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New financial legislation and infrastructure in Dubai and Saudi Arabia give them the opportunity to challenge Bahrain's position as the Middle East's prime financial centre. Nigel Dudley reports.

Chairman and founder, Garner International

Since the Madrid meeting of the Basle Committee on Banking Supervision in October, a new realization has dawned on the senior managements of banks around Europe and the rest of the world. The Basle II accord will go ahead - having looked in doubt at various times this year - and the time is fast approaching when banks must move beyond arguments over complexity, pro-cyclicality and inappropriate incentives. They must start implementation.

Most bankers would have said the stakes were high enough at the Rugby World Cup final between bitter rivals Australia and England in Sydney. But that was not the case with Aussie investment bank Macquarie. It upped the ante by publishing research confidently predicting a home victory, entitled "Rugby World Cup - quant style - Why the Wallabies will win".

Issuer: Commerzbank

Led by imaginative sovereign issues, Latin American bond markets made a remarkable recovery this year. Corporates are now joining the bandwagon as sovereign yields come down. Felix Salmon reports.

As the demand for Latin bonds strengthened over 2003, so did the supply, at least in terms of the number of investment banks competing for mandates. After years of a shrinking market as a result of banks pulling out or merging, the number of players is increasing again, as a consequence of European commercial banks deciding that debt capital markets activity is a good complement to lending operations.

The biggest debt deal of the year from eastern Europe wasn't the Yukos loan, or the Poland dollar deal, or even the Gazprom blowout. For once, the banks involved don't want to tell you how well it went, and it probably doesn't appear on any league table. That's because it's an arms financing deal, one of the biggest private financings of this type for several years.

With Greece scheduled to hold general elections next spring, the conservative New Democracy party currently has a solid lead in the polls. The party's shadow finance minister, George Alogoskoufis (pictured), says Greece should change its economic policy mix to place greater emphasis on fiscal consolidation and the liberalization of certain markets to boost competitiveness and growth prospects. "The real picture of the Greek economy is not reflected in the GDP growth numbers. Special factors such as the preparations for the 2004 Olympic Games and the speeding up of older projects have boosted GDP," Alogoskoufis tells Euromoney. "The budget deficit is widening, the public debt exceeds 100% of GDP, inflation is among the highest in the EU, and the economy's international competitiveness is low, as evidenced by the large current account deficit and the rankings of international organizations. The public sector is still characterized by bureaucracy and corruption."

Following the passage of a new law allowing for securitization in the Greek financial sector last summer, the first transaction originated by a non-state entity is about to hit the market, paving the way for what some bankers say could develop into a promising market.

After two tough years, most big Wall Street and City of London firms are expected to post higher profits this year. It is early days but average end-of-year bonuses are predicted to rise by about 20% at the larger firms.

When it comes to debt, the British are the kings of binge. British debtors now owe the equivalent of UK GDP and their debts are much more sensitive to interest rate rises than US consumers'. Two-thirds of US borrowing is at fixed rates; almost 90% of secured UK household debt - mostly mortgages - is at variable rates. And UK rates have begun to rise.