|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's range||25.94 - 27.69|
|52-week range||24.50 - 54.22|
|Beta (5Y monthly)||1.61|
|PE ratio (TTM)||4.31|
|Earnings date||05 May 2020|
|Forward dividend & yield||3.10 (12.09%)|
|Ex-dividend date||25 May 2020|
|1y target est||61.49|
(Bloomberg Opinion) -- Banks insist they’re in much better shape than they were during the run-up to the 2008 financial crisis. This time, as the coronavirus lockdowns wreck output, lenders can be “doctors of the economy,” in the words of one industry executive. True, banks have much larger capital buffers and better access to funding than was the case 12 years ago. How smart they've been at running their trading businesses remains to be seen.Some of Europe’s biggest banks have gone into the worst economic contraction since the Second World War sitting on huge piles of complex, risky trades whose fair value is hard to determine. These are the so-called Level 2 and Level 3 assets, the types of instruments that blew up in 2008.Valuations of Level 2 assets — mainly over-the-counter derivatives and illiquid stocks — are derived from using observable external measures, such as the price of similar instruments traded in the market. Level 3 assets are the most illiquid instruments, whose prices depend on inputs that aren’t observable to outsiders. Unlike Level 1 assets, which have easily viewed market prices, investors have to rely on banks’ internal models, and own judgments, to get a handle on the Level 2 and Level 3 exposure. Fair values for the same instrument might easily differ from firm to firm.The absolute size of these risky asset pots — totaling several hundred billions of dollars at many of the largest banks — is eye-watering. They dwarf the lenders’ capital by many multiples. Take Deutsche Bank AG: Its stock of Level 2 and Level 3 assets is more than 11 times its common equity Tier 1 capital. At Britain’s Barclays Plc, it is just shy of 11 times, at France’s Societe Generale SA it’s seven times and at Switzerland’s Credit Suisse Group AG it’s almost eight times. While plenty has been written about the inevitable build-up of bad loans in the Covid-19 downturn, these piles of interest-rate swaps and collateralized debt obligations need to be considered too. In the recent market rout, every major asset class was upended. U.S. stocks fell into a bear market at record speed, the dollar soared and safe-haven assets such as government bonds were rocked. How banks’ risky assets fared during the unprecedented turmoil is guesswork from the outside. All the banks listed in the table above declined to comment for this piece. One bank executive, who asked to remain anonymous, said the balances of banks’ Level 2 and Level 3 assets and liabilities may both have increased in the quarter, which would be a welcome sign that hedges have been working in the turmoil.For example, the decline in long-term interest rates would have increased the present value of years-old derivatives that swapped fixed rates for floating rates. Interest-rate derivatives tend to make up the bulk of the portfolios, and they may have offset declines in the prices of equities and loans. (That said, some hedges would have been for interest rates and inflation to rise, so they could be heavily in the red.)Less welcome is that banks will probably have to start moving things from Level 2 to Level 3 as price discovery becomes more difficult. Some may decide that observable measures through mid-to-late February are sufficient to keep assets in the Level 2 pot for the first quarter. Each bank has its own model. Lehman Brothers allegedly shifted mortgage-backed securities and other assets from Level 2 to Level 3 in 2008 in an effort to prop up their values.The market became hugely skeptical about these instruments during the financial crisis. A 2015 study published by the Journal of Accounting and Public Policy showed that investors valued Level 2 assets at 85 cents on the dollar and Level 3 assets at 79 cents during 2008. More troubling for the banks sitting on large stocks of Level 2 instruments is that an analysis by Wharton Research Scholars shows they were discounted even more significantly during the crisis than the more opaque Level 3 stuff.Investors should look at how frequently banks turn over their Level 3 assets, according to analysts at Berenberg, who published a report this week saying that France’s BNP Paribas SA, Credit Agricole SA and SocGen have the lowest turnover of Level 3 instruments among 12 banks they studied, which means the assets are probably “stickier and harder to sell.” Credit Suisse has the highest turnover among the group.The French banks, Credit Suisse, Barclays and Deutsche each hold Level 3 assets that are as large as, if not larger than, those of Citigroup Inc. and Bank of America Corp., even though the latter