Finance

A ChargePoint electric vehicle charging station at Walnut Creek City Hall parking lot, Walnut Creek, California, April 18, 2023.
Smith Collection/gado | Archive Photos | Getty Images

Check out the companies making headlines in midday trading.
WestRock — The stock gained 4.2% in midday trading on news that the company is nearing a merger with Europe’s Smurfit Kappa in a deal that could create a global paper and packaging giant worth about $20 billion, as first reported by The Wall Street Journal.

GameStop — The video game retailer saw shares rose nearly 0.8% after the firm posted quarterly revenue that surpassed Wall Street estimates as well as a smaller-than-expected loss. GameStop said the strong revenue in the quarter came from “significant software release.”
Semiconductors — Semiconductor stocks slid as a group. Shares of Lam Research and Advanced Micro Devices fell about 2.5% and 2.8%, respectively. Shares of Qualcomm dropped 7.2%. Nvidia declined 1.7%. On the other hand, shares of Intel bucked the trend, rising 3.2%.
Apple — Apple slid 2.9% after a Bloomberg News report said China plans to expand restrictions on iPhones to state-owned companies. Previously, The Wall Street Journal reported that China was planning to ban iPhone use in government-backed agencies.
Align Technology — The orthodontics stock dropped roughly 7.8%. Align Technology said Wednesday it’s acquiring 3D printing company Cubicure in a 79 million euro transaction, or roughly $84.6 million.
Rollins — Shares declined 6.2% after the pest control services company on Wednesday announced the start of a proposed secondary public offering of $1.35 billion of its common stock.

Seagate Technology — Seagate Technology shares dropped about 10.9% after Barclays downgraded the stock to equal weight form overweight. The Wall Street firm cited poor fundamentals and a recovery that could take longer than expected.
ChargePoint Holdings — Shares of ChargePoint Holdings plunged 10.9% after the electric vehicle charging infrastructure company missed fiscal second-quarter revenue estimates. ChargePoint posted $150 million in revenue, weaker than the $153 million forecast by analysts polled by LSEG, formerly known as Refinitiv. Separately, the company announced it would cut about 10% of its global workforce.
Dutch Bros — Shares slid about 4.6% after the drive-through coffee chain on Wednesday announced a public offering of $300 million in shares of its Class A common stock.
Dave & Buster’s Entertainment — The stock dropped 6.1% after reporting second-quarter results that missed expectations. The entertainment and dining company earned 60 cents per share on $542 million of revenue. Analysts polled by LSEG had anticipated earnings per share of 93 cents on revenue of $559 million.
C3.ai — C3.ai shares tumbled 12.2% after the artificial intelligence software company guided for a wider-than-expected operating loss for the fiscal second quarter. C3.ai forecast an operating loss in the range of $27 million to $40 million. Analysts polled by StreetAccount expected a loss of $20.5 million. Meanwhile, C3.ai reported an adjusted fiscal first-quarter loss of 9 cents per share on revenue of $72.4 million. Analysts polled by LSEG were anticipating a loss per share of 17 cents on revenue of $71.6 million.
Roku — The streaming stock slid nearly 3% following a downgrade to hold from buy from Loop Capital. Roku rallied more than 12% Wednesday after announcing plans to lay off 10% of its staff, among other cost-cutting measures. Roku had also lifted third-quarter revenue and EBITDA guidance.
Verint Systems — Shares plunged 19.4% in midday trading after the analytics company reported weaker-than-expected second-quarter earnings and revenue. Verint reported adjusted earnings of 48 cents per share on revenue of $210 million. Analysts polled by LSEG had expected earnings per share of 57 cents on revenue of $225 million.
— CNBC’s Alex Harring, Yun Li and Pia Singh contributed reporting. More

Adyen has acquired a banking license in the U.K., which enables its merchants to offer cash advances to small and medium-sized enterprises in the country.
Adyen already has a banking license in the Netherlands, which lets it process merchant payments nearly instantly.
It comes as Revolut, one of the U.K.’s biggest fintech firms, has been struggling to obtain a license from the Bank of England.

