March 2002
| Euromoney March 2002 Enronitis is spreading fast. How virulent it proves to be, and how quickly the contagion can be contained, is anyone's guess. But its chief symptom - the fear that companies have been systematically misrepresenting their accounts through off-balance-sheet financing, special purpose entities and minimal disclosure - will not be easily suppressed. US regulators hope a fresh dose of rules will provide a remedy. Others say more rules will only mean more loopholes and that what is needed is a complete overhaul of the requirements for company reporting, auditing, governance and analysis worldwide. Only then can confidence in the system be restored, they say. |
Euromoney March 2002
It's one of finance's most elite clubs, though its members don't accept that it exists. It's made up of the handful of heavyweight economists who advise governments in emerging-market crises while holding down senior positions at the investment banks that lend money and arrange financing for these countries. But Argentina has exposed the limits of their power and raised questions about whose interests they're serving.
Euromoney March 2002
Portuguese banks were the golden boys of European finance for years, reaping the rewards of a consumer lending boom. But Portugal has landed with a bump, with GDP growth no longer outstripping the rest of Europe. The banks are suffering, both in wholesale finance and in retail, where intense competition makes it difficult to turn a profit. Even market leader Banco Comercial Português is feeling the pinch. With opportunities for domestic mergers limited, it has expanded abroad, with mixed results.
Euromoney March 2002
As German media empire Kirch begins to buckle and telecom firms are again making headlines for all the wrong reasons, contingent liabilities are suddenly a hot topic for credit fund managers. What’s particularly worrying them is the number and size of put options that might force cash-strapped companies to overpay for assets.
Euromoney March 2002
Derivatives can be used to hedge risk, to speculate or, unacceptably, to cook the books. That those involved in the financial markets can simultaneously fear credit risk and the use of instruments to allay it suggests that they need to identify derivative users’ intentions more clearly.
Euromoney March 2002
Convertibles bankers are fretting about the lack of issuance so far this year. It’s hardly surprising, it was one of the most active markets in 2001. Some are hoping that the need to raise money quickly will help boost volumes but issuers may prove cautious.
Euromoney March 2002
Two years ago the asset management division of UBS was facing an uncertain future. With figureheads Gary Brinson and Tony Dye gone it was time for new faces to take the lead. As value investing has come back into favour, performance has turned around and now UBS has done the logical thing, uniting the operation under one banner. Where next for UBS Global Asset Management?
Euromoney March 2002
Deutsche Börse’s move to take full control of international central securities depository Clearstream highlights the divergence between banks, exchanges and clearers that would like to see an integrated utility-style system of settlement for European securities markets and those exchanges such as Deutsche Börse that see such operations as a way of generating value for their own shareholders.
Euromoney March 2002
After years of complaints from regulators and private-sector rivals that Germany’s state banks are taking unfair advantage of public guarantees, the issue is in sight of being resolved. The EC has decreed that the Landesbanken will have to do without this subsidy within three years. Most state bank officials are confident that they can find new ways to compete but others are not so sure.
Euromoney March 2002
The days of promiscuous big spending on IT may be over for investment banks. However, because the splurge was often
ill-directed and uncoordinated there’s still a lot to be done – and spent – to patch up old mistakes, deal with major developments such as T+1 clearance and upgrade neglected back-office systems. Worryingly, most banks still seem unwilling to cooperate with rivals on pooled systems and the development of common standards.
Euromoney March 2002
A lot is riding on Brazil’s success. It has always been the dominant economy in south America but until Argentina collapsed it did not have to play a leadership role in sustaining investor sentiment about the region. Today Brazil must rise to its economic challenges or be held responsible not only for its own stagnation but for sinking south America as an economically significant continent.
Euromoney March 2002
Close ties with the US have helped protect Mexico from the problems faced by other countries in the region. However, its future prosperity depends on its being able to learn to stand on its own two feet. President Vicente Fox faces a tough struggle to push through tax reforms.
Euromoney March 2002
Shareholders in global telecom companies don’t want to hear about Latin American expansion any more. That leaves the way clear for smart, well-financed local operators.
Euromoney March 2002
With worries about US corporate credit scaring bond market investors far more than Argentina’s default, emerging-market issues have retained their popularity. Emerging-market debt offers low volatility, rising prices and decent volumes. Latin issuers remain in the vanguard. The only problem is that their bonds are beginning to look expensive.
Euromoney March 2002
Privatization in India has accelerated under firm government leadership but the process has been complicated by doubts about the involvement of state companies as buyers and government provisions to prevent monopolies developing. Foreign buyers have been notably absent, not least because of restrictions on the size of their holdings and other government provisions. Looming in the background is also the threat of a growing populist political tendency.
Euromoney March 2002
Kuwait’s banking sector has seen many false dawns over the past 20 years, with only one real international player, National Bank of Kuwait, enduring. Now, however, other players are looking to make a real impression.
Euromoney March 2002
Axa gave its brokers a nasty shock last year. It decided that it was inefficient for local offices to continue to deal with local firms and chose instead to select a much smaller number of global brokers. All of its brokers had to complete a hefty questionnaire explaining why they were up to the job of servicing one of the world’s biggest investing institutions. If relationship banks couldn’t fulfil various criteria, including access to senior staff, they were dropped from the list. And it’s not easy to get back on it.
Euromoney March 2002
When Forexster launched, it said it wouldn’t be just any new forex trading platform. It would revolutionize the market, taking banks out of forex trades and enabling clients to deal directly with each other. Banks and existing platforms scoffed at the idea, saying that while that model was attractive, the complex structure of credit lines involved would never work. Forexster begs to differ. Now it is filing for a patent to prove it. Still the banks think this is pie in the sky but if the patent works it could damage banks and rival platforms.
Euromoney March 2002
The imminent implementation of T+0 settlement for foreign exchange ought in theory to be an all-round blessing for market participants, reducing Herstatt risk. Some banks will, however, fall outside the system, raising the possibility of a two-tier market with differential spreads. Members will also incur new risks.
Euromoney March 2002
Six months ago rising oil prices, the bursting of the new economy bubble and weaker financial markets were increasing the dangers of a recession even before the blow of September 11. Although the direct effects of the attacks have been relatively small and sector-specific, the effect on business confidence is likely to be large in the short term. In our latest review of country prospects Euromoney's panel of experts has revised down average global projections for 2002-03 for 79 countries and has revised up 105. On balance, consensus growth forecasts indicate strong resurgence in 2003.
Euromoney March 2002
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CP BACKSTOP FACILITIES
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SPAIN
Euromoney March 2002
EUROPEAN BONDS
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E-FINANCE
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Enronitis
Euromoney March 2002
RUSSIA
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ASIA
Euromoney March 2002
INDONESIA
Euromoney March 2002
VENEZUELA
Euromoney March 2002
There is huge potential in business-method patents, and the financial sector in the US has begun to realize this. As in so many other areas of intellectual property, Europe is being needlessly left behind.
Euromoney March 2002
Chairman, International Accounting Standards Board
Euromoney March 2002
Canada’s secretary of state (international financial institutions)
Euromoney March 2002
Issuer: Napocor International Finance TrustAmount: $500 millionLaunched: February 1 2002, put on hold February 4 2002Lead manager: Bear Stearns