have much bigger trading businesses.The European Systemic Risk Board, the European Union body that monitors the financial system’s stability, has also noted the Level 2 and Level 3 threat — particularly the prospect for “opportunistic behavior” by managers and the overvaluation of assets. “If several banks were to be affected simultaneously at a time of acute fragility in the financial system, concerns could spread to the macroprudential domain and affect financial stability,” a February report from the board warned.What’s more, banks no longer have to use the crisis-era filters that protected their capital positions from movements in the fair value of assets they hold for sale. Without these filters, fair-value gains and losses are directly recognized in banks’ income statements even if they’re unrealized. And as my colleague Ferdinando Giugliano noted, significant risks may lie in smaller banks that may not have been as transparent in their Level 2 and Level 3 disclosures.Equally concerning is the faith being placed in banks’ risk management practices, especially since regulators started loosening the rules because of the Covid-19 crisis. In its 2019 review, the European Central Bank’s Single Supervisory Mechanism, its bank oversight arm, observed a worsening of internal governance, especially among the larger lenders. Regulator’s plans to tackle this area of weakness with a new set of capital rules for trading desks — known as the Fundamental Review of the Trading Book — was pushed back a year to January 2023 as part of the response to the coronavirus lockdowns. By then, it could be glaringly obvious how clever banks have been at managing risk.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- India opened up a wide swath of its sovereign bond market to overseas investors, taking its biggest step yet to secure access to global indexes as the government embarks on a record borrowing plan. Bonds rallied.Global funds will be able to buy new five-, 10- and 30-year bonds from April 1, the Reserve Bank of India said in a statement late Monday. It scrapped caps on some issued debt including the benchmark and said tenors may be changed or added.The rule change comes as Prime Minister Narendra Modi faces his biggest challenge yet after locking down the country for three weeks to contain a worsening coronavirus outbreak. Already under pressure from a slowing economy, Modi’s government needs inflows to fund a $22.6 billion stimulus package.“It’s certainly a right step moving forward to further open up the local market,” said Arthur Lau, head of Asia excluding Japan fixed income at PineBridge Investments Asia Ltd. “Whether the breadth of the move is sufficient will depend on the frequency and magnitude of the issuance.”Foreigners hold just 2.6% of the 60 trillion rupees ($794 billion) of sovereign bonds issued by India, and the government had set a 6% limit on overseas ownership. They also own under 2% of the outstanding benchmark 10-year debt.Gains were seen in the securities selected by the central bank for full foreign investments. The benchmark 6.45% bond due in 2029 fell eight basis points to 6.13%, while the 7.32% note due in 2024 was down eight basis points at 5.59%.The greater access comes just as global funds are selling emerging-market assets to hoard dollars amid fears of a global recession. They’ve sold $9.1 billion of rupee-denominated debt this quarter, the most in Asia, and the outflows helped send the currency to a record low.“It makes sense at a time when the government is trying to fund fiscal spending,” said Frances Cheung, head of Asia macro strategy at Westpac Banking Corp. “Current offshore-onshore rate differentials don’t suggest there is a lot of pent-up demand.”Inclusion in the Bloomberg Barclays Global Aggregate Index may translate into potential inflows of $6-$7 billion, according to HSBC Holdings Plc. A place in the JP Morgan GBI EM Index at a later date can potentially attract $12-$16 billion, the report said.Under existing rules, foreigners can account for a maximum 30% of the outstanding amount of any sovereign security, and the combined upper limit will remain at 3.6 trillion rupees until new limits are given, the RBI said. It didn’t specify whether the bonds falling under the new rules will still be part of the overall cap.The overseas cap in corporate debt will now be 15% of what’s outstanding, the RBI said. The plan to provide wider access to Indian bonds was first announced in the budget unveiled on Feb. 1.Opening up the debt market along with allowing domestic banks to trade in offshore currency markets will help deepen the hedging market for foreign investors, according to Standard Chartered Plc.Huge BorrowingsIndia will detail on Tuesday its borrowing plan for the first half of the fiscal year starting April 1. The government may slash or even cancel debt sales because of the virus outbreak, Reuters reported on Monday, citing finance ministry officials it didn’t identify. Authorities are also looking at selling these bonds to the RBI or to the state-owned Life Insurance Corp. of India, according to the report.