Brief: Private equity firm Blackstone said on Tuesday its proposed 1.36 billion euro ($1.47 billion) takeover of NIBC Holding NV might not win regulatory approval, sending shares in the Dutch bank 12% lower. “There is substantial uncertainty concerning the business plan and it continuing to be a realistic basis for obtaining regulatory clearance,” Blackstone said. “The relevant regulators have not yet given any indication of their views in this respect.” NIBC shares traded down 12% at 0900 GMT in Amsterdam. Blackstone also warned that NIBC’s decision to postpone its dividend payments meant it could no longer guarantee the financing of the deal. NIBC this month decided to postpone dividend payments at least until the second half of the year, as European banks came under pressure to improve their capital positions to be able to weather losses caused by the coronavirus pandemic.
Brief: The investment chief of Veritas Pension Insurance Co. says he doesn’t understand why there are glimmers of hope in equity markets, as he sells stocks and buys government bonds to protect his portfolio. “There is a lot of optimism at the moment in the equity market that the crisis will soon be over, but I don’t believe it will,” said Kari Vatanen, who oversees 3.3 billion euros ($3.6 billion) as chief investment officer of Veritas in Finland. “In the real economy, we are going to see data getting worse, week after week.” Vatanen, who spoke after delivering first-quarter results that showed a 10% loss due to the rout triggered by Covid-19, says he’s been busy cutting risk in his portfolio since he started last month.
Brief: HSBC Holdings PLC (HSBA.L) on Tuesday warned of more earnings pain ahead after first-quarter profit nearly halved as it set aside a hefty $3 billion in bad loan provisions due to the coronavirus pandemic. Europe’s biggest bank said the outbreak would mean sustained pressure on its revenues as customer activity declined and lower interest rates squeezed margins, while noting increased fraudulent activity could lead to “potentially significant” credit losses. The bleak outlook, shared by many lenders reporting earnings this season, underscored the scale of the problems facing the sector as it grapples with corporate borrowers in crisis, plunging stock and oil prices, as well as low interest rates. HSBC’s new Chief Executive Officer Noel Quinn faces additional hurdles as plans to cut costs through layoffs - part of a wider restructuring unveiled in February - have been put on hold due to the pandemic.
Brief: The world’s largest wealth manager, UBS (UBSG.S), reported a 40% rise in quarterly profit on Tuesday, with its core business enjoying its best three months since 2008, thanks to a restructure and rich clients reshuffling portfolios to respond to the coronavirus outbreak. The bank booked net profit of $1.595 billion, slightly ahead of its previous guidance of around $1.5 billion. It reported strong operating growth across all but one of its business divisions, even after accounting for the risk of increased defaults resulting from the virus. “This quarter, I can comfortably say, you saw UBS at its best,” Chief Executive Sergio Ermotti said on a call to analysts and journalists, sounding a confident note on the bank’s preparedness as it braces for headwinds from a fall in asset valuations, sinking interest rates and a slowdown from bumper client activity levels.
Brief: The economic aftermath of the 2008 financial crisis was so tepid it was referred to as the “Great Recession”. In the wake of the coronavirus catastrophe, investors need to brace for the “Great Repression”, which may be even uglier than the downturn of a decade ago. That is the takeaway from an analysis out on 27 April from economist David Rosenberg. Rosenberg is often considered a “perma-bear”, but that is not entirely fair. He has had his optimistic spurts. This just isn’t one of them. In the “base case” for the US economy, published by his firm, Rosenberg Research, the economy “reopens” in May, in a staggered approach across industries and regions. There are “periodic setbacks in terms of COVID-19 case counts…sufficient to make people less comfortable and confident about spending then they did prior to the crisis. A vaccine is not developed in this forecast, but treatment that alleviates the worst respiratory symptoms” is developed within the next six months, he writes.
Brief: MFS Investment Management has closed its global energy fund after assets dropped to around $2m with limited prospect of further growth, Citywire Selector has learned.The specialist fund, which was formally called theMFS Meridian Funds – Global Energyfund, was overseen by James Neale. It was officially liquidated on 15 April 2020. MFS IM wrote to investors at the end of February about its plans to close the fund when it had around $6.8m in assets under management. It originally launched the strategy as a Luxembourg-domiciled fund in February 2009. In a short statement toCitywire Selector, a spokesperson for MFS IM said: ‘As MFS does not believe the fund will grow to a viable size, we believe that liquidation best serves the interests of Funds shareholders. The liquidation took place on the 15 April 2020.’