>>> Barrons Weekend Summary

Cover:
-This week's Cover presents the second Barron's Roundtable installment (out of three), featuring 11 investment experts discussing various stocks they find attractive this year. Despite their generally bearish outlook on 2025, the panelists continued to discuss these stocks and bond funds. They recommended companies benefiting from artificial intelligence, mergers and acquisitions, new products, expanded markets, or better blocking and tackling of day-to-day affairs. In this week's Roundtable installment, Barron’s collects 34 picks from five experts, including Henry Ellenbogen, Sonal Desai, John W. Rogers Jr., Rajiv Jain, and Mario J. Gabelli. The experts demonstrated that there are numerous ways to uncover value in an otherwise pricey market. The group's investment specialties and analytical approaches demonstrate that there are numerous ways to uncover value in an otherwise pricey market.

Interview:
-No update

Tech Trader:
-Alphabet, the parent company of Google, has been a battleground stock amid skeptics who believe it will lose market share to artificial intelligence. However, Al Root argued that Google is unlikely to lose its dominant share of the search market anytime soon, protecting its $258B in annual ad sales. Google's shares have increased 16% since his article, while the S&P 500 index remains flat. The danger for Google may not be losing market share in search, but rather that search becomes subsumed within the broader category of AI, specifically automated personal assistants. Experts predict that 2025 will be the year of AI agents that can automate tasks on servers, PCs, or smartphones. These agents could access Google Search from any web browser, incorporating Google's results into its process but not clicking on ads. Google is aware of the threat and is fighting on several fronts, including AI summaries of search results, Gemini language models, and custom AI data center hardware, known as TPU.

The Trader:
-Hershey's earnings and stock price have been hit by various headwinds, with analysts forecasting a 19% lower earnings this year compared to 2023. The cost of goods, including cocoa, is expected to rise significantly from 2023 due to cocoa shortages in Africa. Hershey's price increases of 2% in the fourth quarter were not enough to offset these costs. The company's operating profit margin is expected to fall almost five percentage points from 2023 to 19% this year. The overall sales picture has also been poor, with last year's sales declining modestly to $11.16B.
-Stocks surged following inflation data this week, with the S&P 500 increasing by 2.9% to around 6000. The NASDAQ Composite rose by 2.5% and the Dow Jones Industrial Average rose 3.4%. However, the data did not provide much relief, as the consumer price index rose by 2.9% year over year in December, above November's 2.7%. Core CPI, which excludes volatile food and energy prices, gained 3.2%, a tick below forecasts and under November's 3.3%. Inflation remains above the Federal Reserve's 2% goal, with the average headline CPI being 2.7% in the past three months, above the 2.6% average for the three months ending in September. The personal consumption index (PCE) has been running a few tenths of a percentage point below headline CPI, but remains above 2%.

Features:
-The Supreme Court has ruled that the law banning TikTok in the U.S. will not be blocked, but the Biden administration will not enforce it. The White House stated that TikTok should remain available to Americans under American ownership or other ownership that addresses national security concerns. The Supreme Court concluded that the challenged provisions do not violate petitioners' First Amendment rights. The Department of Justice supported the decision, stating that authoritarian regimes should not have unfettered access to millions of Americans' sensitive data. Implementing and ensuring compliance with the law will be a process that plays out over time.
-The US government has committed an additional $590M to Moderna's messenger RNA-based pandemic flu vaccine, as the Biden administration prepares for a potential H5N1 avian influenza pandemic. The award is a significant sum for the US Department of Health and Human Services division, BARDA, which last year gave Moderna $176M to fund the shot's development. The government's recent funding for Moderna's mRNA bird flu shot now totals $766M, approaching the $995M spent on the company's Covid-19 shot in early 2020. The funding will speed up the development of an mRNA-based H5N1 vaccine that is "well matched" to the strains currently infecting cows and birds in the US. Moderna is preparing to advance the pandemic influenza shot into a Phase 3 trial.

Europe:
-The UK's Competition and Markets Authority is investigating Google again, assessing its position in search and search-advertising services and its impact on customers, businesses, and rivals. The investigation will focus on whether Google can shape the development of new artificial-intelligence services to limit competition, its use of consumer and publisher data, and its use of its position to direct consumers towards its own services. Google will continue to engage constructively with the CMA to ensure new rules benefit all types of websites and allow people in the UK to benefit from helpful and cutting-edge services. The US is facing a more consequential antitrust challenge for Alphabet stock, as a federal judge ruled in August that Google had a monopoly in general search services and text advertising.

Emerging Markets:
-No update

Commodities:
-Oil stocks have seen a surge, making shorting or betting against them a stronger bet than buying them. The Energy Select Sector SPDR exchange-traded fund, home to oil producers like Chevron and Exxon Mobil, has risen 13% to $94 since a major low point in late December. This optimism is rooted in several factors, including interest rates, inflation, consumer and business demand, and President Biden's additional sanctions on Russian oil. Oil stocks have seen sellers come in when the price moves into the low $80s since early 2024, and gains in oil stocks have been tapped out since 2014. Technical dynamics are reasons not to buy oil stocks, but there are also plenty of reasons to outright short them. If any of the factors driving them higher disappoint, the downside potential looks substantial.

Streetwise:
-A three-year freight recession is easing, but the overall transport outlook is “better than bad but not necessarily good,” says Evercore ISI analyst Jonathan Chappell. The best stock opportunities are in companies that can bootstrap better results even if outside factors don't fully cooperate. The US economy experienced a net gain of six points after a strong Jan. 10 jobs report and an inflation reading five days later. The overall inflation rate accelerated to a seasonally adjusted 0.4% for December, which isn't ideal for rate cut hopes. However, if we use full-year inflation and strip out energy and food, we get 3.2%, whereas economists were predicting a fourth straight month with a 3.3% reading. The latest number is 3.248%, which is two one-thousandths of a point away from being rounded up to 3.3%, not down. Financial markets were recently pricing in a 92% probability of a first-half rate cut, up from 68% before the inflation report.

