LONDON (Reuters Breakingviews) - HSBC Chief Executive Noel Quinn is making a decent stab of reviving the ailing $90 billion lender, but the ground keeps shifting beneath his feet. With low interest rates sapping revenue in every division aside from investment banking, cost cuts at the London-based bank will have to go much further than originally planned to get returns back up to a respectable level.
LONDON (Reuters Breakingviews) - Credit Suisse has already been through the wringer. Former Chief Executive Tidjane Thiam cut 4.3 billion Swiss francs ($4.7 billion) of costs at the Zurich-based lender between 2015 and 2019. Now, his successor, Thomas Gottstein, will make further annual savings of 400 million francs, merge his investment banking units and may shrink the proportion of capital allocated to that business. His plan, which amounts to mimicking UBS, is likely to narrow a valuation discount to the local rival.
LONDON (Reuters Breakingviews) - For once, Europe’s bank traders aren’t the dunces in the class. Having long dragged down group-wide returns, the markets-based units of Barclays and Deutsche Bank surged in the second quarter. Yet ebbing volatility implies that the old reality will return before long, necessitating further cuts.
LONDON (Reuters Breakingviews) - Sometimes even a bad idea can make money. That may be the case with SAP’s 2018 acquisition of survey-software seller Qualtrics. The German IT giant’s chief executive, Christian Klein, now plans to float the business. At least rich tech valuations mean Qualtrics could be worth more than SAP paid.
LONDON (Reuters Breakingviews) - SoftBank Chief Executive Masayoshi Son overpaid for UK chip designer Arm when he bought it for $32 billion in 2016. A sale to $257 billion Nvidia, which the U.S. giant has considered according to Bloomberg, offers the best chance of salvaging a return. Yet the qualities that make the purchase attractive would also make it controversial for antitrust agencies – and for Arm’s customers.
LONDON (Reuters Breakingviews) - Deutsche Bank investors can strike off at least one of the risks facing the 18 billion euro lender: a dicey mid-pandemic cash call. The group’s 13.3% common equity Tier 1 (CET1) capital ratio, unveiled in an impromptu investor update on Tuesday, means Chief Executive Christian Sewing has bigger buffers to withstand a coronavirus-induced surge in bad debt. But there’s little else for shareholders to get excited about.
LONDON (Reuters Breakingviews) - Jamie Iannone, eBay’s chief executive since April, may have chalked up an early win for shareholders in the $41 billion e-commerce group. He’s close to agreeing a $9 billion cash-and-stock sale of eBay’s classifieds business to Norway’s Adevinta, Reuters reported on Monday. Taking the buyer’s richly valued paper holds risk, but also gives the U.S. group upside from consolidation in Europe.
LONDON (Reuters Breakingviews) - The board of Lloyds Banking Group has devised a management handover that evokes its boss’s slick hair. Well-coiffed Chief Executive António Horta-Osório will leave the 23 billion pound UK bank in 2021, nine months after incoming Chairman Robin Budenberg joins. The smooth transition will reassure shareholders, and give Budenberg time to find a successor to boost fee income and test the waters on M&A.
LONDON (Reuters Breakingviews) - Markus Braun’s day of reckoning turned out to be worse than seemed possible. The Wirecard chief executive’s company lost more than half its market worth on Thursday, sending its value down to 5.4 billion euros, after EY found indications that 1.9 billion euros of cash may be “spurious”. Its accounting scandal is now an existential crisis. Braun’s enablers, including regulators, lenders and auditors, have a lot of explaining to do.
LONDON/NEW YORK (Reuters Breakingviews) - Big Tech investors have historically brushed off the threat from Margrethe Vestager, the European Commission’s antitrust tzar who wants to reduce U.S. behemoths’ digital dominance. The combined market value of Apple, Amazon.com, Facebook and Google owner Alphabet has risen more than threefold to $4.4 trillion since the Dane’s first term started in 2014. Two new probes into Apple, launched on Tuesday, suggest that it’s time to start taking her more seriously.