|
New Zealand’s new deputy prime minister has a harsh message for his Australian cousins across the Tasman Sea. Foreign ownership of banks – the Aussies have bought up virtually all the Kiwis’ institutions – is not welcome. “We are in danger of re-colonization if we are not careful,” says John Anderton. “The irony is that 100 years ago the Bank of New Zealand was opened up to get away from the control of Australian bankers not interested in New Zealand. Now we have sold practically every one of our banks to Australia.” This could cause some conflict within the government: Anderton is leader of the Alliance party which is the minority partner in the coalition with the Labour party. And it was Labour, specifically its former finance minister Roger Douglas, which encouraged banking consolidation and selling out to foreigners in the 1980s. Bank of New Zealand is owned by National Australia Bank, Trust Bank of New Zealand has been subsumed by a merger with Westpac, and Aussie bank ANZ is the third member of New Zealand’s big four. Only National Bank of New Zealand escaped the clutches of the Aussies, and that’s because it’s owned by the whingeing poms at Lloyds TSB, which has also bought Countrywide Bank. Angry Anderton searching for ways to reverse the trends in New Zealand banking, is promoting a return to community-based banks, the loss of which he equates with the loss of services like schools and hospitals. In mid-December, he opened a community banking facility in Palmerston, a town with a population of 800 in the South Island province of Otago – best known for the adventure resort Queenstown, home of bungee jumping. The town has been deprived of bank branches and automatic teller machines. Anderton attacked Westpac for pulling out of Palmerston. A Westpac Trust source says the bank is “committed to New Zealand” but adds ominously that the company is looking into trans-Tasman synergies: “Though that doesn’t mean we’ll move everything to Sydney.” Anderton will no doubt be relieved. Alex Mathias The bonds of humanity It is known as the green heart of Italy for its forests. It is famous for the many basilicas that adorn its landscape as well as the several saints, like Saint Francis of Assisi or Santa Chiara, who were born and lived there. But Umbria, a small region smack in the middle of the Italian peninsula, has never been a player in the financial markets…until now. Its debut bond has changed all that. In December the region signed a debt programme to raise e2.6 billion [$2.62 billion] on the international capital markets, becoming the European local authority with the largest programme outstanding. The money will be raised through a series of Eurobond issues in the next two years and with it Umbria will continue the reconstruction works it needs after the earthquake of September 1997. Part of the funds will be devoted to restoring historical and artistic buildings such as the St. Francis Basilica in Assisi, where work has already begun. But the bulk will be used to provide homes to 3,500 families still living in containers. The bonds will be guaranteed by the L6,500 billion [$3.42 billion] that the Italian government has allocated in the budget plans for the next 20 years, but also by Umbria’s solid financial performance. “We are one of the few [Italian] regions that are not in deficit,” says Bruno Bracalente, president of Umbria and professor of economic statistics at the University of Perugia. A 20-year e600 million floating rate note launched in late December is the first issue in the programme. Chase, Depfa Europe and three Italian banks acted as arrangers. The Umbria bond was different, according the arrangers, and had a humanitarian allure to it. “I don’t want to be rhetorical but I think we can say that this time finance was really at the people’s disposal,” says Alessandro Mitrovich, general director at Chase Italia in Milan. “It is a great feeling to see something being physically built with the money you raise in the market.” Professor-president Bracalente puts it in metaphysical terms: “It is materializing the immateriality of finance.” Luciano Mondellini Warburg forever Switzerland’s UBS, plagued for months by rumours that it is considering selling Warburg Dillon Read, has decided to show its enduring commitment to its investment-banking unit by changing the name. Again. The former British merchant bank has had more guises than the Scarlet Pimpernel. It’s masqueraded under four names in five years. Good-old SG Warburg gave way to SBC Warburg in 1995. Two years later Dillon Read was suffixed after SBC bought the US boutique. Then the prefix disappeared after SBC merged with UBS in 1998, leaving the name as Warburg Dillon Read. Now it’s time for a rebranding to affirm UBS’s commitment to its investment banking activities. Or so goes the corporate line. And the new incarnation? UBS Warburg. It’s part of CEO Marcel Ospel’s desire to show that UBS is a “global integrated investment services firm,” as he told his Japan staff at a meeting late last year. And what better rebranding than to give it the same prefix treatment ministered to all the other divisions, such as UBS Private Banking, UBS Private Equity and UBS Brinson. But that all happened back in 1998. Why leave out WDR for so long? Perhaps because the Dillon Read brand was so central to the bank’s US effort. But the absence of the UBS prefix made it appear that the parent bank was less than committed to keeping Warburg. Also, the latest name change might help US investors better to identify the core parts of the group: UBS has filed with the US securities and exchanges commission to