Latest news with #TommyReggioriWilkes
Yahoo
11-06-2025
- Business
- Yahoo
UBS shares slide 7% after analysts say Swiss capital rules put buybacks at risk
By Tommy Reggiori Wilkes LONDON (Reuters) -Shares in UBS dropped 7% on Tuesday as analysts voiced concern about the impact of new government proposals to force the Swiss lender to hold $26 billion in extra capital, including on the bank's plans to return cash to shareholders. UBS' stock had risen after the government on Friday announced its proposals to prevent another Credit Suisse-style meltdown. But on Tuesday the shares reversed those gains and fell sharply. By 1235 GMT they were down 6.6% at 26 francs, set for their biggest one-day drop in two months. Swiss markets were closed on Monday. The bank's capital returns to investors for 2026 and beyond remain uncertain, Deutsche Bank analysts said in a note, even as UBS on Friday reaffirmed its intention to return $3 billion in capital this year. Traders also cited worries about the impact on UBS's buyback plans as a reason for the share price fall. JP Morgan analysts said they had already lowered their buyback estimates to $3.5 billion from $6 billion for next year, and to $4 billion from $8 billion in 2027, because the Swiss proposals were the "worse-case scenario". "We are thus already pricing the worst case scenario, leaving upside from any improvement in the final rules. We think with the share price reaction today, UBS shares have priced these proposals more than enough," they said on Tuesday. Others disagreed about the likely impact on buybacks. UBS should be able to manage the extra capital demands without affecting future buybacks and dividends, Citi analysts said. But they were worried about the rules being amended as they move through a consultation and legislative process, and about UBS' consensus earnings momentum, "which continues to be weaker than peers on ongoing NII (net interest income) softness." Uncertainty over the capital requirements have clobbered UBS shares. So far this year the stock has lost nearly 9%, against a 30% rally in a European banking share index. While the government proposals confirmed some of UBS' worst fears, the bank will have six to eight years to prepare for them becoming law, a time in which the rules may change. UBS executives say the additional capital burden will put the Zurich-based bank at a disadvantage to rivals and on Friday called the requirements "extreme" and "neither proportionate nor internationally aligned." Switzerland's Finance Minister Karin Keller-Sutter said the measures were crucial for financial stability and would protect taxpayers. (Additional reporting by Danilo Masoni in Milan and Siddarth S in Bengaluru; Editing by Amanda Cooper and Hugh Lawson)
The Star
10-06-2025
- Business
- The Star
Societe Generale to launch dollar-pegged stablecoin
PARIS (Reuters) -French bank Societe Generale will launch a dollar-backed stablecoin via its crypto subsidiary SG-FORGE, becoming the first major European lender to launch a dollar-pegged cryptocurrency in the booming market for stablecoins. The cryptocurrency, called "USD CoinVertible", will exist on the Ethereum and Solana blockchains and is expected to be publicly tradable from July, SG-FORGE said in a statement on Tuesday. (Reporting by Elizabeth Howcroft; Editing by Tommy Reggiori Wilkes)
Yahoo
23-05-2025
- Business
- Yahoo
Analysis-Rome's seat at Italian bank M&A table keeps investors guessing
By Valentina Za and Tommy Reggiori Wilkes MILAN/LONDON (Reuters) -Rome's determination to have a say in the reshaping of Italy's financial sector has made things increasingly unpredictable for investors who have waited years for consolidation of the country's fragmented banking landscape. UniCredit and its CEO Andrea Orcel are locked in a standoff with the Italian government over the bank's bid for smaller rival Banco BPM. Italy's second-largest lender said on Friday it would challenge in court the conditions the government has imposed for its bid to proceed, after securing a 30-day suspension of the offer while it disputes Rome's demands. Italy has special powers it can use to protect national security interests but these have become a major hurdle to some of the M&A efforts in the banking sector. "Things have turned out completely differently than expected," said David Benamou, chief investment officer at Axiom Alternative Investments, whose European bank fund holds positions in some Italian lenders. "There are many moving parts and when politics get involved it's much more difficult to anticipate the drivers." Andreas Kokkinis, an associate professor at the University of Birmingham's law school, who has published work on bank corporate governance, described the conditions Rome has placed on UniCredit's bid for BPM as "unusual". "This is clearly motivated by 'national interest' type of concerns and not merely by financial stability or customer protection concerns," he said, adding that this type of behaviour can harm shareholders as well as economies. Italian Economy Minister Giancarlo