Deleveraging is the key word of the moment and there is still a long way to go for banks and hedge funds. Beyond that, the impact in the real economy of the banking crisis is only just starting to appear. The tools at governments’ disposal may not be strong enough to handle the challenge. Is a raft of new regulation inevitable?

Those of us involved in finance tend to treat the vagaries of investment banking as a matter of life and death.

As in all other areas of financial services, the credit crunch has made its presence felt in international cash management. Banks and corporates have found their relationships and business practices severely tested and have found out who they can, and cannot, trust in a downturn.

Investment bankers are struggling in so many ways. The operating environment is far from rosy. Round after round of redundancies are announced and yet even those spared the black-bin-liner treatment are left wondering whether they might have drawn the short straw – the business is not going to be much fun for the few left behind. For those who do have jobs, such is the disdain in which the profession is held by the general public that many are finding themselves having to lie to avoid discomforting situations.

Global stock markets are at their cheapest for 25 years. Belated measures taken by the US authorities, and possible stimuli from the new Obama administration – and not forgetting a proper historical analysis – show rewards will come in 2009 for those brave enough to buy, writes Charles Dumas.

"There are concerns that bonuses may increase the appetite for risk," warned Anthony Bellchambers of London’s Futures & Options Association in a prophetic comment from a January 1998 Euromoney, ‘The end of the bonus bonanza?’

The credit crunch has spread to emerging Europe – despite what the region’s central bank governors may claim. They have taken action to bolster liquidity and shore up the banking sector. Chloe Hayward asked 14 monetary authority heads what more they can do to manage the inevitable downturn.

For those senior bankers bemoaning the fact that they were not awarded a bonus this year take heart – things could be worse. You could be working for Credit Suisse. The Swiss bank decided to pay employee bonuses for 2008 with illiquid leveraged loan and CMBS debt that no-one else will touch with a bargepole.

In the first of a series of interviews for 2009 with some of the world’s leading corporate chief executives, boss Antonio Brufau talks to Laurence Neville about his strategy for keeping a top-10 energy company on track in challenging times.

Euromoney was emailed this from a Wall Street contact:

Kazakhstan has emerged as the principal conduit for South Korean investment in central Asia. Guy Norton reports from Almaty on the future for cooperation.

US policy failures in the autumn of 2007 were crucial both in letting the financial crisis fester and then spiral out of control, and in a premature, panicky slashing of interest rates that paradoxically aggravated the slowdown severely, writes Charles Dumas.

"I was going through passport control and they asked me the purpose of my visit and what I did. For the first time in my career, I thought "I can’t say I’m a banker, I’ve got to say something else – maybe I can tell them that I’m a doctor."

It wasn’t all gloom as a post-crisis financial world looked forward to a belt-tightening 1998, though: one reader found time to send a poem eulogizing the euro before its launch. Perhaps Ms Opal Innsbruk’s ode can encourage in these dark times as it did over a decade ago:

Agency brokers have returned to fixed income just as investment banks have withdrawn from the market. Will they be able to create dark pools of liquidity and repair the breach in the distribution of debt securities? And does their increasing power herald the return of the primacy of relationships?

"We call upon the top management of the commercial banks to take these decisions into account and recognize that they are operating in an environment in which a lot of the fundamental risks to liquidity and solvency have been addressed. There now is a different situation because of the actions of central banks and governments. The banks should recognize that they are no longer in a similar state of shock as they were for example in September"

Just two years after facing its previous financial crisis, Hungary is once again in trouble thanks to over-reliance on foreign markets. But it is not necessarily the banks that need saving. Jethro Wookey reports from Budapest.

In 2009 corporate issuers are likely to join financials in seeking to push through equity issues aimed at repairing balance sheets. Intricate measures might be needed to attract investors. However, IPOs look set to be less thin on the ground than in 2008 – at least by mid-2009. Peter Koh reports.

Jordan’s Arab Bank is one of the most influential financial institutions in the Middle East. It has thrived for nearly 80 years, largely because of a strict risk management policy. Sudip Roy reports from Amman on how the bank is managing the financial crisis.

Who dropped the ball?

In this downturn, corporate restructurings will be driven by problems at the banks rather than the struggling companies themselves. Louise Bowman explains why.

In the past few months the Russian capital markets have been hit by a rush of selling as spooked investors head for the exit, sending valuations into free fall. Guy Norton reports from Moscow on what lies in store.

After enjoying years of plenty, the country’s investment banks are facing up to the prospect of leaner times ahead. Guy Norton reports from Moscow on how they are looking to survive the economic downturn.

Unlike most sovereign wealth funds, the State Oil Fund of Azerbaijan is still growing strongly and looking for more foreign risk. Will the country’s experience of the global downturn rob the international capital markets of a new hope? Dominic O’Neill reports from Baku.

Not so long ago, HSBC’s Latin American debt franchise could have been described as promising but limited. That’s no longer the case. As some of its rivals struggle to maintain their position in the region, the UK bank is growing new relationships fast. Unlike many competitors, HSBC is still able to offer a full range of services, including writing a cheque when needed. "In the last couple of months, a lot of new clients have been knocking on the door that weren’t before – our overall pipeline for 2009 is now stronger than it was in 2008," says Gerardo Mato, managing director, head of global capital markets and banking, Americas.

James Garvey announced his retirement from Goldman Sachs in December 2008. Garvey’s title was chairman of investment-grade financing – a role that was given to him after the firm made syndicate and debt origination a global business run under Jim Esposito a year ago.

This Asian crisis might not be as bad as the last one. For Amando M Tetangco Jr, governor of the central bank of the Philippines, the lessons learnt from the crisis of 1997 and the reforms that followed it mean that the outlook for 2009 is not nearly as gloomy as might be expected. Euromoney speaks to him about the challenges facing the banking sector, forecasts for growth and inflation, and lessons learnt from the 1997 crisis. It’s been a tough year by any measure, so let’s look forward. What’s your outlook for 2009?

Japan’s megabanks embarked on a year-end fundraising spree that will spill over into 2009, despite spending much of 2008 seeming to enjoy excess capital reserves as they invested billions of dollars in foreign financial institutions. Deteriorating conditions in domestic stock markets, to which Japan’s top banks are heavily exposed, and the poor banking environment in general, mean that they are seeking to shore up their capital positions. The optimistic outlook is that the banks are raising funds in anticipation of high demand for loans in the new year. Sumitomo Mitsui Financial Group’s $5.8 billion preferred share issuance priced on December 11 was the largest deal of that kind from Japan ever, with the firm aiming to raise further funds in January. Three days earlier, on December 8, Mitsubishi UFJ Financial Group, the country’s largest banking group by assets, priced a ¥417 billion ($4.5 billion) common equity offering at a 3% discount to the share price. The group’s share price was the worst performing among Japan’s top three banks during the run-up to the deal’s pricing but the stock has since recovered.

Having negotiated away their covenant protection in the boom years, lenders find themselves in a weak negotiating position in the bust.

A GDP growth rate of 8% has long been touted by Chinese authorities as well as commentators as an important threshold; should the rate slip lower, the argument runs, the slowdown might trigger dangerous social problems. Analysts at foreign banks have universally tended to avoid predicting that this might happen but an interesting trend to watch for in 2009 will be the emergence of the ‘below-eight-percenters’ if conditions in China do not improve. Early out of the gates was Qu Hongbin, analyst at HSBC, who wrote in December that while China’s Rmb4 trillion ($2.16 billion) stimulus could lift growth above 8% in the second half of the year, "weaker growth in H1 ‘09 will drag the whole year average to 7.8%". Watch this space.