LONDON (Reuters Breakingviews) - Christian Sewing can’t catch a break. The Deutsche Bank boss has seen the German lender’s market value shrivel to just 13 billion euros. Now he is preparing to take the axe to its underperforming investment bank. Rock-bottom expectations give him scope to spring a positive surprise.
LONDON (Reuters Breakingviews) - HSBC’s first-quarter results shore up its rich valuation. The global bank reported a robust 10.6 percent return on tangible equity in the first three months of the year, buoyed by a lending spike. Investors were already assuming that the bank hits its 2020 return targets. Potential for more buybacks in the second half provide additional firepower.
LONDON (Reuters Breakingviews) - Thank goodness for traders. Such gratitude is likely to be a novelty for BNP Paribas Chief Executive Jean-Laurent Bonnafé given how woeful these bankers’ performance was in some of the previous quarters. Still, a boost to volatile trading income reported on Thursday helped lift the French lender’s return closer to its 2020 target. Bonnafé will have to maintain the improvement in revenue growth if he is to hit that goal.
LONDON (Reuters Breakingviews) - Banco Santander has made shareholders in its Mexican unit a proposal they can refuse. The Spanish bank on Friday offered investors in Santander Mexico the chance to swap their shares for stock in the parent company. Despite a 14 percent premium, the deal is unenticing. Investors should hold out.
LONDON (Reuters Breakingviews) - European Central Bank President Mario Draghi is considering ways to ease the financial pain that negative interest rates impose on banks. However, such measures would at best only modestly boost lenders’ profits and do nothing to remedy their bigger challenge: high costs.
LONDON (Reuters Breakingviews) - “I trade therefore I lose.” This version of René Descartes’ famous maxim is probably not what Société Générale had in mind when naming its proprietary trading unit after the 17th Century French philosopher. Yet low returns are what the division tended to deliver. Closing it down, and pulling out of commodities trading, is a logical but insufficient response to SocGen’s mediocre investment banking performance.
LONDON (Reuters Breakingviews) - Deutsche Bank's latest strategy for boosting its appeal may be its most effective yet: the German lender headed by Christian Sewing has banned staff from Dorchester Collection hotels after its owner, the government of Brunei, implemented homophobic laws. Shareholders will welcome the fact that employees of a bank whose costs ate up 93 percent of revenue last year will no longer frequent a chain which charges nearly 400 pounds a night for a standard room in London. However, the decision raises the moral bar.
LONDON/MILAN (Reuters Breakingviews) - Deutsche Bank boss Christian Sewing has just received an unexpected leg-up from his rival Jean Pierre Mustier, who runs Italy’s UniCredit. Both men are competing for the affections of Commerzbank. The arrival of another suitor puts extra pressure on the German government to back a domestic marriage.
LONDON (Reuters Breakingviews) - Swedbank’s attempt to cauterise wounds is unlikely to succeed. Its board on Thursday dismissed Chief Executive Birgitte Bonnesen and appointed Finance Director Anders Karlsson as an acting replacement following allegations that the lender was involved in money laundering in the Baltics. The problem for investors is that the scandal will last longer than her tenure.
LONDON (Reuters Breakingviews) - Albert Einstein defined insanity as endlessly doing the same thing while expecting a different result. By that yardstick, global investment banks are off their rockers. New year optimism about rising rates and greater volatility boosting markets revenue has been summarily dashed. Instead, trading arms will continue to disappoint.