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The banks party through the crisis

Credit becomes a special case

The emerging markets are bouncing back - at least some of them are. While they do, the market is holding its breath as crisis-hit countries implement fiscal and monetary reforms. And while economists believe growth rates will improve, they are also resigned to sovereign defaults on foreign debt. Commentary by Rebecca Cicolecchia, research by Alexa Marx.

When Armínio Fraga quit his job at Soros Fund Management to become Brazil's central banker he was dubbed a "poacher turned gamekeeper". But he is no stranger to the public sector. With stability restored he is now modernizing Brazil's finance sector. Brian Caplen reports

When the ministry of finance regulated banks in Japan the watchdog turned a blind eye to foreign banks doing things domestic ones couldn't. Not that there was anything illegal in the lucrative business of creating structured deals for firms intent on disguising losses. The new regulator - the FSA - takes a different view and has imposed an exemplary clampdown on Credit Suisse. There's apparently a limit on the number of times something legal can be done if it's deemed against the public interest. The bankers are bemused by the vagueness of it all and so is our reporter Steven Irvine.

As the risk of a round of sovereign bond rescheduling looms, bondholders are dusting off the documentation to see what it says. By Christopher Stoakes

The Asian crisis delivered a devastating blow to the region's sprawling conglomerates. For years they diversified and grew rapidly, feeding on a rich diet of debt, much of it in foreign currencies. Then suddenly their markets collapsed and their debt service costs soared. But the bad times are ending and after drastic restructuring the best companies are on the move again. Alex Mathias reports.

The 17 superchefs of the European Central Bank who sit on its governing council have 17 ideas about how to set rates, and how transparent the process should be. From the orthodox toughness of Duisenberg and Issing to the softness on the Nordic and southern fringes. Here are the two Germans, two Frenchmen, two Dutchmen, two Finns, two Spaniards, two Italians, the Austrian, Irishman, Portuguese, Belgian and Luxembourgois who rule euroland. By David Lanchner

Nothing surprises crisis-hardened Desmond Supple any more, but even he was left slightly baffled by Malaysia's bid to resurrect talk of a single south-east Asian currency. Supple, head of research at Barclays Capital in Singapore, deftly reeled off reasons why, in his opinion, such a concept would not work, at least for the foreseeable future. Variations in development levels between the countries and differences in business cycles are top of Supple's list.

Credit and swap spreads have already risen in anticipation of the world's financial markets clamming shut this December. Borrowers and bankers talk nervously about the disappearance of liquidity and short-term funding in the run-up to year 2000. Central banks are on standby. So are some traders who hope to take advantage of illiquidity and mispricing. The frustration for many is that it is their own contingency plans, not their computers, that threaten chaos. But no-one knows how fierce the full millennium effect will be. Marcus Walker reports

Credit becomes a special case

After eight years of campaigning, Germany's private-sector banks finally won a judgment in Brussels against WestLB's contentious capital-raising scheme, striking a blow at the financing privileges of state-owned banks. But WestLB chairman Friedel Neuber barely missed a beat: in less than a month he had demonstrated his political shareholders' loyalty by arranging yet another capital increase. Cowed by an angry government, the private banks dare not take the challenge to its logical conclusion. They fear losing more than they would gain, says Laura Covill.