The Adyen logo displayed on a smartphone.
Rafael Henrique | SOPA Images | LightRocket via Getty Images

Dutch payments giant Adyen on Thursday said it won approval for a banking license in the U.K., marking a deeper push from the company into the banking sector.
The company said its new license would allow its merchants to offer cash advances to small and medium-sized enterprises in the U.K.

Crucially, Adyen said the license would enable it to continue operating under the U.K.’s Temporary Permissions Regime — under which it can provide services in line with its EU business — after Brexit.
Adyen already has a license in the Netherlands as an acquiring bank. In this capacity, the company can process merchant payments nearly instantly, rather than relying on banking partners to handle settlements, which can often take several days.
Adyen’s U.K. merchants can already offer customers bank accounts, virtual or physical cards, and cash flow and expense management.
“The U.K. is a key market for Adyen and we’re excited to cement our position here with this banking authorisation,” said Mariëtte Swart, Adyen’s chief legal and compliance officer.
“It will strengthen our ability to help domestic and international businesses achieve their ambitions faster. It’s another stride towards Adyen becoming a full spectrum global financial technology platform.”

A competitor to U.S. payments giant Stripe, Adyen is one of Europe’s largest technology firms, with a market capitalization of 23.4 billion euros ($25 billion). The company has been recovering after its first-half earnings numbers showed the slowest revenue growth on record.
The company’s shares fell as much as 39% on Aug. 17, wiping 18 billion euros from Adyen’s market value. Shares of Adyen closed down more than 2% on Thursday in Amsterdam.
Adyen’s permit approval comes as one of the U.K.’s own biggest fintech firms, Revolut, has been struggling to obtain a license from the Bank of England. Revolut applied for a license two years ago, but has faced delays. Regulators have had numerous concerns to consider, including the company’s late filing of accounts and internal problems with corporate culture.
Revolut says it has worked to improve its corporate culture internally. The company also saw its chief financial officer, who was at the helm at the time of its delayed accounts, leave earlier this year.
Correction: Adyen’s shares fell as much as 39% on Aug. 17. An earlier version misstated the date. More

Apple phones on display in an Apple store in Miami, Florida, May 4, 2023.
Joe Raedle | Getty Images

Check out the companies making headlines in premarket trading Thursday.
Apple — Apple shares fell more than 2.6% after Bloomberg News reported China is planning to extend a ban on iPhone use to state-owned corporations. A day earlier, The Wall Street Journal reported that China was moving to prohibit iPhone usage and other foreign-branded devices in government agencies.

Dutch Bros — The drive-through coffee chain dropped about 6% in premarket trading after it announced a public offering of $300 million in shares of its Class A common stock after market close Wednesday.
Dave & Buster’s — Shares of the entertainment and dining company fell more than 3% after it reported weaker-than-expected second-quarter earnings. The company generated 60 cents per share profit on $542 million of revenue. Analysts surveyed by LSEG were expecting 93 cents per share on $559 million of revenue. Comparable sales declined year over year on a pro forma basis.
McDonald’s — The fast-food chain gained nearly 1% premarket after Wells Fargo upgraded the stock to overweight from equal weight, saying the company “is firing on all cylinders” when it comes to innovation and that it could see upside in the second half of this year.
ChargePoint Holdings — Shares of the electric vehicle charging infrastructure company tumbled 11.6% after ChargePoint missed estimates for the fiscal second quarter. ChargePoint noted $150 million in revenue while analysts polled by LSEG forecast $153 million. The company also said it would cut its global workforce by about 10%.
WestRock — Shares added 6.7% after The Wall Street Journal reported that the company is nearing a merger with Europe’s Smurfit Kappa in a deal that could create a global paper and packaging giant worth around $20 billion.

