June 2009
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LATEST ARTICLES
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Euromoney's 40th anniversary gives us a chance to look forward. We profile the firms and the individuals who will help to write a new and successful chapter in global finance. We’ve picked out old firms sticking to what they have always done best and whose time has come, or those adapting to new times; or relatively young businesses with a new offering, or a new take on an old one.
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The debt market has rewarded the biggest borrowers and the largest – and least scarred – underwriters handsomely. A new poll of the world’s largest fixed income investors by Euromoney shows which issuers are accessing the markets most successfully. Alex Chambers finds out what is making the bond markets tick.
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The world’s largest borrowers in the international bond markets rate the products and services offered by the biggest deal arrangers.
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The latest Euromoney primary debt and new-borrower poll provides a unique insight into what borrowers really think of their underwriters and what investors think of borrowers.
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The extent of government involvement in Portugal’s economy might be partly to blame for anaemic growth over the past decade, but it’s throwing up attractive opportunities for private-sector investors. Simon Brady reports.
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The country’s banks are proving among the most resilient in emerging Europe and have helped to boost sentiment towards the country and its stock market. But are there still dangers ahead? Guy Norton reports.
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Although the economy is suffering, charitable giving is still taking place on Wall Street. Trading firm BTIG had its seventh commissions for charity day in May and raised $3 million – up on the $2 million raised last year, and a record raise for BTIG.
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A prominent Wall Street hedge fund manager is busted by the police after it emerges that his fund is no more than a giant Ponzi scheme, in which through charm and his reputation he has persuaded prominent friends and financiers to invest.
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With banks in the pillory and credit still scarce, financial institutions are demanding more from their cash-management providers. Can second-tier hopefuls keep up with the pace or will global players reap the rewards? Laurence Neville reports.
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Relatively untroubled by sub-prime losses and well-endowed with deposits, Japan’s banks are still enthusiastic lenders. But the bulk of their advances are still domestic – sometimes to potentially shaky borrowers. Will they expand further in lending in international markets? Chris Wright reports.
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"They want us to take away the bull. They want us to put up the flag. I hate that fucking flag"
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"So far-reaching and significant may be the decisions to come around capital requirements, funding liquidity and reserving that policymakers should not be precipitate in making those. Indeed I would advise that no such decisions should be taken now. There is no need"
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Wealth management services are relatively underdeveloped in the Gulf region. But local and foreign private banks and family offices have broad opportunities to develop their business.
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Corporate lending has slowed to a trickle, so distressed issuers are turning to debt exchanges and buybacks to avoid bankruptcy. While the leveraged loan market trades well below par, owners and sponsors see this as a no-brainer, but noteholders may have very different ideas. Louise Bowman reports.
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With bankers having been held responsible for all of society’s ills since mid-2007, it was only a matter of time before the movie industry latched on to the public mood. A new film released this month called New Town Killers is marketing itself as a "credit crunch film" that "targets the financial sector and points blame for social and economic climate (sic)". Starring Dougray Scott (Mission Impossible 2, Desperate Housewives) the film apparently creates a scenario where the rich and privileged (two bankers) prey on the poor and deprived (everyone else). "It is the juxtaposition of two incredibly successful young bankers against a kid who hasn’t got a chance that creates the tension," the press release helpfully points out. Expect much, much more in a similar vein to come. Come back Jaws, all is forgiven.
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The turmoil is a factor delaying capital markets plans rather than a disruption. Banks continue to profit from government debt refinancing, and upcoming privatizations should attract more foreign investment. Elliot Wilson reports.
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The United Arab Emirates has informed the secretariat of the Gulf Cooperation Council that it is pulling out of the proposed GCC monetary union, according to a report by the country’s official news agency.
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Over the next few years the financial landscape could see a dramatic shift as market forces, politicians and tighter regulations make banks scale back their foreign businesses and focus more at home. Is the era of global banking over? Sudip Roy reports.
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The credit crisis has left the country’s banks relatively unscathed, and regulators around the world want to find out why. But is a conservative culture stopping local players achieving their global potential? Helen Avery investigates.
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Opportunities rising in private equity; $11 billion sitting on sidelines
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It has already won a reputation as one of the world’s leading hedge funds. Now Citadel has its sights set on investment banking. Chief executive Ken Griffin sees a sweet spot where many firms have left the stage. He normally succeeds in his goals. Chief executive Ken Griffin believes his newly expanded business will be a force to reckon with on Wall Street, says Helen Avery.
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Quantitative easing is being hailed as a policy panacea. The problem is that it sounds a lot like a prescription that causes the very problems it is designed to treat.
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Philip Lynch, Nomura’s Middle East and Africa chief executive, tells Euromoney his firm has been mandated on a yen-denominated sovereign debt issue from the Middle East, which will come to market in the next few months.
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The authorities have run out of ways to deal with the debt overhang and to create new credit. The only palatable way out looks to be a period of generalized inflation
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CB governor defends one-off devaluation; Hails fight against inflation
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Government seeks foreign investors; Opportunities in real estate, cement and power
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Investor demand for central and eastern European sovereign risk is strengthening, allowing governments across the region to access the international bond markets again. The Slovak Republic continued a positive trend in May when it attracted €2.8 billion-worth of orders for a €2 billion six-year deal.
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Big names have been recruited in ECM; they must help pay the bill for a secondary market presence.
