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April 2000

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LATEST ARTICLES

  • Allan Meltzer and his cabal of fellow iconoclasts obviously hit something when they fired their round in the debate about the IMF and the World Bank.
  • The endgame being played out in the Polish banking sector is messy and aggressive and cuts to the heart of the attractions and the problems faced by strategic and portfolio investors in this emerging European market. The protagonists include three of the world’s powerhouse banks: Citibank, Deutsche Bank and Commerzbank. Minority shareholder rights have been ignored in the scramble for market position. Ian Dawson reports on the fight for the last seats at the top table
  • As cash flows into the hands of high yield bond investors in Europe, the sector is performing strongly and new issues are being snapped up. There has been a curious reversal of roles between European and US buyers. US investors used to provide a comforting guarantee of success for European deals. Now, as the US high yield market turns bearish, Europeans fear that the presence of desperate US buyers will infect deals with the taint of failure.
  • Pfandbrief-style debt is emerging from countries all over Europe, bringing new forms of collateral and legal structures to a market traditionally dominated by German issuers. The new issuers have attracted some new buyers, but are still finding it difficult to tap into investor bases in the US and Asia, partly because of euro weakness. Euromoney.com went behind the scenes at the International Bond Congress to ask some of the biggest German and non-German covered bond issuers what they want from arranging banks and how they are building investor confidence in their products. This roundtable first appeared on the internet at www.euromoney.com/pfandbriefe.
  • The Shadow Financial Regulatory Committee, an influential group of US financial thinkers with a lot of clout in Washington, has spent the past year reconsidering bank capital standards. Their recent proposals call for bankers to raise new funding in the form of subordinated debt as a way to curb bad habits.
  • Brazil’s economy is in surprisingly good shape following last year’s devaluation. Now the challenge is to make further progress in reducing the fiscal deficit, to overhaul the tax system and make reforms in pensions, health and education. It’s a tall order and Brazil is not noted for making swift progress but the direction is broadly correct.
  • The spectacular revival of the samurai, Euroyen and global yen markets, begun in the second half of 1999, has continued this year and shows no sign of abating. Bankers expect the queue of corporate and sovereign borrowers to remain long for the rest of the year and for Japanese buyers and international investors moving into yen bonds to keep on buying corporate and even emerging market issues on the primary and secondary markets.
  • Asia may be bouncing back. But apprehension was in the air when the IMF, the World Bank and the Asian Development Bank convened a conference in Washington to discuss financial contagion. Rudiger Dornbusch, MIT's celebrated international economist, was one of the prime movers for this event. He talked to James Smalhout.
  • Why are journalists and politicians still sniping at the European Central Bank? Except for the euro’s gentle decline, it hasn’t put a foot wrong. Apart, that is, from bad public relations, grand plans to eclipse the national central banks, and a still crazy auction system. What could be better than that? David Shirreff reports
  • Germany’s mortgage banks are in discussion with the regulators over further revisions to their business charter. Widening the mortgage banks’ lending activities to include the US, Canada and Japan, and including derivatives as cover for Pfandbriefe (bonds collateralized by mortgage assets and public sector loans) are among the more far-reaching proposals. Euan Hagger reports
  • Have last month's falling share prices of internet companies vindicated all the dire warnings of a speculative bubble?
  • The Russian economy has responded positively to Boris Yeltsin’s retirement and to a commodity boom. Can the bullish mood last or will reform get bogged down and Vladimir Putin’s “strong government” put a straitjacket on enterprise? And does finance minister Mikhail Kasyanov have the breadth of experience to control the economy? We also look at Alfa, the only Russian bank to come out of the crisis stronger than it went in.
  • Analysts asked to pick future Russian finance ministers a few years back would have been hard pressed to come up with Mikhail Kasyanov’s name. Bankers first got to meet him across the table at debt negotiations. They respect his tough style even if they weren’t always pleased with the outcome. What makes Kasyanov tick and what are his hopes for Russia? Ben Aris asked him
  • Winds of change are blowing through the marbled corridors of Turkish banks, which have grown rich from inflation. Contrary to all expectations, the government has received the backing of the IMF for an ambitious economic programme whose success is widely predicted.
  • Euromoney polled 80 big investors on which firms they rated for credit analysis, and for which sector. The poll showed that credit investors rely extensively on banks' research. They want high quality, timely and independent analysis and access to the analysts. Euromoney's poll shows which firms investors rank highest across various sectors
  • EU membership has its down-side. As eastern Europe seeks to join up, its raw capitalism could be stifled by all the rules and regulations. Recovering from years of central planning the last thing these economies need is dirigisme and subsidies, Brussels-style. But that’s what they are about to get. Although it has failed to reform itself, the EU insists that new entrants implement all its 80,000 pages of directives. Some candidates are so enthusiastic they also want to adopt the euro. Economists warn that these ambitions could cost them dearly, killing off enterprise and making economic management difficult if not impossible.
  • On March 9, Deutsche Bank and Dresdner Bank announced a “merger of equals” in a deal which could leave insurer Allianz owning and controlling their retail network. Deutsche and Dresdner said they will be “blending the best” to create a winning investment and private banking giant, but insiders fear another UBS-style massacre. Who devised this millennium deal and will it work? Early reports suggest there are many on both sides who wish the whole thing had never been started. David Shirreff reports
  • The development of banking in Egypt depends heavily on government action. Privatization is moving slowly, important legislation has been delayed and there are no signs that the overvalued Egyptian pound will be devalued. The equity market is also stagnant, with few private companies making new listings.
  • LabMorgan, an incubator for new e-finance businesses, is JP Morgan’s response to the biggest challenges facing all large established financial services companies today: how to keep ahead of the changes being wrought by the internet and how to retain talented employees who might be lured by the prospect of dot com riches to take bold new ideas to outside venture capitalists. The bank will plough $1 billion into new ventures this year. If LabMorgan succeeds, it will reinvent the bank. Peter Lee reports
  • One Russian bank not only survived the rouble crisis. It came out stronger.
  • Extraordinary scenes have unfolded as Asian investors rush to buy shares in new vehicles set up to profit from growing use of the internet. The police have even been called in to restore order among hopeful punters. Asia's new economy is changing the face of capital markets in the region. Hong Kong no longer sees itself as a property-based economy but as a centre for capital formation in the internet age. Growth estimates for internet revenues are mouthwatering, with the Chinese language market as the ultimate prize. But this is still Asia. The new economy entrepreneurs are the old economy billionaires minus their suits. Their plan might be to use temporarily overvalued internet shares as currency to grab real assets, reports Phillip Moore
  • Thailand's new bankruptcy court sent out an encouraging message to international lenders in March when it declared the country's largest debt defaulter insolvent in a benchmark case that paved the way for its restructuring.
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