, it is culminating in Dubai, the most fragile of the United Arab Emirates, writes the FT’s chief business commentator.
Lex on Dubai
Dubai’s hopes of becoming a world financial centre are proving to be nothing more than an Ozymandian dream. Wednesday’s unexpected decision by Dubai World, the Gulf emirate’s largest state-owned conglomerate, to impose a six-month debt standstill has foreign creditors up in arms. Earlier this month, Dubai’s ruler Sheikh Mohammed Bin Rashid Al Maktoum publicly pledged his support for the group and its obligations. Investors, perhaps foolishly, took him at his word.
Market Insight: Donald MacKenzie – Culture gap let toxic instruments thrive
Of all the “toxic assets” at the heart of the credit crisis, one kind proved most toxic of all: collateralised debt obligations, made up of asset-backed securities (or ABS CDOs to those in the know). They are like a kind of Russian doll, writes MacKenzie, the holder of a personal chair in sociology at the University of Edinburgh. A CDO, or collateralised debt obligation, is an instrument that involves packaging a pool of assets and selling tranches of securities based on the cash flow from the pool.
Analysis: Banks look to life after ECB funding
When the Greek central bank governor warned the country’s banks last week that they would have to start thinking about weaning themselves off support from the European Central Bank, his comments sent tremors through the sector. It has since become clear that his remarks have ramifications for the entire eurozone banking sector.
The Short View: Dollar Decline
Currency traders are asking a question: if the US Federal Reserve is not concerned about the dollar’s current levels, why should they be?