“Lower oil prices should be positive to India’s economy and this should help RBI and the government to have more room to support,” PineBridge’s Lau said. “That being said, the ongoing public health issue remains the major risk factor of how things will evolve especially after the lockdown.”The yields on the benchmark 10-year bond fell to 5.98%, the lowest in more than a decade, on Friday after the RBI slashed the key rate by 75 basis points. It has since risen more than 20 basis points through Monday on concerns over new borrowings.The idea of tapping the global debt market more aggressively was floated September when Modi was in New York. Bloomberg LP, the parent company of Bloomberg News and Bloomberg Barclays Indices, announced it would help Indian authorities navigate a course to inclusion in international bond benchmarks.Investors who don’t have direct access to Indian debt can come via the International Central Securities Depositories, the central bank said.“This is potentially the first milestone in the path toward global bond index inclusion,” said Mayank Prakash, fixed income fund manager at BNP Paribas Asset Management India. “Euro clearing shall be the next probable task.”(Adds HSBC’s estimates in ninth paragraph, closes prices)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Banks in Asia are suddenly shy to part with dollars. And who can blame them? Many of their corporate clients are borrowing the U.S. currency and depositing it with the same banks — just in case they can’t get the funding when they need it. The caution amid the coronavirus outbreak isn’t all that different from Amazon.com Inc. trying to discourage vendors from cornering toilet paper supplies. “Corporate banks are becoming a bit more discretionary about permitting draws on credit lines where hoarding cash is the sole objective,” according to Greenwich Associates consultant Gaurav Arora. The dollar squeeze is evident, as one of us wrote Monday, in the hefty premiums South Korean banks must fork out to borrow the U.S. currency — a reliable indicator of trouble in the past. It also appears that China’s banks may be less eager or able than before to fund the dollar needs of their corporate borrowers, Bloomberg Opinion’s Anjani Trivedi noted Wednesday.For Asia, the crunch is an unwanted gift from European lenders, whose departure from the region post-2008, as well as regulations that reined in Wall Street firms, have led to a funding hole. Japan’s banks have expanded and lenders like BNP Paribas SA have scaled up trade finance, but they’re yet to fill the void, especially as troubled Deutsche Bank AG shrinks. The German lender was in the top five corporate banks in Asia in 2014; last year, it wasn’t even in the top 10, according to Greenwich. Some countries like Korea have felt the loss more keenly than others. U.K. banks’ exposure to Korea has dwindled to $77 billion from $104 billion in the first quarter of 2008. German lenders’ claims have fallen to $13 billion from $36 billion.Japan’s lenders have taken up part of the slack. Driven by negative interest rates and aging demographics at home, they have dished out funds aggressively in Southeast Asia as well as to global deal-chasing clients like SoftBank Group Corp. The large U.S. operations of megabanks like Mitsubishi UFJ Financial Group Inc. also provide them with liquidity, as does their stack of fully convertible, cheap yen deposits. But some Japanese lenders have piled into off-balance sheet products, which suck liquidity in times of stress. Japan's Norinchukin Bank, a lender to farmers and fisherman, was one of the world’s largest buyers last year of collateralized loan obligations, bundled U.S. leveraged loans.When the Fed extended emergency swap lines to South Korea, Australia, Singapore and New Zealand last week to ease the worldwide dollar shortage, a step that our colleague Shuli Ren called for here, it was a sign that the liquidity problem was serious enough. Overall, the Fed gave temporary access to nine authorities in addition to the five that it has permanent arrangements with for making dollars available.