C3.ai — The artificial intelligence software company plunged 9.2% in after C3.ai forecast a larger-than-expected operating loss for the fiscal second quarter. The company called for an operating loss of $27 million to $40 million, while analysts polled by StreetAccount anticipated a loss of $20.5 million. For the latest quarter, C3.ai reported a loss of 9 cents per share, excluding items, on revenue of $72.4 million, while analysts surveyed by LSEG called for a loss of 17 cents per share on revenue of $71.6 million.
Roku — The streaming stock was lower by 1% in early morning trading after Loop Capital downgraded the company to hold from buy. The move comes after Roku jumped more than 12% on Wednesday after announcing plans to lay off 10% of its staff, as well as consolidate office space and review its content slate to trim expenses. Roku had also lifted its third-quarter revenue guidance, saying it now expects revenue to range between $835 million and $875 million, versus prior guidance of $815 million. 
Verint Systems — The analytics company lost 16.2% in premarket trading after Verint’s second-quarter earnings and revenue fell short of expectations. Verint posted adjusted earnings of 48 cents per share, while analysts polled by FactSet forecast 57 cents per share. Revenue came in at $210.2 million, falling short of the estimated $57.4 million.
— CNBC’s Tanaya Macheel and Jesse Pound contributed reporting. More

Milton friedman looms large in the personal and political life of Argentina’s probable next president. Javier Milei’s ideas, which carried him to an unexpected victory in the country’s primaries in August, take cues from the 20th century’s most prominent free-market economist. Friedman influenced both Mr Milei’s opinions on the ideal size of the state (tiny) and its role in the economy (non-existent). So deep is Mr Milei’s admiration that he has christened one of his four pet mastiffs in Friedman’s honour. The former economics lecturer told The Economist in a recent interview that Milton and his other dogs, all of which are named for economists, make “the best strategic committee in the world”.The most far-reaching of Mr Milei’s Friedman-influenced proposals is to dollarise the economy. This would involve replacing the peso with the greenback, and mean getting rid of Argentina’s central bank, which Mr Milei calls “the worst thing in the universe”. He exaggerates, but only a little. Argentina’s economy is in tatters. Annual inflation is at 113%. The central bank has exhausted its dollars. The peso’s value against the American currency has halved since the beginning of the year. In short, the time for radical thinking has arrived. Unfortunately, dollarisation is more likely to be a curse than a solution to Argentina’s problems.When a country hitches its economy to another’s currency, it gives up on making its own monetary policy. Interest rates would be determined by the Federal Reserve, making them more predictable and just about impossible to fiddle. For a country with a record as chequered as Argentina’s, this would relieve a number of headaches. Most Argentines use dollars anyway. Making this state of affairs official would allow the public to avoid the hassle of converting back and forth from the American currency to pesos. Exchange rates for dollars, the world’s most heavily traded currency, would be unmoved by anything happening in Argentina, a fairly small economy, meaning currency values would no longer seesaw. It is a formula that, for a while at least, kept things relatively stable in Ecuador after it dollarised in 2000.The main draw, however, is that Argentina would be blocked from printing cash. Friedman was critical of central banks, convinced that most are too weak to keep inflation in hand, since doing so means standing firm against pressure from