>>> Weekend Papers Summary

FINANCIAL TIMES
-TikTok has warned of an imminent blackout for its 170 million US users following the Supreme Court's upheld divest-or-ban law. The law requires TikTok's Chinese parent, ByteDance, to sell the platform by January 19 or face a nationwide ban. The Supreme Court ruled that divestiture is necessary to address national security concerns regarding TikTok's data collection practices and relationship with a foreign adversary. Joe Biden's administration has said it will not enforce the ban during Biden's remaining days in office. However, TikTok has criticized the White House and Department of Justice for failing to provide clarity and assurance to service providers.
-Fox's Restaurant in Altadena, Los Angeles, has been destroyed by a devastating wildfire, leaving only its roadside sign. The owner, Paul Rosenbluh, is now questioning the necessity of staying in the disaster zone for so long. Tens of thousands of others across Los Angeles are facing the same dilemma - whether to stay in areas reduced to smoldering heaps by one of the costliest natural catastrophes in US history or to move somewhere less vulnerable to climate change-related disasters. The potential economic loss is estimated at between $135B and $150B, far higher than the $16.5B record set by the 2018 Camp Fire in Northern California.
-The Israeli government has endorsed the Gaza ceasefire deal, paving the way for a truce in the 15-month war with Hamas to go into force on Sunday. US-led mediators announced that both parties had agreed a multiphase deal to halt the 15-month war and free the 98 hostages held by the Palestinian militant group. However, Israel's formal approval was delayed due to disagreements with Hamas over which Palestinian prisoners should be released and political tensions within Netanyahu's government. The prime minister's office stated that the security cabinet had endorsed the deal after examining diplomatic, security, and humanitarian aspects.
-The US Federal Trade Commission (FTC) is suing PepsiCo for alleged illegal price discrimination by providing Walmart with unfair advantages. The FTC claims that Pepsi violated the Robinson-Patman Act by providing Walmart with promotional payments and allowances that were not available to others. The company also provided Walmart with advertising and promotional tools not available to its competitors. FTC chair Lina Khan criticized Pepsi for giving massive retailers a leg up, which inflates prices for American consumers. Walmart, the world's largest retailer, leads the US in groceries with a 21% share of sales. The FTC filed the suit in a 3-2 vote, following several enforcement actions by the regulator.
-SpaceX has been ordered to halt its Starship rocket launches due to an explosion shortly after lift-off in Texas. The Federal Aviation Administration (FAA) is requiring SpaceX to conduct a mishap investigation into the loss of the Starship vehicle. The debris fell from the explosion in space above the northern Caribbean region, causing dozens of flights to be slowed or delayed. SpaceX described the incident as a rapid unscheduled disassembly, with Elon Musk stating that success is uncertain but entertainment is guaranteed.
-Biden's loose monetary policy during his presidency contributed to post-pandemic price increases, leading to Federal Reserve interest rate rises. Although inflation is now closer to the goal of 2%, borrowing costs remain at their highest level for over two decades. Consumer prices remain over 20% higher than in January 2021. The administration made some advances for working families, such as expanding child tax credits and providing more healthcare insurance support. Low-wage workers experienced the fastest real wage growth under Biden, and more Americans are in work than when he started his term.
-The European Commission has expanded its probe into X, requiring the company to hand over internal documents about its recommendation algorithm and issue a retention order for all relevant documents. The move follows complaints from politicians in Germany that X's algorithm promotes far-right content ahead of the country's February 23 elections. Musk has come out in favor of Alternative for Germany (AfD), arguing it will save Europe's largest nation from "economic and cultural collapse". German chancellor Olaf Scholz has criticized Musk's support for the AfD as "completely unacceptable." Germany's defense and foreign ministries have also suspended their activity on X.
-Britain's Prime Minister, Sir Keir Starmer, has dismissed Elon Musk's criticism of his leadership as "noises off" and believes he could strike a trade deal with Donald Trump and avoid punitive tariffs on the UK. Starmer emphasized that Trump's inauguration would not add to his political woes and that they had a "constructive" relationship that would survive the outpourings of Musk's criticism. Trump has asked Musk to help his new administration slash US bureaucracy, and Starmer said he would be "ruthless with cuts" if needed to keep to Labour's fiscal rules. Starmer has repeatedly harked back to the president-elect hosting him for dinner at Trump Tower in New York last September.
-US stocks have seen their best week since Donald Trump's election victory, thanks to strong bank earnings and easing inflation data. The S&P 500 closed 1% higher, bringing the index up 2.9% for the week. This marks the best weekly gain since a 4.7% rise in November, when Trump's election win boosted hopes of tax cuts and deregulation. The Nasdaq Composite added 2.5%, its best weekly gain since early December. Banks like JPMorgan Chase, Goldman Sachs, and Citigroup reported strong profits.
- Chrystia Freeland, Canada's former finance minister has formally announced her intention to run for the Liberal Party leadership and become the prime minister in the wake of Justin Trudeau’s resignation. Freeland announced her bid, stating she is fighting for Canada. Freeland’s main rival at present is the former Chair of the Bank of England, Mark Carney. The winner will be decided through a vote by the parliamentary caucus and party members on March 9. The contest will come during a period of uncertainty, with US president-elect Donald Trump threatening to impose tariffs on Canadian exports.
-Novo Nordisk's diabetes and weight-loss drugs Ozempic and Wegovy could face significant price cuts in the US due to the government's inclusion in the next round of Medicare negotiations. The Danish drugmaker's shares dropped 4.3% to DKr575.6 ($79.33). The group of drugs accounts for about $41B in annual spending by Medicare, the state-backed insurance program in the US for over-65s. Another round of negotiations could yield billions in savings. In the first set of talks last year, Medicare knocked between 38% and 79% off US list prices.
-LVMH regained its position as Europe's largest company after shares in Novo Nordisk dropped due to concerns about cutting the price of its weight loss and diabetes drugs in the US. LVMH shares rose 7.5% over the week, while Swiss rival Richemont reported strong sales growth for the final three months of 2024, sparking a rally in Europe's luxury sector. LVMH is now worth €345.3B, slightly more than Novo Nordisk's market valuation of €344.5B.
-The UK government is set to increase the cost of travel permits for EU and US citizens to enter the country from £10 to £16, causing concerns that the increase could harm tourism. The move comes after the introduction of the electronic travel authorization scheme, which requires many visitors to apply for digital permission. The Home Office plans to raise the permit cost from GBP 10 to GBP 16 to reduce the reliance on taxpayer funding. Tourism groups and airlines have criticized the changes, arguing they make the cost of visiting the UK increasingly uncompetitive. Richard Toomer, executive director of the Tourism Alliance trade association, called the decision "staggering" and criticized the move for European visitors.

