Source: www.breakingviews.com is Europe's leading financial commentary service

With Islamic banking business growing faster than more conventional financial services, competition to provide new products is heating up.

In the wake of September 11, the US authorities targeted informal financial networks serving people in the Islamic world for particularly severe treatment. One of these was called Barakkat, a cash-transmission network that linked expatriate Somalis living in the US with their impoverished home country. Barakkat was closed down less than a month after the outrage, causing enormous stress to the large expatriate Somali community in the US and their families in Somalia.

After a weak 2001, most Arab banks enjoyed little pick-up in their fortunes in 2002. However, early results in 2003 suggest that the tide may be turning.

Debt capital markets is one area of European banking that is hiring rather than firing. But most of the new jobs are at banks still building a presence, and it is only skilled, experienced staff that they are after at modest cost.

Barbados

The emerging-market bond bubble may be close to bursting as the US economy shows signs of picking up and bondholders digest a recent rise in yields. It means investors will have to dig harder for opportunities in the CEE region.

THE CEO OF a leading investment bank recently offered Euromoney a telling judgement on the state of the sector. "There is now more talent outside the industry than inside it," he noted, reflecting on the exodus from the big banks of some of their brightest and most successful people.

Source: www.breakingviews.com is Europe's leading financial commentary service

Latin America's poor economic performance in the past decade has overturned analysts' judgements that getting rid of the region's dictatorships and introducing free-market reforms would clear the path to sustainable economic growth.

Ibrahim bin Abdulaziz Al-Assaf, Saudi Arabia's minister of finance and national economy since 1996, has steered the economy through a difficult period. He has played a leading role in the modernization, diversification and liberalization of the Saudi economy and managed its finances prudently in a period in which oil prices have swung between $10 and $30 a barrel. Al-Assaf, a 54-year old economist who has served as the country's executive director at the World Bank for six years and as vice-governor of the Saudi Arabian Monetary Agency (Sama) and wins Euromoney's finance minister of the year award for 2003, spoke to Nigel Dudley in his office in Riyadh.

A cabinet reshuffle should revive Saudi Arabia's economic reforms, with a new capital market law pending.

Advisers: UBS (Cordiant); Goldman Sachs (WPP)

Emerging markets offer US funds significantly safer investment opportunities than some G7 countries, according to new research from risk analysis firm RiskMetrics.

Turkish banks' dependence on earnings from treasury bills has put them in the same ramshackle boat as the government and rendered them apathetic towards innovation and consolidation.

GEMS Management & Investment | East Capital/Prosperity Asset Management | Longreach Capital | Protego GEMS Management & Investment

Bond investors finally appear to be getting the message that exposure to commodities can be a useful hedge in a portfolio. And if they have invested in the right commodities, they could find themselves in an excellent position to profit from any forthcoming US interest rate rise.

In the July issue of Euromoney, an editing error led us to state incorrectly that Alfa Bank is a subsidiary of Austrian firm RZB. It is not. We would like to make it clear that Alfa Bank is Russian-owned and not a subsidiary of any foreign firm.

Politicians in the US and Japan are blaming the low value of the Chinese renminbi for all manner of economic ills in their countries and pressing for its revaluation upwards. Yet many of their own manufacturers are benefiting greatly from the low manufacturing costs in China. Speculators will win if the renminbi rises.

Although logistics suggest that regional companies should play a major part in reconstructing Iraq, hopes of big gains have had to be scaled down. In some areas, such as telecoms, the odds look to have been stacked against Arab firms.

The transport system now rivals the weather as a topic of conversation among disgruntled Britons. So there was considerable interest in investor appetite when National Air Traffic Services (Nats), which runs air traffic control services in UK airspace, followed another transport-sector debutant, Network Rail, which maintains the UK rail infrastructure, to the bond markets this summer.

"When we launched our Vice Fund, one SRI [socially responsible investing] group said they would pray for us," says Dan Ahrens, co-manager of Mutuals.com's Vice Fund.

Bankers are grateful for the bouyancy of the debt capital markets. But they are not letting the rush of business impede their efforts to broaden the range of products they offer clients and cut out unfruitful relationship banking.

A new capital markets law, continued privatization and an eventual opening up to foreign investors should boost Saudi Arabia's equity market.

The pan-European asset management industry spends more than $9 billion every year managing and distributing product information, according to research by independent consulting firm SPB Marketing. Software company Activiti has created a product that it believes can help large fund managers to cut costs by up to $5 million by increasing the efficiency of the flow of information between firms and consultants and within the asset management firm itself.

When Allianz announced its first-half results in August, it fuelled both sides of the argument about Dresdner Kleinwort Wasserstein's future.

After two years' frantic activity and expenditure banks are still struggling to understand, let alone control, terrorist financing. Governments have failed to support the financial community with resources, skills and systems. The implications for global security are alarming.

Fixed-asset investment in China is growing faster than demand, creating overcapacity that may never be drained no matter how fast exports grow. A new burden of potential non-performing loans could be accreting as a result.

Five years after Russia defaulted on its sovereign debt, burning foreign investors, the government is poised to return to international capital markets next year with $2.76 billion of Eurobond issues. Thanks to the country's revival, investors are salivating at the prospect of fresh Russian paper.

There's not a lot new about the fact that German corporates need to think about reassessing their funding mix, but a new survey by Siemens Financial Services suggests that their best ideas about how to go about this are not good enough.