politicians to make it easier to pay bills or to let the economy run hot at election time. As Mr Milei is quick to point out, Argentina’s central bank has been one of the most irresponsible. Dollarisation would put the printing presses firmly out of reach. This means, proponents argue, that it would be only a matter of time before the state downsizes and the long battle with inflation comes to an end.Yet this argument has a problem: it takes an unrealistically rose-tinted view of governments. It assumes that politicians—aware that they are no longer able to call on the central bank in a crisis—will automatically reduce their borrowing to a safe level. This would be true if the only reason governments were borrowing too much was because they knew that the central bank would bail them out. In reality, most governments borrow because there is enormous pressure to do so. Lenders need repaying. Bureaucracies must be restructured. Opposition parties push incumbents to spend. And, most pressing of all, voters come to expect certain services from the state. The absence of printing presses is not sufficient to outweigh these concerns.When a disaster strikes, things get scary in a dollarised economy. There is no central bank to act as lender of last resort to either the government or the banking system. Defaults thus become much more likely. Banks that could have been saved with emergency liquidity fail, and the government lacks the dollars to cover deposits, leaving millions out of pocket. Moreover, most borrowing could by then be under American law, putting the government on the back foot in any restructuring negotiations.Indeed, Ecuador is currently experiencing many of the downsides of dollarisation. When the policy was introduced, it stabilised prices straight away. But it also failed to stem the government’s fiscal deficits. Policymakers have since resorted to increasingly creative ways to finance the bill, pushing the country into a deal with imf in 2019.Milei, rockedA future in which Argentina falls into disaster is more easily foreseeable than one in which policymakers see through the tough decisions required to make a success of dollarisation. Fiscal excess has been a problem for the better part of a century. The country has had 22 imf bail-outs over the past 65 years, leaving the fund so exhausted that it has given up demanding the country break even. A string of left-wing governments have built a sprawling welfare state and vast bureaucracy. Mr Milei promises cuts worth 15% of gdp, to a public sector that accounts for 38% of gdp, but struggles to outline where they will come from.There are plenty of other problems. A significant one is how Mr Milei’s government would find the $40bn his team thinks is necessary to make the switch to dollars. Currently Argentina cannot even repay the imf, to which it owes $44bn. Having run out of American currency, the central bank is instead burning through yuan borrowed from China. Mr Milei has suggested selling state-owned firms and government debt in an offshore fund to raise the necessary capital. It is hard to imagine there will be many buyers.Whoever takes power in December will be starting from a terrible position. Forget about finding the money to enable dollarisation. Growing numbers of economists reckon that the country is once again insolvent, meaning that it will be almost impossible for it to pay back its existing debts. The country’s bond prices reflect the fact that financial markets are pricing in another debt restructuring. In order to make a fresh start, Argentina may need to default, not dollarise. ■Read more from Free exchange, our column on economics:How will politicians escape enormous public debts? (Aug 31st)Which animals should a modern-day Noah put in his ark? (Aug 24th)Democracy and the price of a vote (Aug 17th) More