list on the New York Stock Exchange, probably later in the year. But right now the firm’s US staff are more concerned about the rumours that it intends to move an additional 2,000 employees up to Stamford. Staff in the New York office are so attached to Manhattan eateries. Antony Currie Arpe quits Mediobanca Not content with beating up every Italian rival, the Macchiavellian firm that lurks in the alleyway behind Milan’s opera house has turned to internal knife-fights. On 14 December, it emerged that Matteo Arpe, the young head of investment banking, had walked out after failing to stop chief executive Vincenzo Maranghi from stripping away his responsibilities. The notoriously secretive Mediobanca forbids staff from giving interviews, but sources who know the bank reveal that at the beginning of December, Maranghi proposed to shrink Arpe’s role in the burgeoning area of capital markets. Arpe, 35, resisted the reorganization plan and threatened to resign. The firm’s honorary chairman Enrico Cuccia, 92, tried during a week of intense talks to make the two men compromise. But Maranghi was determined to reduce Arpe’s rising power, and since Maranghi is Cuccia’s chosen successor, Cuccia always backs him in the end. There are two dynamics behind Maranghi’s decision to pick a fight. Earlier in the year a minority of disgruntled staff, principally Saverio Vinci, head of the dealing room, had told Maranghi they were unwilling to work under Arpe, whose management style is described by former colleagues as “tough” and “aggressive”. But Maranghi had his own agenda: to reign in a department that was trying to develop a more Anglo-Saxon culture, and was becoming too independent for his liking. Tension between Maranghi and Arpe was growing from at least mid 1999. The old-guard chief executive is firmly committed to the backroom style of financial dealmaking that Mediobanca has perfected during the last 50 years. Maranghi’s side of Mediobanca is dedicated to upholding its own influence and its core clients’ interests, not pleasing the plebeian mob in the financial markets. Arpe lasted only two years as head of Mediobanca’s equity and debt capital markets business. He banged heads together in a quest to make the operation investor-friendly. In 1999, the department ran a series of massive open-market deals for clients including Olivetti and Enel, bringing in a torrent of commission income. Arpe’s overhaul extended reforms made by his predecessor, Gerardo Braggiotti, who was sacked by Maranghi almost two years to the day before Arpe’s departure. Braggiotti’s sin was challenging Maranghi for the overall leadership of Mediobanca; he now works for Lazard Frères as head of European operations outside France. During 1999, Arpe is thought to have had offers from almost every US investment bank in Italy. He apparently declined because he preferred managing his own operation at Mediobanca to being a cog in a global machine. Now he may have to reconsider a job in Milan or perhaps London with an international firm. The capital-markets half of Mediobanca will probably atrophy. So many dissidents have left that the small firm has run out of people to replace Arpe. Maranghi may instead apply divide-and-rule tactics to the investment-banking division. As Euromoneyreported last month, Arpe’s feud with Maranghi was symptomatic of the contradiction in trying to run an equities and bonds business under the same roof as a manipulative holding company. Maranghi’s predictable victory shows that Mediobanca would rather broke power than securities. The coming months will show whether the firm’s pro-reform shareholders, including Fiat, Pirelli and UniCredito Italiano, feel the same way. Marcus Walker A game of Pin-pong From Bangkok to Brixton via Belgravia: a two-year journey from luxury to lock-up for one of the key characters in Thailand’s financial boom years. Pin Chakkapak was dubbed the takeover king of Bangkok in the 1990s. As president of the country’s largest finance company, Finance One, he lived the high life. But by 1997 a deal to sell Finance One to Thai Danu Bank had been scrapped, the baht devalued by 50% and Finance One found itself among 56 finance companies closed down by the Bank of Thailand. Pin and two other former Finance One executives were charged last year with approving loans totaling some Bt2.1 billion (US$55 million) to ailing associated companies without collateral. The charges carry penalties of up to Bt1 million in fines and ten-year jail terms. Pin has denied the charges, calling them “baseless and false”, and claims the loans were made with the knowledge, and even encouragement, of the Bank of Thailand. Scotland Yard finally closed in on the hapless tycoon, who holds Thai and US passports, in his Belgravia apartment two weeks before Christmas. Pin soon found himself in Brixton jail pending extradition hearings. The Finance One crowd were among a number of senior executives facing charges in the wake of the collapse of Thailand’s financial institutions. None have yet been convicted. Pin’s arrest has deflected some of the attention from an extradition hearing in Canada, in which the Indian-born former treasury adviser to Bangkok Bank of Commerce has been battling for more than two years to avoid being sent back to Bangkok to face embezzlement charges. An auction of Pin’s office furniture earlier this year fetched Bt177,700, three times the reserve price – but still a long way short of filling the hole in Thailand’s economy. Meanwhile, a diplomatic game of Pin-pong looks set to ensue as Thailand attempts to reclaim an icon of its former boom days. Gill Baker |
