Tag Archives: Too Big To Succeed

China’s Largest Conglomerate Is On The Verge Of Bankruptcy

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“Despite being one of China’s largest conglomerates, HNA has been shut out of stock and bond markets as lenders worry about its outsized debt load, forcing the company to pledge some of its core holdings as collateral for short-term loans, as the Wall Street Journal  reported last month. And yet, even as the company resorted to loaning out shares and entering into arcane derivative financing agreements to finance its debt-service payments, it quickly found out that traditional avenues of financing are disappearing or becoming too costly.”

Read more: https://www.zerohedge.com/news/2018-01-30/chinas-largest-conglomerate-verge-bankruptcy

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America’s Biggest Problem is Government, Say Most Americans Since Nixon Era

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“23 percent of Americans say that the government is America’s biggest problem.  ‘That’s about exactly what is was before Nixon resigned,’ Jones said, referring to the Watergate era.  One might be tempted to view this result as solely caused by disgust with President Donald Trump or his policies. But that’s not really the case, or not entirely. The commentators point out that the poll is similar to findings from 2014-2015 when Barack Obama was president.”

Read more:  https://fee.org/articles/americans-say-americas-biggest-problem-is-government/

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Judge bars Starbucks from closing 77 failing Teavana stores

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“An Indiana judge has taken an unusual step and temporarily barred Starbucks from closing 77 failing Teavana stores in Simon Property Group malls because the real estate giant was less able to handle the financial pain.”

Read more: https://nypost.com/2017/12/01/judge-bars-starbucks-from-closing-77-failing-teavana-stores/

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Fed ends ‘too big to fail’ lending to collapsing banks, with caveats

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“The Fed’s new restrictions come from the Dodd-Frank Act of 2010, which brought in a wave of reforms after the financial crisis.  Under the new rule, banks that are going bankrupt — or appear to be going bankrupt — can no longer receive emergency funds from the Fed under any circumstances.  However, it’s important to note that the new rule allows the Fed to judge by its own measures whether a firm qualifies for its emergency aid.  The idea is the Fed can still lend to banks during times of emergency, but the bank must be able to pay it back. Yet the true health of a bank in turmoil can be very difficult to assess.”

http://money.cnn.com/2015/11/30/news/economy/fed-adopts-rule-to-end-too-big-to-fail/

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Rolls-Royce Lays Bare Entrenched Failings to Stunned Investors

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“Rolls-Royce Holdings Plc Chief Executive Officer Warren East revealed the full extent of the earnings meltdown facing Britain’s leading manufacturing company and said he’s uncovered issues with its organization and management that run deeper than was apparent when he took over in July.  East’s comments come as a further blow to a business that was regarded as Britain’s biggest industrial success story, recovering from bankruptcy to become a poster child of Margaret Thatcher’s privatization drive and take on the likes of General Electric Co. The CEO said he sees no quick fix, effectively writing off a recovery before 2017, when the results of a restructuring plan begin filtering through.”

http://www.bloomberg.com/news/articles/2015-11-12/rolls-royce-says-2016-profit-to-be-hit-by-990-million-headwind

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U.S. Banks to Face $120 Billion Shortfall in Fed Crisis Plan

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“The largest U.S. banks would face a $120 billion total shortfall of long-term debt under a Federal Reserve proposal aimed at ensuring their failure wouldn’t hurt the broader financial system.  Banks such as Wells Fargo & Co. and JPMorgan Chase & Co. will be required to hold enough debt that could be converted into equity if they were to falter, according to a Fed rule that was approved by a unanimous vote on Friday. The Fed’s proposal, which applies to eight of the biggest U.S. banks, requires debt and a capital cushion equal to at least 16 percent of risk-weighted assets by 2019 and 18 percent by 2022.”

http://www.bloomberg.com/news/articles/2015-10-30/u-s-banks-to-face-120-billion-shortfall-under-fed-crisis-plan

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Global Banks Face $1.2 Trillion Shortfall Under Proposed FSB Rules

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“The world’s 30 biggest banks, including HSBC, JPMorgan Chase and Deutsche Bank, would need to raise as much as $1.2 trillion in total loss-absorbing capacity by 2022 under proposed rules published Monday by Europe’s Financial Stability Board (FSB).  Under the proposed rules, which would apply to 30 global banks identified by the FSB as ‘systemically important,’ the lenders will have until January 2019 to create a financial buffer, or Total Loss Absorption Capacity (TLAC), of at least 16 percent of their risk-weighted assets. The minimum TLAC requirement will gradually increase, rising to 18 percent by January 2022.”

http://www.ibtimes.com/global-banks-face-12-trillion-shortfall-under-proposed-fsb-rules-2175047

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Junk-Bond Issuance Surges to $26 Billion in the Last Stages of Boom

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“Speculative-grade borrowers raised about $26 billion of debt this month, more than double what was sold in October. That made it the busiest month for the riskier borrowings since May. Issuance was dominated by companies whose credit profile is on the rise and those who were willing to pay up.  Investors are more discerning in a junk-bond market where a rout in commodities may leave them with the first loss since 2008. And even as issuance of the debt picked up this month, this year’s tally of $275.6 billion is down by 21.6 percent from last year’s pace.”

http://www.bloomberg.com/news/articles/2015-11-25/junk-bond-issuance-surges-to-26-billion-in-last-stages-of-boom

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European banks sitting on €1tn mountain of bad debt, survey finds

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“European banks are sitting on bad debts of €1tn – the equivalent to the GDP of Spain – which is holding back their profitability and ability to lend to high street customers and businesses.  The €1tn (£706bn) of so-called non-performing loans amount to almost 6% of the total loans and advances of Europe’s banks and 10% when lending to other financial institutions are excluded. The equivalent figure for the US banking industry is around 3%. As well as bad debts, the EBA pointed to the cost inefficiencies and the cost of so-called conduct issues, such as fines, compensation and legal costs, which absorb almost 4% of banks’ operating income.”

http://www.theguardian.com/business/2015/nov/24/european-banks-one-trillion-euros-bad-debt

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One of the biggest Wall Street dealmakers sounds the alarm on M&A

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“Total M&A activity is also at the highest level since 2007, with global volumes at $2.9 trillion for the year to date, according to the data provider Dealogic. That is up around 38% on the same period last year.  Effron has been one of the biggest beneficiaries. He advised Kraft on its $58 billion merger with Heinz, and he is advising General Electric of its disposal of $200 billion of assets, according to Centerview’s website.  He added that the high valuations in the M&A wave were being justified in the context of today’s environment of low interest rates. That isn’t likely to last forever.”

http://www.businessinsider.com/blair-effron-on-mergers-and-acquisitions-activity-2015-8

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