Financials on Friday: What Have We Learnt This Week?

Financials on Friday: what have we learnt this week?

• Regulatory issues (again). PKO in Poland gave figures for the size of its CHF mortgage issues which is a negative lateral for Santander, ING and the other Polish majors. The UK FCA’s motor finance review hit Lloyds for GBP450m (less than some fears) but could be like pensions mis-selling and PPI… a long, slow, painful series of ever-larger numbers.
• China – the dog that’s failed to bark (this week). HSBC results showed a write-down on its equity position in BoComm over there but little “meltdown” beyond (<USD1bn of charges). StanChart did similarly over China Bohai but only USD282m in charges.
• Strategy revisits; Barclays did little new (the press even used the “deckchairs” analogy) aside from that bumper buyback and StanChart, other than reshuffling mgmt, has also gone the gradualist route.
• Buybacks galore;Barclays led the charge with GBP10bn over 3yrs (40% of market cap!) allied to pretty lacklustre results, Lloyds are going for GBP2bn (with results showing good UK credit quality) and StanChart with USD1bn (and a commitment to more in future years). Banks failing to chase revenue growth tends to be a good thing in the long term. Allianz rounded the week out with a EUR1bn buyback (a 10pp hike in dividend payout ratio).
• Animal spirits: Capital One buying Discover in the US (USD35bn deal) which, sadly, removes a possible buyer for Barclays’ US consumer business (just as mgmt there helpfully carved that out as a separate division). Italian state’s lock-up on its stake in Monte Paschi has ended – the press is adding more heat than light to the fate of that bank. BPER has (notionally) ruled itself out.