(2) Emerging economies like India, Indonesia, Chile and Peru, though, have seen their requests for swap lines rebuffed in the past. The U.S. only helps those it sees as important to the stability of its own banking system.So what can Asia do? Start with the most extreme case. Australia needs U.S. dollar funding not just for foreign-currency loans but also for Australian dollar mortgages. That’s because the domestic deposit base is small, compared with the size of the banking industry. The average loan-to-deposit ratio of Macquarie Bank Ltd. and other major Australian lenders was 126% versus 68% for the top Asian banks, namely DBS Group Holdings Ltd., Mizuho Financial Group Inc., MUFG, Standard Chartered Plc, and HSBC Holdings Plc, according to banking analyst Daniel Tabbush, founder of Tabbush Report.Offshore funding sustains around one-third of major Australian banks' total worldwide operations. While the International Monetary Fund and others have flagged the reliance on foreigners as problematic, the Australian regulators have so far refrained from discouraging lenders to borrow abroad. Yet, the fact that the country had to seek dollars from the Fed during the epidemic upheaval and auction them to its banks will call into question the sagacity of this relaxed approach. In rest of Asia, one lesson from the dollar squeeze is to shun protectionism. Well-capitalized regional banks like Singapore’s DBS could supplement the three traditionally entrenched foreign lenders: HSBC, StanChart, and Citigroup Inc., a big cash management bank for Western multinationals. DBS could emerge as an Asian global bank, though in good times its expansion has been stymied by regulators playing to nationalist political sentiment, as we saw when it wasn’t allowed to buy Indonesia’s PT Bank Danamon in 2013.The next step may be to seek more intermediaries with scale. JPMorgan Chase & Co. is pumping top dollar into serving corporate treasuries as a safeguard against the fickle fortunes of investment banking. Japan’s lenders could also do more: MUFG is already one of the region’s most aggressive lenders and has the historical advantage of having a dollar clearing license, like HSBC. Unlike 2008, this isn’t a credit contagion yet, though that could change if large, messy financial bankruptcies were to erupt. But beyond the current crisis, the regulators must plan for the next squeeze. Since not everyone can rely on the Fed, the dollar supply chain is each country’s responsibility. At least until a credible alternative to the U.S. currency comes along. (1) The standing facilities are with the Bank of Japan, the Bank of England, the Bank of Canada, the Swiss National Bank and the European Central Bank.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- As the shortage of dollars sweeps the globe, cracks are starting to show up in Asia’s emerging markets, despite the hefty foreign-reserve cushions built up over the years.The squeeze on U.S. currency is putting pressure on emerging Asia debt. Southeast Asian and Indian government and corporate payments are set to jump 67% in 2022 to $41.9 billion, according to data compiled by Bloomberg. Dollar payments are expected to peak at $44.4 billion in 2024.While the Federal Reserve has ventured into unchartered territory to fight a slowdown in the world’s largest economy, Indonesia, Malaysia, and India are raising red flags for analysts as the coronavirus outbreak shutters large parts of their economies, currencies plunge and governments push to widen their fiscal deficits. It’s all a wakeup call for emerging Asia, which has been seen as relatively sheltered compared to peers globally, given flush foreign reserves, current-account surpluses in many countries and regional swap lines to tap on in crisis.“No one is facing imminent balance of payments pressure here,” said Christian de Guzman, senior vice president at Moody’s Investors Service in Singapore. “But given the way markets are right now the option of refinancing for them may be a bit difficult. There’s already some pressure on their local currencies. The cost of funding may have actually increased.”Indonesia and India are of particular concern, given the twin deficits on their budget and current accounts, which make them more reliant on foreign inflows than peers.IndonesiaFiscal pressures are building in Indonesia, where the government is considering lifting its deficit cap to 5% of GDP from 3%. The central bank is predicting the current account deficit will come in at 2.5%-3% of GDP this year, and foreigners own 35% of Indonesian local-currency government bonds, among the highest in Asia based on available data.The rupiah has taken a beating, weakening about 16% against the dollar so far this year, making it the worst-performing currency in Asia. That will put pressure on companies refinancing their dollar debt, said Xavier Jean, senior director for corporate ratings, at S&P Global Ratings in Singapore.