NEW YORK TIMES
-TikTok, a popular social media platform, has been evading a ban in the US since mid-2023. The company had been targeted by lawmakers and officials due to its Chinese ownership, which posed a national security risk. In mid-2023, a group of employees at TikTok began a plan called Project Achilles to prevent the regulatory threat from reappearing. They launched a campaign of TV commercials, messages to users, and public advocacy to turn Washington's attention elsewhere. However, by the end of the year, TikTok's leaders lost interest, and some, including CEO Shou Chew, seemed to think the threat of a ban was no longer imminent. Project Achilles never became reality, marking the end of TikTok's streak of Houdini-like escapes.
-The truce in Gaza was similar to previous versions promoted by mediators from Egypt, Qatar, and the Biden administration. The deal was pushed over the line by the unlikely partnership between the envoys of America's current and future presidents, working in tandem with the Qatari prime minister in late-night meetings. While Biden and Trump have competed for credit, their representatives were both crucial to the final push, each using different approaches to push the Israeli leadership toward a deal while Sheikh Mohammed focused on Hamas. The combination of these three individuals and the three worlds they represent was the only thing that was going to get this done, according to Thomas R. Nides, a former U.S. ambassador to Israel. An array of officials and interlocutors had helped push negotiations forward for more than a year, with Brett McGurk on the American side overseeing U.S. mediation efforts since the opening weeks of the war.
-The Israeli government has approved a cease-fire deal with Hamas, allowing the release of dozens of hostages and hundreds of Palestinian prisoners, marking a reprieve from the 15-month war in the Gaza Strip. The deal, announced by the prime minister's office, will go into effect on Sunday. Palestinians celebrate the provisional cease-fire, hoping it will end the conflict, while Israelis await the return of captives abducted by Hamas. Daniel Lifshitz, whose grandfather was among the 250 captives taken in the Hamas attack, expressed his excitement for the outcome.
-The Trump administration plans to carry out "post-inauguration" immigration raids in Chicago next week, marking the beginning of President-elect Donald J. Trump's goal to oversee the largest deportation program in American history. The plan, called "Operation Safeguard" by Immigration and Customs Enforcement, is expected to start on Tuesday, the day after Trump's inauguration, and last until the following Monday. The size of the operation is unclear, but the agency is taking additional steps to ramp up enforcement and tied it to Trump's inauguration. ICE is planning to send around 150 agents to Chicago for the raids, with hundreds of agents asked to volunteer and participate in the "post-inauguration" operation targeting illegal immigrants in the United States.
-The US Border Patrol is expected to play a significant role in President-elect Donald Trump's immigration crackdown. A video showcasing Operation Return to Sender, a recent sweep in California's Central Valley, sparked tensions among Californians. United Farm Workers officials expressed concerns about the arrests, arguing that they signaled that "rogue" law enforcement agents, inspired by Trump's plans, could take matters into their own hands. This is part of a new political climate where people in some agencies feel emboldened.
-Robert F. Kennedy Jr., President-elect Donald J. Trump's choice to lead the nation's health agencies, filed a petition in May 2021 to revoke emergency authorization of Covid vaccines, a time when they were in high demand and considered life-saving. Kennedy filed the petition demanding that officials rescind authorization for the shots and refrain from approving any Covid vaccine in the future. Just six months earlier, President Trump had declared the Covid vaccines a miracle, and at the time of filing the petition, half of American adults were receiving their shots, schools were reopening, and churches were filling. Kennedy's nonprofit, Children's Health, filed the petition on behalf of the organization.
-President-elect Donald J. Trump has chosen Brandon Williams, a former Navy officer and one-term congressman, to lead the National Nuclear Security Administration. Williams, who served aboard a nuclear submarine and represented a New York congressional district, has not provided much information about his experience in managing atomic weapons. Advisers to the incoming administration have suggested restarting nuclear testing, and Williams' selection is a departure from the tradition where administrators of the atomic complex typically had deep technical roots. Williams' experience in the intricacies of how weapons work and how they are kept reliable for decades is unknown. Former director of the Los Alamos weapons laboratory, Terry C. Wallace Jr., expressed surprise at Trump's pick.
-Former Vice President Mike Pence is set to attend President-elect Donald Trump's inauguration on Monday, as per congressional committee officials. Trump chose Senator JD Vance as his running mate in July 2024. The impact of Trump's request to move his second swearing-in ceremony into the Capitol Rotunda, which seats around 600 people, is unclear. The seating arrangements for former presidents and vice presidents are not yet known.
-President Biden, 82, has admitted that he might not have made it through a second term. His family and inner circle dismissed concerns that he was too old for the job, but recognized his physical frailty to a greater degree than they have publicly acknowledged. They cooperated to manage his decline, rearranging meetings, delaying sharing information, and surrounded him with aides. They also used teleprompters for fundraising and replaced the grand steps for boarding Air Force One with a shorter set. Biden's fumbles continued this week, such as confusing the emir of Kuwait with the emir of Qatar and referring to his national security adviser as "Secretary Jake Sullivan."
-President Biden has declared that the Equal Rights Amendment has been ratified and is now part of the Constitution, but has declined to order the government to officially publish it. The archivist, a Biden appointee, has refused to formally publish the amendment, citing its inability to meet constitutional requirements. Legal fellow Thomas Jipping argues that Biden's announcement is merely personal beliefs and that no relevant legal authority has been identified.
-Treasury Secretary Janet L. Yellen has warned Congress that the US will need to use "extraordinary measures" on January 21 to prevent default on its debt. This warning is likely one of Yellen's final acts before the Trump administration takes power. The debt limit, which caps the US's borrowing capacity, will be the responsibility of the next Treasury secretary, President-elect Donald J. Trump, and lawmakers.
-Canada is preparing a three-stage plan of retaliatory tariffs and trade restrictions against the US if President-elect Donald Trump fulfills his threat to impose a 25% tariff on Canadian goods imported into the US. The plan will primarily affect consumer goods worth CAD$ 37B ($25.6B), according to senior government officials. The goal is to maximize political pain, with the focus on goods made in Republican or swing states, where the pain of tariffs, such as job pressure and local business bottom lines, would affect Trump allies. The details of the plans remain private for now.