Giorgetti has defended the government's right to vet banking deals, saying EU states are in charge of national security. The ministry did not immediately reply to a request for comment. The government was one of the instigators of the dealmaking flurry, when in November it sold a stake in Monte dei Paschi di Siena. That has since led to seven banking takeover offers in just six months. POLITICS VS MONEY Politicians' desire to influence the make-up of their banking industries - motivated partly by job protection - is playing out elsewhere in Europe too, slowing the consolidation that bank executives and supervisors say is needed. Germany opposes UniCredit's ambition to acquire Commerzbank, and the Spanish government is unhappy about BBVA's bid for domestic peer Sabadell. Investors see Italy as a testing ground for the merger activity that would help European banks close a profitability and valuation gap with U.S. rivals. M&A speculation is helping to keep European bank stocks near 17-year highs, though falling interest rates pressure earnings. Shareholders interviewed by Reuters are convinced there is no alternative to reducing the number of players. "Our playbook here is the United States," James Davidson, co-manager of the Artemis Global Income Fund, told Reuters. "The number of U.S. banks has halved in the past 22 years; we expect it to halve again. The biggest U.S. banks have grown market share quickest – leveraging technology & scale." Italy's conservative government has its own view. It has repeatedly said it would use the re-privatisation of MPS, which it rescued in 2017, to create a bigger competitor to market leaders Intesa Sanpaolo and UniCredit. "It surely looks messy, but the dynamics are quite clear: politics on one side and people trying to make money on the other. A compromise needs to be found," Benamou said. OPPORTUNITIES AND RISKS To promote its agenda, Rome in November sold chunks of MPS to the Del Vecchio and Caltagirone families, who are also major investors in insurer Generali and in its biggest shareholder, merchant bank Mediobanca. In response, UniCredit's Orcel has sought to bolster the bank's leverage, building a 6.7% Generali stake and throwing his weight behind Caltagirone at a key Generali shareholder vote. Orcel needed allies after UniCredit's swoop on BPM deprived Italy's Treasury of its favoured merger partner for MPS, which has since bid for larger rival Mediobanca. To fend off the MPS takeover, Mediobanca moved on Banca Generali, a private bank owned by Generali. It would finance the deal by handing over its stake in the insurer. The web of dealmaking is complicated, but for investors the M&A chaos is better than the years of stasis that preceded it. "Now banking consolidation has struck," said Andrea Scauri of Lemanik Asset Management. "I see it positively: it carries opportunities. Also risks, if you find yourself on the wrong side of the trade, but that's for investors to navigate." Some, however, worry that the rewards from having fewer banks risk being lost. "Consolidation aims to strengthen Italy's banks but governance weaknesses rooted in ownership structures and possible political agendas threaten to undermine its benefits," said Guy de Blonay, fund manager at London-based Jupiter Asset Management. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-05-2025
- Business
- Yahoo
Britain to bar consumers from borrowing to buy crypto under new regime
By Tommy Reggiori Wilkes LONDON (Reuters) -Britain is to restrict consumers' use of credit cards to buy crypto and their access to crypto lending products, the regulator said on Friday, a move aimed at improving protection as cryptoassets are regulated for the first time. The finance ministry this week said it would bring cryptocurrencies under compulsory regulation, with exchanges, dealers and issuers all coming under the existing rulebook. Crypto trading has exploded in popularity, with around 7 million people - about 12% of the adult population - owning cryptoassets, but it remains largely unregulated, the Financial Conduct Authority (FCA) said. The regulator maintains consumers "should be prepared to lose all their money" if they invest. Announcing new draft laws to regulate the sector, the government said it wanted to crack down on "bad actors" while supporting legitimate innovation in the burgeoning industry. The FCA is now looking at introducing curbs on retail investors using borrowed funds for crypto. "We are considering a range of restrictions, including restricting the use of credit cards to directly buy cryptoassets, and using a credit line provided by an e-money firm to do so," it said in a paper seeking feedback on its proposals. Consumers would still be free to use borrowed money to buy stablecoins, digital currencies that aim to keep a fixed value relative to other assets such as the U.S. dollar, issued by FCA-regulated companies. The FCA, citing a survey it commissioned, said 14% of crypto investors had used credit to buy crypto last year, up from 6% in 2022. The regulator is also considering