“The credit quality of Indonesian companies as a whole has been steadily declining over the past three years because of steady capital spending, growing debt, intense competitive pressure and more challenging operating conditions, especially in the real estate sector,” he said.Almost one-third of the credit ratings in the Indonesian corporate sector, excluding state-owned firms, are on negative outlook -- signaling further deterioration in their credit profile over the next three to 12 months, Jean said. That’s the highest level since the global financial crisis, he added.The yield on Indonesian state oil and gas firm PT Pertamina Persero’s dollar bonds due July 2029 surged 205 basis points this month to 5.21%. Similarly, the rate on Malaysia’s Petroliam Nasional Bhd’s dollar debt due October 2026 jumped 132 basis points to 3.29%.Among the eight local sovereign bond markets in emerging Asia tracked by Bloomberg, Indonesia and Malaysia have the biggest losses so far this month at 19% and 10% in dollar terms, respectively. The yield on Indonesia’s benchmark 10-year bond has climbed to 8.38%, the most since 2018, while that on Malaysia rose to 3.58%, near an eight-month high.IndiaIn India, similar pressures are building. Global funds have sold net $7 billion of rupee-denominated debt so far this month through March 23, based on data compiled by Bloomberg. The rupee has plunged to an all-time low and stocks fell by a record Monday after the government moved to lock down the country of 1.3 billion people.The market sell-offs show both Indonesia and India as being the “most, and increasingly, troubled,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore. Currency plunges and external debt servicing are problems that could compound one another, he said.The central banks in both countries have been accelerating steps to shield the economy from the market fallout. Indonesia has cut interest rates twice this year, increased intervention in the currency market and purchased bonds from the secondary market. The Reserve Bank of India has pumped liquidity into the banking system.MalaysiaNatixis SA highlights risks around Malaysia, assessing it as one of the least liquid of 11 economies in the region, according to a March 18 note by chief Asia-Pacific economist Alicia Garcia Herrero and emerging Asia senior economist Trinh Nguyen.Malaysia’s high reliance on foreign income -- including commodities exports that account for 15% of GDP, and shipments of intermediate goods that are 49.5% of GDP -- make it particularly vulnerable, according to Natixis.By industry sector, oil and gas as well as metals and mining are under greater pressure right now, and account for a higher share of dollar credit in South Asia than in North Asia, said Ek Pon Tay, senior portfolio manager at BNP Paribas Asset Management in Singapore.“Beyond the immediate liquidity squeeze coming from the global credit crunch via the capital account, the decline of commodity prices is adding another pressure,” the Natixis analysts wrote. For commodity-reliant economies like Malaysia, “the contraction of earnings and USD will impact these exporters and the economy.”(Updates with local bond moves in 11th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Strains in dollar funding markets re-emerged late Wednesday after global currency markets turned suddenly illiquid as U.K. authorities considered locking down London, the center of foreign-exchange trading.Cross-currency basis swaps for the euro-dollar pair, a proxy for how expensive it is to acquire the greenback, showed renewed signs of stress following a brief reprieve. On Tuesday, they touched levels last seen in 2011, before euro-area banks took $112 billion made available through a special central bank operation, providing a brief period of respite.Dollar funding markets more broadly got a bit of a breather in the wake of new Federal Reserve policy measures and news of a U.S. Treasury department proposal to support America’s money-market mutual funds, but these improvements also pared as the day wore on. Commercial paper rates, meanwhile, have continued to climb.“Corporates around the world are drawing on their credit lines to ensure they have enough liquidity,” Robert McAdie, BNP Paribas SA’s chief cross-asset strategist, wrote in a note. “This is creating a surge in the cost of dollar liquidity.”Here’s a look at some key funding metrics:Cross-Currency Basis SwapsThree-month euro-dollar cross-currency basis swaps inched wider, after tightening to as much as 11 basis points, a slight premium for getting euros.Libor-OISThe gap between the three-month London interbank offered rate for dollars and overnight index swaps sat at its widest since 2009 as of Wednesday’s setting, led by an increase in the key global fixing. The so-called FRA-OIS spread -- which is futures traders’ outlook for the trajectory of funding stress going forward -- also expanded after earlier improvement.Commercial PaperRates on three-month commercial paper for non-financial companies reached a record relative to OIS. As companies raise cash ahead of an economic slowdown, they appear to be having difficulty selling the short-term IOUs -- a common occurrence during times of stress when money funds show a preference for safe assets.However, the Fed’s late Tuesday announcement of a Primary Dealer Credit Facility may support sentiment. This allows primary dealers to borrow at the 0.25% discount window by pledging different assets, including investment grade debt securities and municipal bonds. Alongside the earlier announced commercial-paper facility, this will begin on March 20.Read more: Why It Matters That the Libor-OIS Spread Is Widening: QuickTake(Updates moves throughout.