NEW YORK POST
-Paramount Global executives are in talks to settle a lawsuit filed by President-elect Donald Trump over CBS News' interview with Vice President Kamala Harris. Paramount, the parent company of CBS, is aiming to close its planned merger with Skydance Media. Trump's dissatisfaction with CBS News is a major hurdle, and the deal is likely to remain in regulatory purgatory for the foreseeable future under Trump-nominated FCC chair Brendan Carr, unless it meets certain "fairness" conditions demanded by Trump's FCC.
-President Biden and his aides have announced 32 executive actions aimed at tying up President-elect Donald Trump's administration. These actions include granting Temporary Protected Status (TPS) to almost 1M people, protecting them from deportation and granting work permits. Trump's appointees at the Department of Homeland Security can revoke the TPS designations, but it will likely require a lengthy legal fight. Biden has also backed Trump's decision to revoke the status for 300,000 people from El Salvador, Haiti, Nicaragua, and Sudan. He also banned drilling for oil and natural gas off most of America's coastline, a massive new off-limits ocean zone larger than Alaska and Texas combined. Trump pledged to "unban it immediately," but the law Biden used, the Outer Continental Shelf Lands Act of 1953, has no clear mechanism for future presidential reversals.
-Los Angeles Mayor Karen Bass has been accused of adding to the city's corruption through "legalized corruption" and scandals. These scandals have come to light after the revelation that Bass and her cronies defunded the Los Angeles Fire Department by $17M, contributing to their under-preparedness to tackle the wildfires currently destroying the city. Bass promised to tackle homelessness and end carbon emissions, but did not mention battling endemic corruption in city government that critics say has gotten in the way of the government's ability to fight the wildfires. Critics argue that the Los Angeles Department of Water and Power, a sprawling bureaucracy in need of serious reform, has remained largely unchecked by politicians as it brings billions from ratepayers to the city government.

Le Figaro : bataille entre milliardaire au pied de la Tour Eiffel.

Théâtre d’une bataille entre milliardaires au pied de la tour Eiffel, la justice tranche le sort du jardin d’une copropriété illustre

Cheikh al Thani, propriétaire du mythique appartement de Paul Morand et les autres copropriétaires de l’immeuble au rang desquels figure la famille Arnault se sont livré une longue bataille judiciaire. La procédure que vient de clore la Cour de cassation, nous révèle des pans d’Histoire.

Avenue Charles Floquet, l’une des artères les plus chères de Paris parce qu’elle longe le Champ-de-Mars avec en point de mire la tour Eiffel, se trouve l’appartement où vécut Paul Morand. Il est, depuis 12 ans, le théâtre d’une bataille judiciaire entre ultrafortunés que la Cour de cassation vient de clore.

Le mythique appartement, le jardin de la discorde

Écrivain, diplomate, Paul Morand dont l’antisémitisme et l’homophobie sont notoires est aussi devenu immortel en rentrant à l’Académie française, sur le tard – à 80 ans et après 4 postulations - en raison de ses affinités avec le régime de Vichy que lui fit payer le Général de Gaulle.

Il a vécu près de cinquante ans à Paris au sein du 7e arrondissement, dans un immeuble construit au début du XXe siècle pour le Prince de Soutzo dont il épousa l’ex-femme. Son appartement situé au rez-de-chaussée est, à lui seul, une page de l’histoire de France. 

La demeure est connue pour les réceptions qui s’y donnaient. Alain Peyrefitte, successeur de Morand à l’Académie, évoquait un salon de 18 m de long et de 7 de haut qui lui faisait penser à « une salle de château de style Tudor, en bordure du Champ-de-Mars » avec « sous les plafonds presque aussi hauts que la Coupole, une cheminée Renaissance et deux immenses armoires Ming ».

François-Marie Banier, écrivain et photographe condamné pour abus de faiblesse sur Liliane Bettancourt, héritière du groupe l’Oréal, a aussi fréquenté l’appartement qu’il décrit comme un « Transatlantique échoué au pied de la Tour Eiffel ». « Son salon, cathédrale de Chartres des salons, devant lequel la salle de bal du Titanic est une plaisanterie » y aurait vu Nijinski danser, Proust s’y réchauffer, Nathalie Baye y faire la lecture pour la Princesse de Soutzo Morand, des pièces de théâtre s’y seraient jouées devant 500 personnes et Alain Delon s’est porté acquéreur de la «table de palais» qui en ornait l’entrée, en souvenir de Morand dont il avait joué le rôle de «L’homme pressé».  

Un prix à hauteur de la démesure

En 2005, Les Échos rapportaient la vente de cet appartement de 731 m2, doté d’un jardin privatif de plus de 300 m2, pour un montant situé entre 8 et 10 millions d’euros. Aujourd’hui, on peut estimer que son prix a doublé et il est intéressant de noter que le jardin, objet du litige actuel, y est décrit comme privatif.

Un collectionneur, le Cheikh Hamad ben Abdullah al Thani, cousin de l’émir du Qatar, en est aujourd’hui le propriétaire, par le biais d’une SCI. Le jardin qui borde son appartement côté Champ-de-Mars, est l’objet d’une bataille judiciaire entre voisins. Les copropriétaires, parmi lesquels se trouve la famille Arnault (LVMH) par le biais de sociétés diverses, estiment que le jardin est une partie commune, alors que le Qatari s’en estime unique détenteur.

Le fait du Cheikh envenime les relations de voisinage

Après l’acquisition de l’appartement en 2009, la SCI du Cheikh a obtenu de l’assemblée générale des copropriétaires, l’autorisation d’aménager et de restaurer à ses frais le jardin donnant sur son appartement.

Les travaux entrepris ayant dépassé largement de simples travaux paysagers puisque le sous-sol a été creusé sur plusieurs mètres de profondeur pour y loger des installations de chauffage et de climatisation, le syndicat des copropriétaires a agi en justice et obtenu gain de cause, avec la condamnation de la SCI à démolir les ouvrages réalisés et à remettre le jardin en l’état antérieur.

Parallèlement, la SCI a cherché à obtenir en justice la propriété du jardin commun, par usucapion, c’est-à-dire par simple effet du temps sans avoir à le payer.

La propriété du jardin, revendiquée de part et d’autre

Si dans un premier temps le tribunal a estimé que le jardin était une partie commune non affectée à l’usage exclusif de la SCI, la Cour d’appel lui a, par la suite, accordé un droit d’usage exclusif sur la verdure. Mécontent, le syndicat des copropriétaires, doublé par les sociétés copropriétaires détenues par la famille Arnault, a saisi la Cour de cassation.

La haute juridiction vient de rendre son arrêt qui indique que la SCI du Cheikh n’est pas propriétaire du jardin par l’effet de la prescription acquisitive puisque dans les trois derniers actes de vente, aucune mention en ce sens n’y figure. En pratique, à chaque vente immobilière, les notaires sont censés vérifier la consistance du lot cédé en le comparant à l’état descriptif de division, de façon à appréhender les éventuelles annexions de parties communes. Après avoir constaté que la SCI n’était pas propriétaire du jardin, les magistrats lui ont quand même accordé un droit de jouissance exclusive.  

