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Edited by Rebecca Bream

Who pushed NatWest?

Traditional active equity asset managers are alienating their institutional clients through underperfomance and high fees. Many pension funds and insurance companies in the US, UK and Europe are embracing passive index tracking, while others are devoting more attention to the rewards - and the risks - of hedge fund investing. The search is on for performance, or alpha, wherever it may be found. The whole asset management business may soon be transformed. Peter Lee reports.

Suddenly, euroland, or rather Germany, is full of the urge to rate companies great and small. Partly, this is a swipe at giants Moody's and S&P, but it's also recognition that medium-size companies will pay more for capital if they aren't transparently rated. The regions back their own Mittelstand, while Frankfurt roots for the Finanzplatz. David Shirreff reports.

Deutsche Bank wanted to buy it because it wanted a bigger presence in investment banking in the US. Merrill Lynch considered putting in an offer because it wanted to improve its coverage of the technology sector. But Chase Manhattan is the bank that finally secured the 30-year-old California-based investment-banking boutique Hambrecht & Quist. And this time, the rumour mill has it, it's because Chase needs it as a way into equities. Antony Currie reckons that's not the case

The dollar and the Dow have dived. Serious imbalances in the US economy are now evident. The current account deficit is nearing unfinanceable proportions. The US economy could only grow at an above-average, yet disinflationary, pace while the rest of the world remained stagnant. That's no longer the case. Global growth is accelerating. So the dollar is no longer the currency of choice. And a weak dollar is synonymous with rising commodity prices and resurgent inflation. And it's not just the US economy and financial markets that are becoming paralysed. I reckon 2000 will be a year of US foreign economic policy paralysis. At its heart lies the presidential campaign. The impact on international relations could be severe. Those with Russia are already becoming strained. A deal on Chinese World Trade Organization accession may be missed, undermining Zhu Rongji and China's reformists. Trade tensions with the EU will escalate. And no action will be taken to support the dollar.

It's been going on for seven years, and has taken up more of the US Federal Accounting Standard Board's (FASB's) time than any other rule. US bankers and issuers hate it, claiming it will force an unwanted change in borrower strategies and will even hit earnings. They've lobbied Congress to get it nullified, and the board has responded with a year's postponement and by changing some of the strictures. Yet still the complaints roll in from those few who claim to understand it. Systems still aren't ready, and there is less than a year to go before it comes into effect. Who'd have thought that an accounting rule-change could cause such a furore? Antony Currie reports on the dilemmas and debates around rule FAS133

Edited by Antony Currie

Citigroup's latest acquisition

Edited by Rebecca Bream

Last month's €2.3 billion issue of convertible bonds for Mannesmann promised to mark a revival of the convertible market, but within a week of its (successful) launch it was hit by Mannesmann's bid for Orange of the UK. At its launch on October 6, the deal was significantly oversubscribed, though it had been done on terms which raised plenty of eyebrows. The yield to maturity was 3.875%, towards the bottom of the indicated range and the premium conversion - the share price at which the bond could be exchanged for equity - was one of the highest seen this year at 38% above the prevailing share price. A high conversion premium usually points to a bullish equity market, but this deal came as the equity markets were looking rocky.

Even after a wave of mergers and takeovers there are still 7,000 banks in the US. No-one doubts that consolidation is the way to go but the fate of recently merged banks suggests that it has to be based on something more substantial than cost-cutting. The emergence of e-commerce hammers home the point that revenue growth is still crucial. Antony Currie reports.