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Hedge fund behemoth Bridgewater has shown its hand in Europe with roughly $15 billion in bets against companies on the continent and in Great Britain, filings reviewed by Reuters show. The world's biggest hedge fund manager's short positions amount to more than $5.3 billion in France and $4.7 billion in Germany, while in Spain its shorts add up to almost $1.4 billion and $821 million in three Italian companies. Hedge funds engage in the practice of 'shorting' by borrowing a stock from an institutional investor, such as a pension plan, and selling it back at a profit when the price drops.
(Bloomberg Opinion) -- Since taking over as the euro zone’s main banking supervisor, the European Central Bank has spearheaded efforts to reduce the amount of bad loans that had cumulated throughout the great recession and the euro zone sovereign debt crisis. This pile has fallen from 6.8% of total loans at the peak in the December 2015 to 2.9% in September 2019.But critics, including the Bank of Italy, have insisted that the ECB has been blind to another risk lurking within the banking system: illiquid Level 2 and Level 3 assets, such as interest rate swaps or unlisted equity investments, which are hard to value and dispose of and can be especially problematic during these times of financial stress. These assets sit on the balance sheets of many banking giants such as Deutsche Bank AG and BNP Paribas SA. In light of new research, the supervisor would be wise to monitor the level of these assets among smaller banks, too.To be sure, Italy’s warning was in part self-serving: the country had a particularly high proportion of bad loans, which has come down sharply only in recent years. But regulators and supervisors should certainly be asking whether they are doing enough to ensure that Level 2 and Level 3 assets won’t contribute to the next financial crisis – especially since these played an important role in the 2008 crash.The European Systemic Risk Board, the body in charge of monitoring threats to the financial system as a whole, has produced a study to examine the dangers behind these instruments. They suggest that supervisors pay greater attention to the exposures of mid-sized banks, which are often less transparent than Europe’s banking giants in disclosing their assets. The report documented a high level of heterogeneity in disclosing Level 2 and Level 3 assets by individual banks. The authors looked at a sample of 22 lenders from the European Economic Area – including the 11 systemically important banks. They found that all the largest banks, including the likes of Deutsche Bank and BNP Paribas, have high levels of transparency.Conversely, smaller banks are more cagey about what they hold. In fact, the amount of detail they give declines as the proportion of Level 2 and Level 3 assets increases. This means that supervisors who are worried about the role of these instruments should also look beyond the usual suspects that are the larger banks. While these may be a concern for the size of their balance sheets, smaller lenders may have more to hide.The report offers a list of sensible recommendations. These include demanding greater transparency from smaller, individual banks, and speeding up Europe’s implementation of the “Fundamental Review of the Trading Book”, a set of capital rules for trading activities that was internationally agreed upon by the Basel Forum last year.However, the most important check on the real health of banks must come from supervisors monitoring individual ones. They need to verify that the valuations of individual assets and the models used to evaluate risk are realistic. Level 2 and Level 3 assets need not be dangerous, so long as the ECB ensures they are properly accounted for.To contact the author of this story: Ferdinando Giugliano at email@example.comTo contact the editor responsible for this story: Nicole Torres at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Ferdinando Giugliano writes columns on European economics for Bloomberg Opinion. He is also an economics columnist for La Repubblica and was a member of the editorial board of the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
For many investors, the main point of stock picking is to generate higher returns than the overall market. But its...