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Local governments under pressure to service judicial payments debt; Lawyers concerned about possible technical default
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Debate about compensation must address wider industry issues, but there are no easy solutions.
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No to quantitative easing; End of repo facility eyed?
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Banks moved quickly to sell equity last month; After reducing their underweight position, investors will get choosier
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As banks cut back, leading prop trading boutiques grow; Can banking and prop trading co-exist?
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Governments should cede control of fiscal policy.
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Japanese currency becalmed despite bad news; Possible US move would prompt sell-off
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Markets must soon learn not to react to agency sabre-rattling.
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This edition of Abigail with attitude includes a guide to decoding the underemployed senior banker’s vocabulary.
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Julius Baer has separated its private banking and asset management businesses into two entities. A person familiar with the firm said there had been some management conflict as pressure to push internal products was affecting the reputation of the bank.
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Debtholders pushing back; Sponsors frustrated in restructuring plans
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Veteran launches $1 billion holding company; Targets banking, wealth and insurance
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Funds reassess investment strategy; Positive outlook for private equity
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Even as shares rallied last month, some banks reported severe problems. KBC’s write-downs of insurance from MBIA on a previously undisclosed €14.4 billion collateralized debt obligation portfolio hammered the Belgian bank’s results, turning a modest €465 million first-quarter operating profit into a €3.6 billion loss.
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Geithner wants greater oversight of OTC derivatives; Regulation benefits e-platforms and exchanges
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Kiwi funds outperform global index; Investor interest grows
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Many banks already offer investable indices, but Parker Global Strategies says its new product is an innovation that will ultimately lead to far wider acceptance of foreign exchange (FX) as an asset class. Parker, in partnership with BlackTree Investment Partners, the London-based investment management firm, has created the Parker BlackTree Currency Indices (PBCI).
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While there were a few signs of the impact of the credit crunch – a couple of the normal players were absent and the standard of freebies was marginally lower than in 2008 – it was pretty much business as usual at the Euromoney Forex Forum.
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The latest SIV auction has proved a welcome fillip for the structured finance market.
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Wilmot-Sitwell and Kengeter take charge; Misra hire counters key staff departures
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One thing Jim Quigley is not short of is confidence. The president of Latin America at Bank of America Merrill Lynch believes that the newly merged firm is well placed to win business as capital markets and investment banking activity begin to pick up.
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Barclays was the bank that many expected to fail. Recapitalized, with its earnings power enhanced, safe from the clutches of the UK taxpayer, it may emerge as one of the big winners from the crisis. The bank’s leaders expect to build dominant positions in both retail and investment banking. What could still throw Varley, Diamond & Co off course?
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Boutique equity trading firms turn to research; Trend brings new forms of analysis
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One banker contrives a metaphor to defend the universal banking model. If you set two BMW 5 Series cars to race around a track and only one makes it back, that tells you that one of the drivers made a mistake, not that the BMW is a bad car. So don’t junk universal banking, through a forced separation into utility banking, comprising retail deposit-taking and commercial lending, away from trading in securities, just to punish the mistakes of poor chief executives who drove their banks into a wall in the reckless pursuit of profits in complex instruments that they didn’t understand, using leveraged proprietary risk-taking they couldn’t control.
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The first question many asked at this year’s Euromoney FX poll dinner (see photos below) was: how could the European football authorities be so stupid? Uefa, in its wisdom, had decided to hold the second leg of the crunch semi-final between London’s finest football team, Chelsea, and arch-European rivals Barcelona on the very same night as the dinner. How could Uefa be so cruel to the hundreds of Chelsea fans – most of whom are, strangely, US citizens – who had already committed themselves to attend the dinner? I even felt sorry for Mark Warms, general manager of Europe at FXall and a Chelsea season-ticket holder, who was doubly frustrated as his company sponsored the dinner. As we all now know, Chelsea were cheated out of the victory they deserved. Brad Leek from RBS and Sean Comer from Barclays oddly made a similar claim in the taxi on the way home about their respective rankings in the poll, at which point I fell asleep. It’s good to see that such – I won’t call it honest – competition remains in FX.
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Emerging markets specialist announces raft of hires; Opportunities in equities and commodities
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The emerging market equity boom might turn out to be leverage-fuelled.
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Mauricio Funes, the newly elected president of El Salvador, is likely to tap IMF, IDB and World Bank sources to help his country navigate the economic slowdown. Last month the El Salvadorian central bank received $187 million of a $400 million three-year loan from the IDB that was signed in December.
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$1 billion deal six times oversubscribed; Could provide covered bond template for region’s other banks
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In early May, Icap hosted the fifth International Rouble Settlement Forum at its London headquarters. The meeting was chaired once again by Darryl Hooker, global emerging market manager at Icap Electronic Broking. Hooker has played a key role in bringing together a diverse range of market participants to try to drag the rouble market into the 21st century and no doubt he will have been pleased to see the forum so well attended; for the first time, representatives from CLS, Swift and the Russian central bank were all brought together in one room.
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Larry Fink wants BlackRock to be one of the key names in finance for the future. Consolidation of investment managers – possibly including BGI – may achieve that goal. But his firm’s influence on the present is already great, as adviser of choice to banks and governments alike on problem assets totalling $7 trillion. Peter Lee reports.
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International banks might not get the rich pickings they crave in the People’s Republic.
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Regulators in Berlin have yet to pull off the confidence trick of their US and UK counterparts.