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As the equity market continues to struggle in Brazil, the local debt market is growing in importance. The challenge is to find enough bankers to fill the demand.

The tables are starting to turn in the Brazilian banking market – for the first time foreign-owned banks have become acquisition targets for locals Itaú and Bradesco, valued at more than $60 billion each, which now dwarf the purchasing power of several of the international banks in the aftermath of the sub-prime crisis.

Hedge fund administrator Fulcrum, has merged with the hedge fund services arm of Butterfield Bank, an award-winning Bermudian bank.

Japan’s agencies have long been dependable if staid issuers, with their government backing and tendency towards regular benchmark issuance providing a steady source of bonds yielding 15 to 20 basis points more than Japanese treasuries. Now they face change: in a series of reforms aimed at reducing government involvement in public finance, Development Bank of Japan (DBJ) is to be privatized and Japan Bank for International Cooperation (JBIC) is merging with a group of other government finance institutions to form a new firm called Japan Finance Corp. Their paths will diverge dramatically: JBIC will continue to enjoy government backing and is thinking only of tinkering with its borrowing routines by offering more benchmarks. DBJ is striking out on its own as an investment bank, and aiming rather high if management are to be believed. DBJ, a regular benchmark yen issuer in the international markets since 1960, is to begin to be privatized in October and will gradually reduce issuance of government guaranteed bonds from the present ¥190 billion ($1.9 billion) to a projected maximum of ¥160 billion in financial year 2008.

HSBC’s attempted takeover of Korea Exchange Bank has been in limbo for more than a year, pending regulatory approval that in turn depends on the outcome of a court case involving individuals charged with improper conduct in the Korean bank’s original sale to private equity firm Lone Star. With the initial deadline already passed, the Financial Services Commission has said it is still reviewing the case, and Korean banks have said that they too would be interested in KEB. Richard Wacker, the bank’s chief executive, is a 20-year veteran of General Electric brought in by Lone Star in February 2004 to turn the then-troubled bank around. Euromoney spoke to him in Seoul about the frustrations of the delayed deal, his plans for KEB’s future and what having HSBC as a majority shareholder could mean for his bank.

CLS has hired Roger Rutherford as its head of product management. Rutherford, who reports to Rachael Hoey, director of business development, joins from Icap’s EBS unit where he held several roles, including leading the EMEA sales team; he was also a key member of the team that launched EBS’s prime brokerage offering and more recently was spearheading the introduction of NDF trading on to the EBS platform. Many years ago, he was a voice broker at Marshalls.

Faced with growing evidence that issuers were gaming the scheme, the European Central Bank has finally tweaked the collateral requirements for its repo liquidity programme. Haircuts for ABS and unsecured bank bonds have been increased, the former up from 2% to 12%. This brings the scheme into line with Bank of England and Federal Reserve rules – but in reality makes ECB rules more stringent as the maturities on offer are shorter. The ECB has also tightened the close-link rules so that ABS collateral for which the seller is also swap counterparty is disallowed. Seller liquidity support of more than 20% has also been axed. The rules are likely to have an impact on smaller banks that have relied on ECB liquidity but analysts at Deutsche Bank calculate that the incremental cost to banks following the haircut change is 50 basis points. This means that the ECB window is still the most cost-efficient funding channel available to banks if maturity is not a consideration. "This change alone is unlikely to compel many banks to return to the securitization capital markets," conclude the DB analysts.

MBIA has agreed to reinsure a $184 billion portion of FGIC’s municipal bond book in a deal that reduces risk exposure for the latter and improves the capital position of the former. The solid municipal credits will also improve the risk profile of MBIA’s book. Under the deal, if a credit event is triggered on FGIC, protection buyers have a claim on MBIA for these assets – but there is still some legal uncertainty as to how this process would actually work. In a separate development, FGIC has paid a $200 million settlement to Calyon to commute CDS written on IKB’s Rhineland conduit. FGIC is suing IKB for fraud in relation to the now defunct vehicle.

The rapid expansion of samurai bonds (yen-denominated deals sold by foreign borrowers into Japan) puts them firmly in the coveted list of credit-crunch beneficiaries. Borrowers of all types facing the increasingly expensive prospect of issuing in their illiquid domestic markets are finding an attractively cheap alternative in Tokyo. The bonds are also attractive for individual investors in Japan, offering higher yields than domestic bonds or the interest paid on savings accounts.

Cambodia’s growl too quiet to be Asia’s next tiger yet

Nigerian banks in London might be compared to the city’s famous red buses: you can wait an age for one to come along and then three or four appear at once. For 25 years there have been just two Nigerian banks in London, FBN and Union Bank of Nigeria. FBN was a branch of First Bank until it was turned into a full bank in 2002. It has a good steady business. “Not all bankers trust Nigerian risk,” says Peter Hinson, managing director of FBN Bank. “We act as a clearing house, for they take comfort from a UK payment.”

Brazilian banks: Santander/Real merger creates new battleground