Emerging Europe

It began with the confiscation of a vegetable stall in Sidibouzid, Tunisia. Now it has spread throughout the Middle East. A region where political change had seemed unthinkable is approaching a defining moment. Andrew Mortimer reports.

EBRD executive highlights overall strengths;
Multilateral returns to profit

Turkey’s banks are the bedrock of its economic success and none is bigger than Isbank, the largest by assets. What is less well known is that the bank is a conglomerate, comprising not just other financial firms such as Is Securities and Is Asset Management but also large industrial concerns such as Sisecam, a speciality glass manufacturer.

Huseyin Erkan is chairman and chief executive of the Istanbul Stock Exchange and one of the main proponents of a deepening of Turkey’s capital markets. The potential for new securities, markets and issuers is there but many bridges need to be crossed. Erkan speaks to Nick Lord.

Turkey’s ambition for an investment-grade rating might be realized this year. Strong fundamentals and political stability almost guarantee it. But if it gets a triple-B rating, two problems remain. What can foreign investors buy, and will making the grade undermine further reform? Nick Lord reports.

Poland on its own for investor appeal: Warsaw Stock Exchange is the standard bearer for privatization.

The financial crisis proved almost as tough for wealth managers as it did for investment bankers. They have worked hard to redeem reputations and improve services. The heads of the world’s eight leading private banks tell Helen Avery how they are giving clients the returns they expect.

Renewed growth and prospects of active capital markets and M&A business in 2011 have put both global and domestic private banks in a bullish mood. Guy Norton reports.

Growth is good for emerging economies but overheating is an ever-present danger. Governments are still failing to devise suitable cooling measures.

A senior banker in Ukraine reckons there might be up to 10 equity deals over the next 11 months. If so, 2011 would be one of the most active years for Ukrainian issuance. If the market did see that many deals it would build on the steady flow of transactions out of the country over the past three years.

Banks mandated for BGZ listing; ‘Pension changes won’t impact demand’

Equity markets tipped for growth; Concerns linger over structural reform

Michael Evans’ promotion emphasizes importance to growth prospects; Internal politics also plays a role

North Korea. Zimbabwe. Tunisia. Algeria. Iraq. Pakistan. Egypt. It’s a list of the world’s flashpoints. And they’re all part of Egyptian entrepreneur Naguib Sawiris’s unique telecoms empire. So when his Orascom group needed financing, and then sought a buyer, it presented Sawiris’s advisers with a unique set of challenges. Eric Ellis tells the fascinating story of corporate finance in the new world order.

Bank of Moscow is not the only Russian bank to have attracted the attentions of VTB Group in recent weeks. In early December, the group’s investment banking arm, VTB Capital, announced that it had acquired a 19.28% stake in Rosbank, which is majority owned by France’s Société Générale. Unlike the proposed long-term strategic acquisition of Bank of Moscow, however, VTB’s interest in Rosbank is widely viewed as a purely short-term financial investment. Although the purchase price was not disclosed, local analysts believe that the cost of the acquisition of the minority stake was equivalent to around 2.5% of VTB Group’s capital.

Europe’s bottom-up problems may be on their way to solution, contrasting with the USA where Federal budgetary deficits are spreading down to States and Municipalities, with rising yields for “munis”.

Hungary started its six-month stint as the rotating president of the 27-member European Union on January 1. In that post, Hungarian officials get to chair meetings of national ministers, including the closely watched monthly gathering of finance ministers. It’s certainly in the hot seat as the sovereign debt crisis lingers and markets speculate about the future of the euro as a currency bloc. A bloc that Hungary isn’t yet part of. A source tells Euromoney of a December meeting he attended in Brussels where he and others met with Hungarian officials. The source asked the Hungarians to give their views on the future of the euro. One official started with a diplomatic ramble about the importance of a strong currency for economic stability, then stopped mid-sentence. “Actually, we are not part of the euro, and so we don’t really care,” the diplomat continued, not so diplomatically.

Bulgaria has lower political risk than Romania. It has not had to turn to the IMF. But Greek banks’ market share in Bulgaria is 26%, twice as high as in Romania.

In global trade, the beginning of the liberalization of China’s currency was one of the most important developments of 2010. In mid-December, its impact reached Russia when HSBC announced its first cross-border renminbi trade settlement transaction there for a subsidiary of sport retail chain Sportmaster. The advent of cross-border renminbi settlement means that Russian companies no longer have to convert Russian roubles to US dollars and then to Chinese renminbi. A process that used to take three days now takes one, substantially reducing traders’ exposure to exchange rate volatility.

The president of the EBRD tells Sudip Roy why adopting the euro is still the best option for central and eastern Europe’s EU members.

Western bankers have paid a heavy price for their expansion into the further reaches of central and eastern Europe yet the region still offers potential for growth. With recovery on the way, will banking groups be able to resist making the same mistakes again? Lucy Fitzgeorge-Parker reports.

The attractiveness of central and eastern Europe as a location for corporates’ shared service centres (SSCs) continues to grow. Emre Karter, deputy head of global transaction services for CEE at Citi, estimates that there are 338 in CEE. “Many serve the CEE and some also serve EMEA or even perform global functions,” he says.

The Principles for Stable Capital Flows and Fair Debt Restructuring were agreed in 2004 between big sovereign issuers and leaders in private finance and subsequently endorsed by the G20 ministers in Berlin in 2004.

Negotiations on government purchase of Surgutneftegaz stake; Surprise offer to buy out minority shareholders at INA