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April 1998

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LATEST ARTICLES

  • Japan is stuck in a time warp. Little has changed, and what has is for the worse. The economy is in dire straits. Half-hearted reform erodes the real incomes of households and corporations without the stimulus of real supply-side deregulation. Household savings rates are already historically low. Export demand is waning. The economy will be down this year and next.
  • After more than a decade of trying, convertible bonds have emerged as a genuine asset class in Europe. At the same time, a once-vibrant Asian market is in reverse. But in both markets there is evidence that participants are struggling to keep up with the sophistication of the product. An overly simplistic approach can be disastrous. By James Rutter.
  • Citicafe is no ordinary bank cafeteria. "The old place was so drab," says Sunil Sreenivasan, chief executive of Citibank Malaysia. "I told the architect I wanted something equal to or better than where the kids go."
  • For some financial institutions and companies, the Asian crisis is an opportunity. For others it's a simple matter of survival. Investment banks have been among the quickest to slash costs and focus on core businesses. But while some commercial banks are recapitalizing and making provisions for bad loans, others are preparing to expand. Pauline Loong reports.
  • Next year, when the sun-loving Germans travel to the Italian Riviera they'll still have to change their Deutschmarks into lire - or will they? Although the lira will be the only legal tender in Italy for a further three years some economists predict that Italian shopkeepers will soon prefer to be paid in Deutschmarks and bank those, even though the lira and the Deutschmark will be components of the same mighty euro.
  • Finding a straightforward structure for turning UK commercial property into tradable securities has long been a desire of the market. One recent deal points the way. By Christopher Stoakes.
  • Flush with optimism, Asia's airlines ordered new aircraft worth billions of dollars. Then came the crisis. Companies are cutting back on business travel, tourists are staying at home - and the airlines still have to service their debts. Hotel chains, tour operators and the world's big aircraft manufacturers are suffering too. Chris Wright reports.
  • Pedro Luis Uriarte is not a man to mince his words. When asked at a recent meeting with analysts in London what he saw as the way forward for Spanish banking in the context of a single-currency Europe, the 55-year-old chief executive of Banco Bilbao Vizcaya (BBV), the country's biggest bank, casually said he thought it would be a good idea to merge with arch-rival Banco Santander.
  • The lemming effect whereby all emerging markets are sold off because of bad news in a few may be slowly breaking down. While Latin America has experienced fallout from the Asian crisis, a survey of US portfolio investors shows their stance towards it quickly recovering to a more positive one. This is largely because of the region's strong fundamentals and adept handling of volatitilty.
  • Short-term foreign debt is a killer for emerging markets as recent events have shown. Incredibly, few analysts bother to measure it accurately. Often they only consider medium- and long-term debt figures to make predictions about economic health. Small wonder so many of those forecasts prove incorrect.
  • European corporates may enthusiastically be embracing the idea of shareholder value, but does this create value for bond investors? This was a question that investors were keen to ask Diageo - the new company created in last year's £9.75 billion ($16.25 billion) merger of Guinness and GrandMet - during its roadshows for a debut $500 million Eurobond. As the trend for European corporate M&A continues, debt investors will increasingly find that recognized names are absorbed into new companies with unfamiliar credit stories. That puts an emphasis on both borrowers and lead managers to explain developments to investors. The trend of hiring highly creative and expensive consultants to come up with new and apparently meaningless company names, scarcely helps.
  • Amid speculation about how emerging markets specialist Caspian Securities is faring, a new chief executive is to replace its founder, Chistopher Heath.
  • Could this be Deutsche Bank's Michael Dobson trying to convince his fellow Vorstand members of his commitment to all things German?
  • With consolidation on their minds, ambitious investment banks are picking their partners. No-one expects SBC-UBS to be the last big merger. Now Euromoney gives you the opportunity to pick your own dream team of banks which are hot in the merger stakes. Rules of the first ever fantasy bank M&A competition are as follows:
  • Was your bonus smaller than expected this year? Feeling unappreciated at work? Do you think you can write an insightful essay on the world of international finance? Not only will you be honouring the esteemed Jacques de Larosière, but the top prize is $10,000.