L’usucapion ou le temps accorde des droits 

Pour parvenir à ce résultat les juges se sont fondé sur deux attestations. La première émane d’une ancienne locataire des lieux entre 1975 et 1985, soit juste après Paul Morand, et la seconde d’une propriétaire en 1989, qui toutes deux affirment que le jardin était à l’usage exclusif de leur appartement dont elles seules détenaient la clef de la grille pour y accéder.

Plus de 30 ans s’étant écoulés sans qu’aucun autre copropriétaire n’accède au jardin, la Cour de cassation a déduit que la copropriété avait entendu céder un droit de jouissance exclusive attaché à l’appartement de la SCI. D’autant que les frais d’entretien et d’aménagement ont toujours été payés par la SCI et non par la copropriété. Et ce, même si le jardin était accessible auparavant à tous les copropriétaires, et non uniquement depuis l’appartement du rez-de-chaussée de la SCI.

Le délai de 30 ans correspond à l’usucapion, c’est-à-dire la prescription acquisitive qui est "un moyen d’acquérir un bien ou un droit par l’effet de la possession sans que celui qui l’allègue soit obligé d’en rapporter un titre ou qu’on puisse lui opposer l’exception déduite de la mauvaise foi » (c. civ. art. 2258). 

Dans cette affaire, l’attribution d’une jouissance exclusive est intéressante puisqu’elle offre la possibilité de jouir du jardin qui appartient à tous, de manière exclusive, tout en restant une partie commune dont les charges sont réglées par l’ensemble des copropriétaires. Le but premier de la SCI n’est toutefois pas atteint puisque la justice a maintenu qu’elle devait remettre le jardin tel qu’il était avant les travaux d’excavation entrepris sans autorisation, puisqu’elle n’en était pas propriétaire. 

Le Figaro : Le fondateur de Telegram, Pavel Durov, a reconnu devant les juges «l

Le fondateur de Telegram, Pavel Durov, a reconnu devant les juges «la gravité des faits» reprochés à la messagerie

Le milliardaire, mis en examen, s’est dit «à titre personnel, dégoûté» par les multiples infractions commises sur son application, qu’il estime «mauvaises pour la société et les affaires».

Le fondateur de Telegram Pavel Durov a indiqué en décembre aux juges d'instruction avoir «pris connaissance en garde à vue de la gravité de tous les faits» reprochés à sa plateforme, selon ses déclarations dont l'AFP a eu connaissance samedi de source proche du dossier. Il «n'a pas créé» Telegram en 2013 avec son frère «pour les criminels» mais leur présence, «une fraction minime», «a aussi augmenté», a concédé cet homme né à Saint-Pétersbourg qui possède plusieurs nationalités dont celle de la France.

Les juges ont détaillé une quinzaine de groupes dédiés à la pédocriminalité, aux stupéfiants, aux escroqueries, aux ventes d'armes, au recours à des sicaires, ayant parfois pignon sur rue sur la plateforme, qui ont valu au PDG de Telegram sa mise en examen fin août pour complicité d'activités criminelles.

«Avez-vous conscience que la simplicité d'utilisation de Telegram permet à quiconque d'accéder à des plateformes illicites, de manière beaucoup plus simple notamment que sur le darkweb ?», lui ont-ils demandé. Pavel Durov s'est dit «en désaccord». Telegram est «efficace» et supprime mensuellement «15 à 20 millions de comptes utilisateurs et un à deux millions de chaînes et de groupes», a-t-il répondu.

Améliorer «le processus de modération»

Le milliardaire a mis en cause le manque de remontées de la justice ou des associations, mais l'a néanmoins répété : il est, «à titre personnel, dégoûté» par ces infractions, «mauvaises pour la société et les affaires». Si l'entreprise basée à Dubaï a annoncé fin décembre son premier bénéfice net annuel, elle pâtit selon Pavel Durov de 2 milliards de dollars de dette.

«Nous nous engageons à améliorer nos processus de modération», a-t-il donc promis, en écho à des promesses publiques faites en septembre, saluées par Emmanuel Macron, ajoutant que ses «équipes ont fait beaucoup de progrès». Interrogé sur un groupe public appelé «Livraison shit beuh Paris», Pavel Durov a néanmoins suggéré que ses modérateurs, ne connaissaient pas le mot «shit», et que ses algorithmes n’étaient pas assez entraînés. 

«Même si nos équipes essaient de modérer ce type de recherches (sur la drogue, NDLR) depuis plusieurs années, ces recherches se concentrent essentiellement sur des marchés et dans des langues où Telegram est le plus populaire. La France ne faisait pas partie de cette liste. Dès que nous en avons eu connaissance, nous nous sommes beaucoup améliorés», a-t-il précisé. Avant d’assurer que les modérateurs embauchés étaient comme lui, «des personnes respectueuses de loi et qui n’avaient pas de connaissance sur le milieu de la drogue».

Telegram coopère avec les autorités

En France, Telegram affirme avoir répondu à 4 demandes judiciaires au premier trimestre 2024, contre 673 pour le dernier. Sur les six premiers mois de 2024, à l'échelle mondiale, Telegram a délivré «des informations d'identification (...) concernant plus de 10.000 utilisateurs», a assuré Pavel Durov. «Ce n'est pas beaucoup au regard» de vos 950 millions d'utilisateurs revendiqués, a répondu un magistrat instructeur. Sollicité, Me David-Olivier Kaminski, avocat de Pavel Durov, n'a pas répondu.

Telegram a répondu à l'AFP que la messagerie «coopère avec les autorités judiciaires dans le monde depuis 2018, fournissant des informations sur les criminels lorsqu'il est sollicité par des requêtes valides et par l'intermédiaire des bons canaux de communication».

Barrons : Trump May Privatize Fannie Mae and Freddie Mac. What It Means for Shar

Trump May Privatize Fannie Mae and Freddie Mac. What It Means for Shareholders and Homeowners.
It could have widespread effects through the housing, banking, and bond markets.

Wall Street has a pitch for Donald Trump: Cement your place in history as the “Art of the Deal” president with your biggest deal ever.

Hedge fund managers like Bill Ackman have built huge stakes in Fannie Mae and Freddie Mac, betting the government-sponsored entities will be privatized by the president-elect at some point in his second term. Trump has said he wants to do it. Now that he’s taking office, some investors are betting it’s just a matter of time and ironing out the details.

If only it were that simple.

Fannie and Freddie play crucial roles in the housing market—setting lending standards for home loans and owning or guaranteeing around half of all residential mortgages. While they don’t issue loans themselves, they bundle them into mortgage-backed securities, or MBS, creating a secondary market worth $6.6 trillion. Many of the 30-year mortgages in the U.S. exist through Fannie and Freddie, and lenders count on them to continuously buy loans, keeping the housing-finance wheels in motion.

