International cash management meets the global challenge

With the notable exception of Deutsche Bank, German investment banks’ performance has lagged their French peers for most of the decade. But the German sector is picking up on new market possibilities, with Commerzbank in particular looking to rebuild its business after a dramatic recovery. Philip Moore reports.

Brazil’s biggest private sector bank has announced the creation of a new subsidiary, Bradesco Investment Bank. This will focus on all aspects of the local and international capital markets business as well as asset management. Bradesco is a retail powerhouse but the bank’s CEO, Marcio Cypriano, is keen to take advantage of growing capital markets activity from Brazilian entities. Cypriano told Euromoney last year: “In general, we should be bigger and better in capital markets. That business should closely match Bradesco’s retail performance.” [See Euromoney December 2005, “Bradesco's plan of attack”.]

The Iranian authorities’ recent granting of operating licences to two new private banks (Bank Sarmaye Daneshgah and Bank Pasargeda) suggests that the sector has a future, despite president Mahmoud Ahmadinejad’s apparent disdain for his predecessor’s reformist agenda.

By Lawrence White

Fund managers' priorities for 2006

Invest with female mutual fund managers to save on trading costs

FX heads aspire for gold in L’Etape du Tour bike race.

It’s not easy to see, but behind the trillions of dollars of FX trading a collision between new technology and traditional banking is changing the economics and mechanics of the business. So far, participants talk politely of cooperation.

“We’ve made $100 billion of investments in the past few years. We have to be number one in every product, in every market. We have no choice. There’s no other way to go.”

“Citigroup should wipe the floor with everyone in credit derivatives. What happened?”

Summer cum laude

It hasn’t been the easiest of starts to 2006 for Citigroup in Asia, with continuing integration challenges at its Korean banking acquisition and difficult negotiations with existing and future partners over its China strategy [see Citigroup fails to solve the China conundrum, this issue]. Now Citi’s China strategy will need to be reconsidered after the departures of chief rainmakers Francis Leung and Wei Christianson.

Javier Lazaro has joined Credit Suisse as head of global markets solutions covering Spain and Portugal from Goldman Sachs’s leveraged finance group. He will report to Paul Raphael, head of European equity capital markets, and Marisa Drew and Craig Klaasmeyer, co-heads of European leveraged finance origination.

As KPMG wins a $5.4 billion advisory mandate, are consultants stealing big deals from investment banks?

This could be just the beginning of a battle between exchanges and their users.

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DrKW has embraced blogging in a big way. The fondness for internet opinion boards has spread from the bank’s IT staff to the rest of the bank, which now has about 300 internal web logs, used for sharing work ideas.

The Lehman Bond Show will now be available via podcast.

Arcelor, the Luxembourg-based steel company that has in the past preferred not to use bank advisers, is wheeling out the big guns to defend it against the €18.6 billion ($22.1 billion) hostile bid from Mittal Steel. It has just hired Morgan Stanley, which will join BNP Paribas, Deutsche Bank, UBS and Merrill Lynch in advising it. Most of the main advisory firms are involved in the hostile bid on one side or the other. Mittal Steel is being advised by Credit Suisse, Goldman Sachs, HSBC, Société Générale and Citigroup.

The sale of Hotspot has prompted a torrent of speculation about the future of other ECNs. But it seems the rumours about new owners for FXall are true.

Cheyne Capital Management sold one of the largest-ever European arbitrage CLOs last month via Nomura. The €1 billion Cheyne Credit Opportunity CDO 1 incorporated several structural features to overcome problems that could arise from its relatively large size. In contrast to typical CLOs, which are normally half the size, 40% ramped up at launch and have around a year to complete sourcing loans, Cheyne Credit Opportunity has a two-year time period to ramp up fully. This extra flexibility will be particularly useful. The competition for leveraged loans will be greater than ever, given that an estimated 35 CLOs are operating this year, compared with about 25 last year.

Dave Tait has not only had a long and successful career in the FX market, but he has also climbed some notable peaks outside of the trading environment.

Hedge fund managers are increasingly shopping around and using more than one prime broker at the same time.

Latin America’s development bank has to change tack as countries in the region rely less on dollar funding.

Regulators outnumbered the regulated at a meeting at the Federal Reserve Bank of New York on February 16. Representatives of 15 bank and securities regulators and exchanges were relieved to hear that the world’s 14 largest credit derivatives dealers had fulfilled their promise, made last October, to cut by 30% the number of credit derivatives trades remaining unconfirmed for 30 days or more by January 31 2006. The backlog, which arose from high-velocity trading and assignment by hedge funds in a market with underdeveloped systems for initial confirmation of trade details, had sparked widespread alarm across the industry. More good news: electronic confirmation has risen to 62% of trade volume, from 46% in September 2005.

The rapid influx of new managers to the CDO market is a staffing headache for established players.

It’s the time of the year, with the bonus season over, when people moves are back in swing. So far, several have caused a bit of a stir.

The UK government’s commitment to imminent PFI transactions appears to be wavering. Have critics of the funding strategy won the argument?

“Probably a good idea” was how a leading market participant described the news that the International Capital Market Association (Icma), the International Swaps and Derivatives Association (Isda) and The Bond Market Association (TBMA) have formed a Global Capital Markets Board (GCMB).