  • First it was a trickle, now it's a stream. The deal-flow in high yield debt issues is swelling in Europe as buyers and issuers prepare for even lower interest rates and the homogenous euro currency bloc. They're all looking for opportunities in the narrow line between debt and equity: the high-yield market. But please don't call it junk. Rebecca Bream reports
  • Australians, big exporters to Asia, are bracing themselves for economic trouble. But, as Ian Rogers reports, stock prices are still rising. Investors can't get enough of big new issues such as telecoms company Telstra.
  • Indian companies lack predatory instincts. But in March they discovered a mean streak. A rash of hostile takeover bids - the worst in India - has perked up a dull stock market. These events will, in the coming weeks, test the new takeover code put in place by the Securities Exchange Board of India (SEBI) in February even as the code itself is being challenged in Indian courts.
  • Investment bankers scouring Russia for the next juicy deal are salivating at the prospect of mortgage-backed securities written off Russian property.
  • Ewa Wisniewska, the new president of Poland's largest bank, has her work cut out for her. On one side of the modern office tower in mid-town Warsaw where she works, there is a large sign that says "Bank Pekao SA"; on the other, the sign says "Grupa (Group) Pekao SA".
  • The European Central Bank's governing council might not be meeting yet, but Deutsche Bank - who else? - has the inside track. For about six months its leading economists in 10 locations have been acting out a "shadow" ECB council which, in a monthly conference call, sets a shadow interest-rate policy for the euro.
  • The secrecy of the negotiations and the price paid stunned the City into awed silence. Merrill Lynch's takeover was certainly a good deal for Mercury Asset Management's shareholders. But was Merrill so taken with the brand name that it underestimated the fund manager's problems? Mercury has little room for growth at home and has never had much success expanding abroad. Mercury wants to keep some independence, but how long before it gets Merrillized? Antony Currie reports.
  • A corruption scandal at the Bank of Japan (BoJ) has provided an excuse to install a new team, and to pave the way for a more truly independent central bank. But will it all work out? The institution's image has suffered from the realization that commercial banks have been lavishing entertainment on all-powerful and seemingly unaccountable officials as a way of resolving business issues. An even bigger question mark hangs over the bank's independence from political interference in its interest-rate policy.
  • Simon Brady becomes editor of Euromoney from next month. He succeeds Garry Evans who has worked for the journal for the last 12 years, eight of them as editor, and who has moved to Tokyo to fulfil an early ambition to work in Japan. Evans became a great editor of Euromoney, swinging its editorial into the different mainstreams of international finance with growing dexterity and judgement, setting a pace that impressed professionals in markets across the world. He will be missed.
  • Last month, Kendrick Wilson, a vice-chairman of Lazard Freres in New York and one of the firm's most senior bankers, left to join Goldman Sachs. Goldman now boasts the strongest line-up of all financial-institutions groups in the US. Wilson, and Goldman's head of FIG, Christopher Flowers, are the two biggest names in the M&A advisory business. Wilson worked on several of last year's tie-ups between commercial and investment banks and was also involved behind the scenes in one of the biggest deals that got away, representing American Express in talks with Citicorp
  • How can an investor get exposure to below investment-grade risk while investingin AAA rated bonds? Credit-linked notesprovide an answer, but does anyone really know how to price them? By James Rutter.
  • Issuers: Pub chains
  • Last National Bank of Boot Hill,
  • How did Asia's foremost investment bank come to grief? Andre Lee - seen by many as the villain of the piece - speaks out for the first time. He tells Peter Lee about the internal tensions at Peregrine, the role of his fixed-income business, the firm's culture of credit management and the source of the rumours that broke the bank
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