As the hubs of the mortgage market, even small tweaks to Fannie and Freddie can have widespread effects through housing, banking, and bond markets. It would be a Herculean feat to privatize them, something that has been bandied about for years, to no avail.

Investors are now betting it will happen under Trump. Shares of Fannie are up 90% this year and have quadrupled since his election. “We have four years with a pro-business administration led by the consummate dealmaker,” Ackman said in a presentation to investors on X on Thursday. “This would be the biggest deal he’s ever done.”

Ackman has good reason to plug the stocks. His firm, Pershing Square Capital Management, reported shares and total-return swaps in 2014 amounting to an 11.3% stake in the common shares of Fannie Mae and 11.1% in Freddie Mac. Those positions would now be worth about $1 billion. By Ackman’s calculation, the firms could each be worth $34 per share when fully privatized, more than five times their recent trading range between $5-$6. He could a make a profit of nearly $7 billion from recent prices.

A Pershing Square spokesman did not respond to a request for comment on the firm’s stakes in the companies.

Yet Fannie and Freddie aren’t likely to be privatized soon, for a variety of political and economic reasons.

One hurdle would be the disruption it could cause in the housing and bond markets. The federal government’s backing of Fannie and Freddie securities essentially eliminates their credit risk, allowing some investors to treat them like Treasuries. The secondary market provides liquidity and financing for mortgages, keeping rates lower than they might be without it. Products like the 30-year fixed-rate mortgage may not even exist without the unique U.S. mix of a deep market for MBS and a federal backstop against default.

Some investors worry all that could be disrupted if Fannie and Freddie were privatized, and they argue that mortgage rates would almost certainly be higher.

“Without an explicit government guarantee provided by Congress, mortgage rates will trend higher—and it could just be a question of whether rates are modestly higher or significantly higher,” said Pimco managing directors Libby Cantrill and Dan Hyman in written comments to Barron’s.

Fannie and Freddie have a checkered history in the housing market. Before the 2007-09 financial crisis, they operated with far less government oversight and ran into trouble after getting caught in the subprime mortgage debacle. They were bailed out in 2008, eventually receiving around $190 billion, and taken under government “conservatorship,” where they have remained ever since.

On paper, the stocks look comically cheap. Fannie booked $12.8 billion of net income on revenue of $21.7 billion through the first nine months of 2024, on a base of $4.3 trillion in assets. With a $6 stock price and earnings per share estimated at $1.48 this year, Fannie has a price/earnings ratio of just four times.

But the companies’ current status makes traditional valuation measures mostly irrelevant. The federal government still holds most of the value of Fannie and Freddie through the Treasury’s “senior” preferred stock and warrants to acquire nearly 80% of the common stock. The companies have paid the Treasury more than $300 billion in dividends, though since 2019 they have been able to retain earnings and build capital.

Hedge funds like Ackman’s Pershing Square have long bet that Fannie and Freddie will re-emerge as traditional companies. Ackman bought up nearly 10% of Fannie and Freddie’s common shares in 2013 on a bet the Obama administration would release the companies. Investors have also brought lawsuits to speed up the process, without success.

So far, Trump officials have stayed mum on their plans. The Trump transition didn’t respond to a request for comment. Trump’s pick for Treasury Secretary, Scott Bessent, didn’t discuss Fannie and Freddie at his confirmation hearing on Thursday. More clues may come from Bill Pulte, Trump’s pick to head the Federal Housing Finance Agency, who will likely be grilled on his views.

Trump has said he supports privatizing the GSEs. In a 2021 letter to Sen. Rand Paul (R., Ky.), he said he had planned to release the companies in his first term and sell the government’s common stock “at a huge profit.” His first administration never pulled the trigger, partly because the Covid pandemic upended the financial markets and economy.

Whether mortgage rates would rise if Fannie and Freddie were privatized remains a contentious issue. Home buyers now benefit from what is essentially a government subsidy in Fannie and Freddie through the low fees they charge lenders.

Those fees translate to a return on equity of about 8%, well below the 12% that banks generally earn. To match that level of profit, Fannie and Freddie would have to raise fees, adding more than 0.25 percentage point to mortgage rates, according to Moody’s Analytics Chief Economist Mark Zandi. That figure assumes the Trump administration imposes higher capital requirements for the GSEs, as it did last time it was in control, in order to prevent a future collapse. Ackman and other critics of that approach say the proposed capital requirements are much higher than needed.

Fannie and Freddie also subsidize mortgages for borrowers with low credit scores with fees charged on higher-score borrowers. That cross-subsidization could go away if the companies set pricing themselves, raising rates on more marginal borrowers.

“It’s inevitable that mortgage rates have to go up” if the companies are released, said Urban Institute fellow Laurie Goodman at an event hosted by the think tank on Tuesday.

Also concerning is what might happen in the mortgage-securities market. Companies like BlackRock and Pimco, sovereign-wealth funds, banks, and pension funds all own MBS, as does the Federal Reserve. While the securities are considered to have zero default risk, Congress never formalized it with a “full faith and credit” guarantee of the government. If the GSEs were to exit conservatorship without that guarantee, it could wreak havoc.

Among the worries, according to Pimco, is that bond funds and index operators might have to reclassify MBS, assigning them some credit risk. Regulators may need to revise capital requirements for banks, since MBS now qualify as some of the lowest-risk securities, along with Treasuries. Some pension funds, insurance companies, and other large investors might not be allowed to own MBS or would have to trim their holdings.

Even if such concerns don’t appear in the market immediately, they might rear up in the next financial crisis, says Ron Sion, a former BlackRock executive who led investment in agency mortgage and investment-grade debt. “It may be the case that it would require some sort of stress event to create significant disruption if the MBS do not have an explicit government guarantee,” Sion says.

Proponents of privatizing the companies say the fears are overblown. Fannie and Freddie’s bailout terms allow them draw up to $250 billion from the Treasury, a line of credit that could survive even if the companies are released.

MBS investors worry an “exit from conservatorship means we’ll be living in caves again,” said Mark Calabria, Trump’s former FHFA director, in a podcast with Impact Capitol earlier this month.

Like systemically important banks, Fannie and Freddie are subject to stress tests from their regulator and have passed recent evaluations. Ratings agency Fitch earlier this month said an exit from conservatorship would be “incrementally negative,” but that if the government maintained its current level of support, Fannie and Freddie could keep their sovereign credit ratings.