Few assets are as political as housing, and therefore few markets depend as much on national borders as those for mortgages. Governments can twiddle endless dials to control what goes on, concerning everything from how much you can borrow and who can lend, to what they can do if you stiff them. For today’s borrowers, though, one dial feels most urgent: how long is your fix?If you are American or Danish, the answer may well be that you have a fixed interest rate for the duration of your mortgage. As a result, you may pay as little attention as you wish to hawkish central bankers and climbing bond yields. In many other countries—including Britain, Canada and much of southern Europe—mortgage rates tend to be fixed for a few years at most, or not at all. If you fall into this group, you may recently have devoted rather more thought to monetary policy than you would like, since (congratulations!) you are one of its transmission channels. Faced with imminently rising payments, you might be looking enviously at those who need never worry about them.Things are not as great as they first appear for this group, however. America’s frozen housing market, with homeowners unwilling to sell and lose the low rates they locked in during the cheap-money years, should alert policymakers to the dangers of long-term fixes. For mortgage-payers, there is a more straightforward reason to be wary of such lending. A lifetime rate might offer psychological safety. But it is safety you must pay through the nose to achieve.To see why, start with how fixed rates are set. Whoever is lending to you—bank, building society or bond investor—is either borrowing the money themselves (from depositors, say) or forgoing lending it to someone else (such as by buying government bonds). In both cases they are giving up interest payments elsewhere. Your mortgage rate needs to compensate for this if they are to lend at all. One compensation method is a rate that floats on market conditions, always matching the interest payments the lender is losing elsewhere. The other is a rate that is fixed for a set number of years, at the average funding cost the lender expects over the course of the period.The catch is that you might want to repay your mortgage early—to move house, for instance. On a floating rate, the lender is unlikely to mind. After all, they are able to take your repayment and lend it to someone else for the same income. But on a fixed rate, they may mind considerably. Suppose you originally agreed to pay 5% interest for 30 years, then want to pay it back at a time when the equivalent market rate has fallen to 3%. In such a scenario, your lender will no longer be able to lend out your repayment for anything like the same income. Again, they will want compensation: the two-percentage-point difference, multiplied by the however-many years left on the mortgage, multiplied by your average remaining balance. A lot, in other words.Hence the unpopularity of 30-year fixed rates in much of the world. Few borrowers want to risk huge prepayment costs if their circumstances change and markets have moved in the wrong direction. One solution is for regulators to cap costs, but this just discourages lending on long-term fixes in the first place.Next to this, the alternative solution adopted by America and Denmark seems almost like alchemy. In both countries, mortgages can be fixed for 30 years and are prepayable at face value at the borrower’s demand. Americans experience no profit or loss regardless of how rates have moved. Danish borrowers similarly pay no penalty if rates have fallen (making their fixed rate expensive by comparison) but can realise a profit if rates have risen. This means that, unlike Americans, Danes need not worry about surrendering a cheaper-than-market rate to move, and can do so more freely.Yet there is a price for everything, and in this case the price is eye-wateringly high borrowing costs. The average rate on a new, 30-year American mortgage stands at 7.2%, whereas the 30-year Treasury rate is just 4.4%. In Denmark the equivalent rates are 5.3% and 2.9%. In Britain, meanwhile, borrowing costs for mortgage-holders and the government are broadly similar. Put differently, both long-term fixes add more than a third to each of the 360 monthly mortgage repayments in question. Those who had the enviable foresight to secure rock-bottom rates a couple of years ago may not mind much. Everyone else, no matter how envious, should remember that safety doesn’t come cheap.■Read more from Buttonwood, our columnist on financial markets:High bond yields imperil America’s financial stability (Aug 29th)Why investors are gambling on placid stockmarkets (Aug 17th)In defence of credit-rating agencies (Aug 10th)Also: How the Buttonwood column got its name More