restrictions on the lending and borrowing of cryptoassets, including running credit checks and testing consumers' investment knowledge and experience. Cryptoasset lending involves the owner loaning their crypto in return for a yield, while cryptoasset borrowing sees customers get loans in crypto that are later paid back with interest. While a small part of the market, cryptoasset lending and borrowing presented "risks of significant harm", the FCA said, including loss of ownership, liquidity risks, limited borrower creditworthiness checks and a lack of consumer understanding. Institutional investor access would remain, it added. The regulator will also seek to improve transparency and consumer understanding of 'staking' - locking digital tokens in a blockchain network in return for rewards. A survey the FCA commissioned found 27% of UK adults who own crypto have used staking. Hannah Meakin, partner at law firm Norton Rose Fulbright, said the FCA was trying to balance innovation with appropriate oversight, "yet this is no easy feat and the proof will be in the pudding as to whether they can get this balance right." Sign in to access your portfolio
Yahoo
30-04-2025
- Business
- Yahoo
Europe's major banks signal caution as ominous outlook tempers profit wins
By Sinead Cruise and Tommy Reggiori Wilkes LONDON (Reuters) -Big European lenders are retaining ambitious performance targets after bumper first-quarter profits this week, but beyond the upbeat headline numbers, bank bosses are contemplating a welter of threats to their future earnings prospects. A global trade war unleashed by U.S. tariffs, the highest in a century, has prompted some economists to raise the odds on recession, with about 40 companies worldwide pulling or lowering their forward guidance in the first two weeks of the first-quarter earnings season, a Reuters analysis showed. With only a handful of data points tracking the early impact of U.S. President Donald Trump's tariff plan, most banks have held firm to shareholder payouts and profitability objectives but customers are already showing caution and provisions against bad loans are making a comeback. "While it's too early for lenders to make strategic shifts, the rise in bad loans is a clear warning sign," said Douglas Grant, CEO of financial services company Manx Financial Group. Grant said slowing GDP growth, rising wage costs, and geopolitical instability were already pushing small businesses to cut investment, scale back growth plans and preserve cash. European banks have enjoyed a run of record profits and soaring share prices for the past two years, and investors have quickly pushed their shares back towards multi-year highs after a dramatic dip in early April. Deutsche Bank produced a 39% rise in first-quarter profit on Tuesday after its investment bank's bond and currency trading revenue surged. But the results included a hit from a large single-loan writedown and provisions for the possible impact of tariffs on clients. Britain's Barclays on Wednesday also highlighted intense financial market activity as a driver of higher investment banking income. At UBS, trading revenue increased 32% to $2.5 billion in the three months to end-March. 'UNPREDICTABLE' Several banks surpassed analyst expectations in the first three months of the year but future customer appetite for risk is becoming harder to read. "There was some activity in response to the big market catalyst that we saw at the very beginning of April, but there is more and more uncertainty getting priced in," said UBS Chief Financial Officer Todd Tuckner. CEO Sergio Ermotti said the economic outlook was "particularly unpredictable", with corporate dealmaking on hold, although not yet cancelled. Although also beating analyst expectations, HSBC on Tuesday raised the spectre of lower loan demand and an erosion in credit quality due to the broader tariff fallout. Barclays CEO C.S. Venkatakrishnan struck a similarly sober tone. "...We have to protect ourselves, as we always do with active risk management," Venkat told reporters. "We have long established programmes to transfer and hedge with, and we will continue to do so as warranted by this environment." DOMESTIC LENDING With global trade uncertainty likely to dampen returns from trade finance and lending to multinational corporate customers, some banks are betting on resilient domestic consumer lending businesses to help weather any downturn. Spain's Santander said profit at its retail business, and its corporate and investment banking division, rose 24% and 13% respectively, offsetting weaknesses in Mexico and Brazil. In France, retail banking and equities trading boosted Societe Generale. The CEO of BNP Paribas said last week that the bank was preparing to capitalise on opportunities arising from a slowdown such as M&A and restructuring activities as well as Europe's drive to revive economic growth and increase defence spending. (Additional reporting by Mathieu Rosemain, Stefania Spezzati, Ariane Luthi, Lawrence White and Jesus Aguado. Editing by Jane Merriman)