On the other side, some MBS investors are warning against hasty action. If releasing the companies “is driven by the shareholders and the MBS market is expected to just come along, that will shut things down pretty quickly,” says Michael Bright, head of the Structured Finance Association trade group and a former Trump administration official. “It’s the ultimate tail wagging the dog.”

Whether Trump will pull the trigger is debatable. His Treasury Department is swamped with other priorities, such as extending the 2017 tax cuts and dealing with the ballooning federal debt. With mortgage rates near multidecade highs at around 7%, there’s little incentive to disrupt the status quo.

“Bessent has enough to deal with. Why throw this into the mix?” asks Stephen Myrow, managing partner of Beacon Policy Advisors.

Investors in the common shares have no way of knowing now how much the companies will be worth. In addition to its warrants, the Treasury’s senior preferred shares would entitle it to $330 billion in a liquidation.

Ackman and some other investors argue that the government should eliminate the senior preferreds, saying the companies have already paid enough to the government. But it’s unclear how that could happen. In his book Shelter From the Storm, Calabria said Trump’s Treasury Department believed waiving even part of its senior preferred shares wasn’t legal and was a political “nonstarter.”

If the government’s stake isn’t eliminated, it could be converted into common stock, along with privately owned preferred shares. The value would depend on the conversion ratio, the new entities’ capital requirements, and the government’s backstop terms. However the math works, it would likely dilute common shareholders.

Whether Trump will kill the party or make it all worthwhile isn’t something we’ll know anytime soon.

WSJ : The Year That Hedge Funds Got Their Mojo Back

The Year That Hedge Funds Got Their Mojo Back
Stock pickers were able to shine in 2024, while esoteric markets such as Argentine debt and crypto bankruptcy claims also yielded opportunities

Hedge funds are having a moment. Will it last?

In a year when everything seemed to go up, the industry generated some of its strongest, and most consistent, returns in a decade. The big question for investors: Was 2024 a turning point, or will the recent trend of so-so—and sometimes dismal—returns quickly reassert itself?

On average, hedge funds gained 10.7% after fees last year, according to an index from PivotalPath tracking more than 1,100 funds. That was the best year since 2020, when they made 11.4% amid pandemic-fueled volatility. Before that, the last time the industry saw double-digit gains was 2013.

Every strategy tracked by the research firm made money on average—unusual in an industry where multiple strategies typically falter in any given year.

“Last year was probably one of the best years in a long time for hedge funds,” said Caron Bastianpillai, a senior portfolio manager at NS Partners, a Geneva-based investment-management firm that allocates money to hedge funds. “Everything has been working. It’s rare that you find that.”


Among numerous big winners were Castle Hook Partners in New York, a specialist in macro investing; Florida-based Infinitum Partners, which focuses on technology stocks; and Helikon Investments in London, whose big investments included backing one of Greece’s banks. All three firms returned more than 60% after fees.

It is a welcome showing for an industry that has faced growing competition for investor dollars from areas such as private credit, plus criticism for charging high fees while often delivering middling returns. Even with last year’s strong outturn, the hedge-fund industry still delivered less than half of the S&P 500’s 25% total return, including dividends.

Hedge-fund firms say they aren’t simply trying to beat indexes. Instead, they focus on making money no matter if broader markets rise or fall. Their appeal to big investors, such as pension funds and endowments, is that they try to protect money during downturns and generate returns that aren’t correlated to investors’ other holdings.

That could be particularly important this year, when markets might face a bumpier ride as global central-bank policy diverges and a new U.S. president takes office. Many hedge-fund managers say higher volatility could yield big investment gains—so long as they are positioned correctly.

Rob Christian, head of absolute return strategies at Franklin Templeton Investment Solutions, said his unit’s hedge-fund portfolio logged its best performance in five years in 2024. The unit invests more than $10 billion of client money into hedge funds.

His team typically rebalances hedge-fund allocations at year-end, Christian said, but this time is putting more money with managers it thinks have further to run. “We’re pressing our winners,” he said.

That includes long-short equity hedge funds that bet on and against stocks. Anticipating dealmaking will pick up, his team has also marginally increased exposure to merger-arbitrage funds, he said.

The year’s best-performing strategy: funds trading technology, media and telecoms stocks, which averaged a nearly 23% return, according to the PivotalPath data. Those buying and selling distressed credit also did well, as did quantitative stock funds. Those two strategies averaged between 15% and 16%.

Dispersion in equity markets was high, meaning there was a lot of variation in the returns from holding different stocks. That aided firms that focus on shares, giving skillful stock pickers more room to outpace competitors and indexes by picking standout winners or shorting potential losers. Elsewhere, esoteric markets such as Argentine debt, bankruptcy claims tied to defunct crypto exchange FTX and commodities like copper also yielded opportunities.

Some notable performances, according to people familiar with the matter and figures seen by The Wall Street Journal:

  • Rokos Capital Management gained 30.7%, according to people familiar with the matter, helped by prescient bets that investors were too optimistic about Federal Reserve rate cuts in 2024. London-based Rokos manages about $19 billion.
  • Florida-based Infinitum gained about 72%. The firm, which oversees about $250 million, takes long and short positions in technology stocks. Its largest position last year was in Singapore-based Sea, a tech conglomerate whose shares more than doubled last year.
  • Castle Hook was up more than 60%. It was one of a number of firms that piled into the “AI power trade.” It also benefited from a postelection rally in the U.S. dollar and falling U.S. bond prices.
  • The main fund of London-based Helikon, a long-short firm managing more than $4 billion, gained nearly 62%. Big holdings included Eurobank Ergasias of Greece, whose shares surged 39%.
  • Multimanager firms, or “pod shops,” had another strong year. Among the biggest players, Point72 made 19%. The firm told clients that it would hand back as much as $5 billion this year. Meanwhile, Millennium Management and Citadel’s flagship fund both returned about 15%.
  • Comparatively smaller multimanagers rebounded after a lackluster 2023. Walleye Capital, which manages $7.7 billion, gained 17.8%. Schonfeld Strategic Advisors, which oversees around $12 billion, returned 19.7% in its flagship fund.

From the late 1990s through the aftermath of the global financial crisis, hedge funds often averaged double-digit-percentage annual returns. But that changed as the easy monetary policy of the 2010s tamped down market volatility, and the industry largely shifted from focusing on big, swashbuckling bets to generate steadier returns with a closer eye on risk management.