In recent years the antitrust division of America’s Department of Justice has gone on a crusade against corporate mergers, filing a record number of complaints in an attempt to stop the biggest businesses from getting even bigger. With few exceptions, these efforts have been thwarted by the courts. That it is so hard to get a judge to intervene in business reflects the work of an institution known more for its free-market influence on economics than the law: the University of Chicago.Fifty years ago this autumn Richard Posner, a federal judge and Chicago scholar, published his “Economic Analysis of Law”. Now in its 9th edition, the book set off an avalanche of ideas from Chicago school economists, including Gary Becker, Ronald Coase and Milton Friedman, which passed into the folios of America’s judges and lawyers. The “law-and-economics” movement made the courts more reasoned and rigorous. It also changed the verdicts judges handed out. Research has found that those exposed to its ideas are more opposed to regulators and less likely to enforce antitrust laws, and tend to impose prison terms more often and for longer.Links between economics and the law have long been studied. In “Leviathan”, published in 1651, Thomas Hobbes wrote that secure property rights, which are needed for a system of economic exchange, are a legal fiction that emerged only with the modern state. By the late 19th century, legal fields that overlapped with economics, such as matters of taxation, were being analysed by economists.With the arrival of the law-and-economics movement, every legal question was suddenly addressed in the context of the incentives of actors and the changes these produced. In “Crime and punishment: an economic approach” (1968), Becker argued that, rather than being a balancing-act between punishment and the opportunity for reform, sentences act mainly as a deterrent: the literal “price of crime”. Harsh sentences, he argued, reduce criminal activity in much the same way as high prices cut demand. With the caveat that a greater chance of arrest is a better deterrent than longer prison sentences, Becker’s theorising has since been borne out by decades of empirical evidence.Too steep?In the movement’s early days, “the legal academy paid little attention to our work”, recalls Guido Calabresi, a former dean of Yale Law School and another of the field’s founding fathers. Two things changed this. The first was Mr Posner’s bestselling textbook, in which he wrote that “it may be possible to deduce the basic formal characteristics of law itself from economic theory.” Mr Posner was a jurist, who wrote in a language familiar to other jurists. Yet he was also steeped in the economic insights of the Chicago school. His book successfully thrust the law-and-economics movement into the legal mainstream.The second factor was a two-week programme called the Manne Economics Institute for Federal Judges, which ran from 1976 until 1998. This was funded by businesses and conservative foundations, and involved an all-expenses-paid stay at a beachside hotel in Miami. It was no holiday, however, even if those who went nicknamed the conference “Pareto in the Palms”. The curriculum was extremely demanding, taught by economists including Friedman and Paul Samuelson, both of whom had won Nobel prizes.image: The EconomistBy the early 1990s nearly half the federal judiciary had spent a few weeks in Miami. Those who attended included two future justices on the Supreme Court: Clarence Thomas (an arch conservative) and Ruth Bader Ginsburg (his liberal counterpart). Ginsburg would later surprise colleagues by voting with the conservative majority on antitrust cases, applying the so-called “consumer welfare standard” championed by the Manne programme. This states that a corporate merger is anticompetitive only if it raises the price or reduces the quality of goods or services. Ginsburg wrote that the instruction she received in Miami “was far more intense than the Florida sun”.In a paper under review by the Quarterly Journal of Economics, Elliot Ash of eth Zurich, Daniel Chen of Princeton University and Suresh Naidu of Columbia University treat the Manne programme as a natural experiment, comparing the decisions of every alumnus before and after their attendance at the conference. They then use an artificial-intelligence approach called “word embedding” to assess the language in judges’ opinions in more than a million circuit- and district- court cases.The researchers find that federal judges were more likely to use terms such as “efficiency” and “market”, and less likely to use those such as “discharged” and “revoke”, after time spent in Miami. Manne alumni took what the authors characterised as the “conservative” stance on antitrust and other economic cases 30% more often in the years after attending. They also imposed prison sentences 5% more frequently and of 25% greater length. The effect became stronger still after 2005, when a Supreme Court decision gave federal judges greater discretion over sentencing.That researchers are turning the unforgiving lens of economic analysis on law and economics itself is a promising trend. The dismal science has come a long way since the heyday of the Chicago school. Thanks in large part to the empiricism of behavioural economics, it is less wedded to abstractions like the perfectly rational actor. This has softened some of the Chicago school’s harsher edges. But it will nevertheless take time for judges to modify their approach. As Mr Ash notes: “The Chicago school economists may all be retired or dead, but Manne alumni continue to be active members of the judiciary.” In courtrooms across America, Mr Posner’s influence will live on for decades to come. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Bali, a holiday destination in Indonesia, and Busan, a port in South Korea, are not easily confused. The former produces little industrial machinery; the latter falls short on year-round tropical weather. But the two have something in common. They are among the regions of Asia now imperilled by the less-than-impressive reopening of China’s economy, and the prospect of a prolonged slowdown.Many Asian countries benefited from Chinese growth over the past two decades, becoming entwined with the world’s second-largest economy. Since China is in the midst of a real-estate slump, with property investment down 9% in the first seven months of the year, these countries now face a headache. China is less of a big buyer of their wares than it was. According to data released on September 7th, its imports dropped by 7.3% in the year to August.In the richer parts of the continent, makers of semiconductor circuits and car parts are nursing losses. South Korean exports to China fell by 20% year on year in August. On September 4th the government pledged fresh support, announcing loans for exporters worth up to 181trn won ($136bn), in addition to tax breaks and other schemes earlier in the year. Between January and July exports from Taiwan to mainland China and Hong Kong fell by 28% against a year before. Almost 10% of the country’s gdp is driven by mainland Chinese consumption and investment, estimates Goldman Sachs, a bank.Some exporters may hope that China’s slump, which has been exacerbated by a global slowdown in sales of electronic goods, has bottomed out, since the year-on-year decline in imports has stabilised. But most do not expect a rapid turnaround. The Korean Chamber of Commerce and Industry recently published a survey of 302 domestic companies that export to China. Almost four in five expected the slump to continue. Without more fulsome stimulus from the Chinese government, such low expectations are likely to be met.In South-East Asia tourist numbers are yet to return to anything like their pre-covid levels. Thailand received just 1.8m Chinese travellers between January and July, compared with more than 11m in 2019. A new government in Bangkok last week announced it would relax visa rules to encourage Chinese visitors to return. Several countries in the region have tourism industries large enough to affect their overall balance of trade. In Cambodia, Laos, Malaysia and Thailand, tourism accounted for between 9% and 25% of total exports in 2019—before covid struck—with China the largest source of visitors to all four.image: The EconomistA few Asian countries, such as India, Indonesia and the Philippines, are less exposed to the slowdown, according to Vincent Tsui of Gavekal Research. Their smaller industrial bases mean they have forged fewer Chinese connections over the past two decades. Mr Tsui believes this lower exposure accounts for the better performance of the countries’ currencies against the dollar this year (see chart).Even during an economic slump, not everything moves in the same direction. Thailand’s exporters of durian, a pungent fruit that is inexplicably popular across much of Asia, have been recent winners. In the first seven months of the year, Chinese imports of the fruit have risen by 52%, relative to the same period last year. Thai officials credit new transport links, particularly a train line connecting Laos and China, for the boom. Sadly for the rest of Asia, not everyone is a Thai durian farmer. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Most people would go to London, New York or Hong Kong to find the world’s outstanding financiers. But perhaps Mumbai deserves a look. After all, it is home to three men who rebuilt India’s banking system after its enfeeblement by a wave of socialist experiments that began in the 1950s. The last of these giants, Uday Kotak, announced his retirement from Kotak Mahindra Bank on September 1st.First to retire, in 2020, was Aditya Puri, who left Citibank in the 1990s to create hdfc Bank, which is now worth almost twice as much as his former firm. Second, in June this year, was Deepak Parekh, who left Chase in the 1970s to build one valuable institution himself, in housing finance, before assisting others, including Mr Puri. Finally, Mr Kotak leaves behind an outfit that leads in areas from conventional lending and investment banking to asset management and insurance. The earliest investors in his project received unimaginable returns: a $120 stake would be worth $40m today. His company went public in 1992; its shares have since made a gain of 12,000%.Each of the three giants played a part in recreating a dynamic private sector. The government had taken a sledgehammer to Indian finance, starting in the 1950s with the nationalisation of insurance firms, before taking over private-sector banks between 1969 and 1980. Mr Kotak began his work in 1985, not long after leaving business school. His first activity, like that of Goldman Sachs’s founder Marcus Goldman, was discounting notes. Mr Kotak paid 12% for funds he lent at 16% to suppliers waiting for payment by Tata, a conglomerate, and other companies with strong credit. In 1989 he moved into automotive finance. Cars were in short supply, making them excellent collateral. Mr Kotak arranged to buy in bulk from Maruti Suzuki, the leading manufacturer, then distributed the vehicles through dealerships on the condition that they were financed.As India’s economy opened up in the 1990s, Mr Kotak started new subsidiaries: investment banking for public listings, then insurance and finally commercial banking in 2003. He was not alone in seeing opportunity. Thousands of financial institutions were established in India during the 1990s only to be wiped out by the global financial crisis of 2007-09. But Mr Kotak, along with Messrs Parekh and Puri, avoided the common mistake of providing credit based on political and personal criteria, and made it through.Kotak Mahindra’s market capitalisation peaked in 2021 at $59bn. It has since dropped to $42bn, despite superb growth, profits and credit quality. The peak came just after a rule on bosses’ tenure was imposed by the Reserve Bank of India (rbi), which set a firm end to Mr Kotak’s time in charge. (Mr Puri suffered a similar fate.) Rather than push on to the last day, Mr Kotak stepped aside a bit early, noting he had a large event to plan: his son’s wedding.The names of two candidates to succeed Mr Kotak have been submitted to the rbi for its blessing, as is now required. The head of the central bank, in turn, is appointed by the prime minister. Although an era of explicit financial nationalisation has ended, a quieter one has emerged. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More