MILAN/LONDON, Feb 6 (Reuters) - European banks have started 2020 on a strong note, much like their rivals in the United States, with a revival in bond trading offsetting pressures from negative interest rates. The European bank shares index erased all of its year-to-date losses on Thursday as strong trading and fee revenues from major banks in the region pointed to a better-than-expected earnings season. Although BNP Paribas had to cut profit targets on Wednesday because of the lower for longer rate environment, investors reacted positively to the French bank's bumper trading revenues.
BNP Paribas is looking for further opportunities to expand its investment banking franchise in Europe and fortify its lead over local rivals after last year taking over Deutsche Bank's electronic equity and prime broking operations. France's biggest bank has jumped to the top of Europe's investment banking league tables by gaining market share in fixed income and equities trading, as others pare back or exit. Yann Gerardin, head of corporate and institutional banking at BNP Paribas, told Reuters after the bank reported a doubling of fourth quarter global markets revenue that it would examine openings like the Deutsche one if they arose.
Credit Suisse , BNP Paribas and French public investment bank Bpifrance are the latest lenders to join an initiative to link provision of shipping finance to cuts in carbon dioxide emissions. Global shipping accounts for 2.2% of the world's CO2 emissions and the industry is under pressure to reduce those emissions and other pollution. Last year, a group of leading banks signed up to environmental commitments known as the "Poseidon Principles", whereby financiers will for the first time take account of efforts to cut CO2 emissions when providing loans to shipping companies.
Britain's finance sector is losing hope of securing even basic access to European Union markets from Dec. 31, as talk that the EU wants UK fishing rights in exchange draws the industry into a political struggle between the bloc and its departing member. Hopes were high that Prime Minister Boris Johnson would prioritise the financial sector -- Britain's largest export industry and biggest corporate tax generator -- in trade talks. Until now, financial firms running EU operations from Britain believed that technical assessments by EU banking, insurance and markets regulators would be enough judge UK rules 'equivalent' to those governing EU-based firms, granting them market access after December.
France's BNP Paribas is joining forces with three other major French companies to set up an innovation centre in Brazil to foster startups accelerating digital transformation and help the bigger firms become more efficient. Based in Brazil's richest city, Sao Paulo, the 1,000 square-meter hub, called La Fabrique, will be shared with Carrefour Brasil SA , pre-paid meal vouchers and card provider Edenred and financial transaction systems developer Ingenico Group . "We are looking for startups that may help BNP gain efficiency," BNP Paribas Chief Executive and country head Sandrine Ferdane told Reuters in an interview.
Stress testing of banks in the European Union to check their ability to withstand market shocks without taxpayer help should be eased to cut bank costs, the EU's banking regulator proposed on Wednesday. The European Banking Authority (EBA) proposed a new framework that would allow banks to publish their own results of the stress test alongside the EBA's. Only one set of results are published now. "The framework we are proposing today aims at making the EU-wide stress test more informative, flexible, and cost-effective," EBA Chair Jose Manuel Campa said in a statement.