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With the business models of many of the largest financial firms destroyed by rapid deleveraging, it suddenly looks smart to be a purveyor of independent advice. The biggest, Lazard, finds corporations, governments and other banks desperate for help in repairing their balance sheets. Peter Lee reports.

The German government plans to acquire an 8.7% stake in Hypo Real Estate Group. The troubled lender said in a statement that the German Financial Markets Stabilization Fund (SoFFin) is taking the step in an effort to stabilize the financial markets. Specially, as part of the recapitalization of Hypo Re, either SoFFin or the German government will gain full control over Hypo Real Estate Holding, and as a first step toward that end SoFFin has committed to acquiring 20 million shares of Hypo Real Estate.

Catalyst Capital has closed its first dedicated European real estate fund, the Catalyst European Property Fund, with EUR228.5 million in assets under management. Peter Kasch, managing partner in London, said the move is due to the current global economic conditions. "Our efforts are now concentrating on identifying acquisition opportunities where we can add value during a recovery period in the markets, particularly in established prime markets."

-- Sarika Gangar & Samantha Rowan

Financial markets have been so discredited that any sensible solutions they might suggest are given short shrift by policymakers.

I almost felt sorry for ‘Swervyn’ Mervyn King, the governor of the Bank of England this week when he was forced to write yet another apology to UK Chancellor Alistair Darling explaining why CPI inflation was running at 3.2% in February when it is supposed to be 2%. According to Merve the Swerve, a major factor was GBP weakness. “Oh really?” I screamed, remembering that in early February, I actually wrote to various members of the BoE’s monetary policy committee pointing out that the UK was importing inflation and cautioning them about any further easing.

Too many Muppets for the week

Last week, most of us laughed when news broke that Russia was seeking an expansion of the IMF’s SDR. This week, China joined the call when the governor of its central bank, Zhou Xiaochuan, posted an essay on the topic on the People Bank of China’s website. Poor old Tim Geithner, the US Treasury secretary, was clearly wrong footed by the suggestion. His initial reaction, along with Federal Reserve Chairman Ben Bernanke, was to dismiss the idea, but he then backtracked and said it was worth considering. Responding to a question at a Council of Foreign Relations event in New York, he said: “As I understand it, it’s a proposal designed to increase the use of the IMF’s Special Drawing Rights. I am actually quite open to the idea.” The result was inevitable. The dollar got a kicking. The main beneficiary was the euro, which is rapidly assuming a new moniker: the anti-dollar.

In a week where it has been easy to criticise the Bank of England, the troubled central bank can at least derive some comfort from a report which says it should be privatised and once again be allowed to regulate the UK banking system. In a new research paper – Central banking in a free society, released by the Institute of Economic Affairs – professor Tim Congdon argues that the decision by Gordon Brown back in 1997 when he was UK Chancellor to change the structure of financial regulation in the UK is a fundamental factor in the current banking crisis. Although Brown granted the BoE independence, he also removed its authority on banking supervision and regulation. Congdon argues that the BoE could do its job most effectively if it were privatised.

The CME has announced an incentive programme to give South American-based banks discounted trading fees for trading its products. The programme begins on May 1.

Dierk Reuter has quit his job as global head of FX algorithmic trading at Deutsche Bank, which he joined in November 2007 from Goldman Sachs. The buzz in the market is that Reuter is the latest in a growing trend to set up a niche boutique. If true, it is another reflection of the difficulty banks are having in retaining quality staff. Talk is that Reuter has been joined in his new venture by Matt Wilhelm from Goldman Sachs and at least two algo experts from RBS. Goldman, as ever, has refused to comment and the brief media glasnost shown by RBS appears to have come to a rapid end.

Abigail Deare has resigned from Credit Suisse, where she worked in hedge fund sales. Word is she’s returning to South Africa.