Swaths of capital flowed into multimanager firms such as Citadel and Millennium, and star traders—who historically might have struck out on their own—joined the firms. Meanwhile, hundreds of hedge funds shut their doors.

There are some signs this might be reversing, said Jon Caplis, chief executive of PivotalPath. He tracks what he calls high-quality hedge-fund debuts, or firms launched by founders leaving managers who oversee $1 billion or more, and expects to see 145 of these from the start of 2024 through the second quarter of this year.

The average launch size is $300 million, he said. “These are very healthy launches.”

FT : UK considers higher cap on foreign state ownership of British media

UK considers higher cap on foreign state ownership of British media
Labour may allow stakes of up to 10% to encourage passive investment from sovereign wealth and pension funds

The UK is considering doubling the proposed threshold of foreign state ownership of the country’s news outlets in response to fears that setting the level too low would unnecessarily stifle dealmaking in the media industry.

The Labour government might allow stakes as large as 10 per cent, significantly higher than the 5 per cent level that the previous Conservative administration was consulting on, according to people familiar with the matter.

In March last year, the Tories changed the law to ban foreign states from owning stakes in UK news organisations for the first time, a move designed to block the takeover of the Telegraph newspaper by a US investor backed by the United Arab Emirates.

Ministers intended to introduce an exemption to the ban for small stakes under a certain threshold to allow passive investment, particularly in listed media companies, from sovereign wealth and state pension funds. A consultation on setting 5 per cent as the level was ongoing when Labour ousted the Tories at the July UK general election.

One person with knowledge of the current government’s thinking described 10 per cent as a “sensible” level, adding: “Its all about finding the balance to allow deals to happen without giving any editorial control or influence to foreign states.”

The Department for Digital, Culture, Media & Sport said: “We have not made any final decisions on the level of exception for ‘State Owned Investors’ from the new foreign state newspapers regime. We are still considering the consultation responses and will make an announcement in due course.”

The Telegraph is still without a permanent owner after the Barclay family lost control of the company because of unpaid bank debts, but an attempt to buy the group by RedBird IMI was blocked by the foreign state ownership ban. RedBird IMI is a joint venture between US fund manager RedBird Capital and Abu Dhabi-owned media investment company IMI.

People close to the sale said that RedBird Capital could still take a stake in the Telegraph separate to its partnership with IMI.

UK media groups have privately raised concerns with the government that setting the threshold too low could prevent them from being able to tap sources of money from cash-rich states in the Middle East. When the Telegraph was first put up for sale in 2023, for example, the Daily Mail’s owners held talks with investors from Qatar about potentially teaming up on a bid. 

Media executives are also concerned the law will hit state pension funds, such as the vast Norwegian, Canadian and Australian funds that are shareholders in listed media companies.

Labour’s decision on where to set the ownership threshold may be controversial given the fierce debate last year among MPs about the risks of allowing foreign states the ability to exert influence on UK media.

Parliamentarians from both main parties were critical of RedBird IMI’s bid, as were executives at the Telegraph itself. Among anxious Tory MPs, a key concern was the potential for overseas control of a right-wing broadsheet seen as influential in their party leadership contests.

The sale of the Telegraph, which led to intense scrutiny over press freedoms in Abu Dhabi itself, soured relations between the UK and the UAE, which is a major investor in Britain.

Emirati officials expressed frustration about pejorative comments made about their state by a string of British politicians in relation to the proposed Telegraph deal. Former Tory leader Sir Iain Duncan Smith was among MPs who argued the UAE’s involvement would raise “security concerns” despite defence ties between two countries

Prime Minister Sir Keir Starmer travelled to Abu Dhabi last month hoping to reset relations.

FT : Commerzbank explores thousands of job cuts in answer to Andrea Orcel

Commerzbank explores thousands of job cuts in answer to Andrea Orcel
German lender under pressure to cut costs and boost returns after approach from UniCredit

Commerzbank is exploring cutting thousands of jobs as it seeks to fend off unwanted advances from Italy’s UniCredit, according to people familiar with the matter.

The plans, which have not yet been formalised, were expected to be unveiled to the workers’ council over the coming weeks, two of the people said. One person familiar with the discussions told the Financial Times that the figure was likely to be “in the low thousands”.

The German lender’s new chief executive, Bettina Orlopp, is due to present an updated strategy on February 13 to show the bank can improve profitability and payouts to shareholders on its own.

UniCredit, led by chief executive Andrea Orcel, has built a position in Commerzbank that has the potential to make it the bank’s largest shareholder if it secures regulatory approval. 

Orcel has made no secret of his ambitions for Commerzbank, including a full takeover of the German rival. 

Investors in Commerzbank have generally been supportive of a deal — with the exception of the German government, which still holds a 12 per cent stake after selling a 4.5 per cent holding to UniCredit last year.

Analysts anticipate that a tie-up would result in billions of euros of cost savings, as the enlarged bank strips out duplicate functions.

A crucial point of resistance from both the unions and the government has been the potential for UniCredit to wield the axe in Germany, where it already has a German subsidiary, HypoVereinsbank (HVB).

Commerzbank unions have warned that a takeover by UniCredit could put up to 15,000 jobs on the line — an issue that has taken on an extra dimension of political sensitivity ahead of Germany’s federal elections, being held next month.

The potential for Commerzbank to instigate cuts even without being taken over by the Italian bank would mark another chapter in its prolonged restructuring.

Commerzbank has already cut thousands of jobs and shut roughly half its 800 branches since 2021, when former chief executive Manfred Knof embarked on a turnaround effort.

The changes have helped boost operating profits and triple the bank’s share price in the past three years, and in 2023 it embarked on the first share buyback programme in its history. 

But UniCredit’s stakebuilding has put additional pressure on the German bank to prove it can deliver better profitability and value for shareholders as an independent company than part of the Italian bank’s empire.

Germany’s second-largest listed bank has struggled to tackle costs that are higher than rivals’, including HVB. Orlopp has already raised Commerzbank’s performance targets since the UniCredit approach in September.

Even some insiders have expressed doubts about whether Commerzbank could hope to present a standalone case that would offer shareholders more value than a merger, given the potential synergies involved in a deal.

One person with knowledge of the matter suggested that Orlopp was now planning to accelerate a further restructuring that was previously seen as an option for the future.

Another person familiar with the discussions indicated that job reductions could be driven by digitisation, especially the adoption of artificial intelligence, with IT functions potentially being “nearshored” to other European countries outside Germany.

Commerzbank said that the strategy update, due to be presented alongside its full-year results next month, was still being developed, and “we cannot pre-empt the upcoming discussions in the management and supervisory boards”.