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April 2004

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LATEST ARTICLES

  • A ground-breaking collateralized debt obligation offering a fixed level of recoveries targets investors who want a simpler structure.
  • Never let it be said that running a global financial services organization leaves you bereft of a sense of humour. Talking to investors in Singapore in February, Citigroup CEO Chuck Prince was reiterating his stance on future acquisitions. As Prince has publicly explained, the bulk of the $50 billion pre-tax net income that he wants Citigroup to be making in five years' time will come from organic growth. There will be no repeat of the Citicorp/Travelers merger of 1998, which was truly a transforming event for both sides.
  • This has been an exciting few weeks for Commerzbank. First it smiled its way through yet more poor results, while promising better times ahead. Days later, it sealed a merger with a retail bank. Then it awarded such low bonuses to securities staff that it risked losing talent. Here, senior executives discuss the bank's strategy, prospects for consolidation and the trouble with bonuses. Katie Martin reports
  • As BNP Paribas and Exane were preparing to unveil their joint venture plans, Crédit Agricole was deciding what to do with the equities businesses it had picked up along with Crédit Lyonnais last year. Crédit Agricole already had a strong brokerage business in the form of CAI Cheuvreux, which has the highest-ranked (13) pan-European research of any French broker, according to the July 2003 Thomson Extel Focus France Survey. Merging Chevreux with Crédit Lyonnais' weaker European brokerage business would have made little sense, as the overlap would have been too great. One French analyst says: "A good merger is one in which one plus one is more than two; Chevreux plus Crédit Lyonnais would probably be worth less than one."
  • Key French brokerages are remodelling their equities divisions in an effort to build a pan-European business. And the solution that BNP Paribas has found is the most radical. But rivals say its new joint venture is an admission of failure. Peter Koh reports.
  • To attract investors, smaller drugs developers need to show that they have products close to regulatory approval. But to reach that stage requires vast investments of high-risk capital. There are no easy ways to plug the gap but alliances with big pharma and forward sales of royalties can help. Mark Brown reports.
  • www.breakingviews.com
  • www.breakingviews.com
  • www.breakingviews.com
  • Bank reform and the development of a properly structured mortgage market have been on the Russian agenda for years. Only now does implementation look set to begin. Ben Aris reports.
  • As Putin's rule becomes more established, the political trend in Russia is firmly authoritarian and centralist. But that is not necessarily a barrier to liberal economic reforms.As Putin's rule becomes more established, the political trend in Russia is firmly authoritarian and centralist. But that is not necessarily a barrier to liberal economic reforms. Ben Aris reports.
  • The capital-raising supermarkets available to companies in most advanced economies are a long way off for Turkey. The shabby state of capital markets is in large part an outcome of years of public sector financial chaos. Metin Munir reports.
  • If Banca Intesa follows through on its interest in Garanti Bankasi, Turkey's banking market and the general economy could receive a big boost. David Judson reports.
  • Ferit Sahenk, general manager at Dogus Holdings, suffered from unlucky timing the last time he tried to sell a stake in Garanti Bank to Italy's Banca Intesa. It was September 2001. The due diligence had been done twice over, all loose ends were tied. The only thing that remained for closing was the deal approval of Intesa's board.
  • Anatoliy Shapovalov, deputy minister of finance of Ukraine and head of sovereign borrowing
  • Moody's introduced its baskets in 1999. As hybrid volumes increased and deals got more complicated, it refined them last November.
  • A bull-market in Indian equities last year sparked spectacular growth in the country's equity derivatives market, which began trading four years ago. Monthly turnover in equity derivatives grew almost fourfold last year and in February this year it accounted for two-and-a-half times the spot cash market turnover on the National Stock Exchange (NSE).The average daily equity derivatives turnover in January touched Rs150 billion (more than $3 billion).
  • Argentina has changed the rules of the debt workout game by refusing to make good-faith efforts to pay its bondholders. And it is easy to understand the logic behind this move. A country that defaults on its external debt pays a huge price both politically and economically. Once that price is paid, however, it starts to recover. The cost of curing the default is large; the benefits are vague, and far in the future ? certainly at least one election cycle away.
  • If you think loan trading is colourless and unexciting, take a look at Thomas Duetoft, head of European loan trading at Dresdner Kleinwort Wasserstein, and his colleague Tom Johannessen, vice-president of loan trading.
  • Last month, at Hong Kong's biggest party, the annual Rugby Sevens festival, an unusual trend emerged among Hong Kong's investment banks. The softer side of those hard-nosed masters of the universe was on display, manifested in the décor of their hospitality suites.
  • Americans have been having a lot of fun with fundrace.org, a new website that searches the public record for political donations. Euromoney, of course, was most interested in gifts from US bank CEOs. George W Bush came out well on top, garnering the maximum $2,000 donation from almost every CEO on the list. But there were surprises among the Democrats. Dick Gephardt pulled in more donations than any other candidate and Howard Dean got none at all.
  • US treasury bond yields caught out many investors in the first quarter, tightening sharply below 4% in February and once more wrong-footing many who had been expecting that they would widen.
  • Just a few months ago Peru looked a shaky bet for international investors. Now bondholders can breathe a little easier. Peruvian president Alejandro Toledo still has the lowest popularity rating in Latin America and economic growth is slowing but Peru's macroeconomic fundamentals are solid and in keeping with IMF demands. It all looked very different in mid-January. Spreads on Peru's debt widened by more than 100 basis points as investors wondered whether Toledo's two-and-a-half-year-old government was on its way out amid corruption scandals. Four ministers lost their jobs in just three months and Toledo, who has a popularity rating of just 9%, struggled to distance himself from corruption scandals.
  • Customer pressure for a wider choice of top-performing products is driving banks into doing what was once unthinkable - selling their competitors' wares. But they are also finding this trend towards open architecture is encouraging them to focus on their strengths and improve their own performance. Helen Avery reports.
  • Results of Euromoney's biggest ever credit research poll indicate that the development of relationships with continental European investors is crucial to success.
  • Citigroup Private Bank has signed up golf legend Gary Player to act as an informal ambassador. As part of the multi-year endorsement, Player will represent the bank on his travels playing championship golf, and will "help to strengthen the firm's long-term relationships with some of the world's most successful families".
  • Agence France Trésor was nervous about becoming the first issuer of euro-denominated inflation-linked bonds but it is pleased with the results. Now its regular linker issuance schedule is helping to bring certainty to the development of the curve. Katie Martin reports
  • A new central bank governor with a firmer grip on exchange rate policy, a modest upturn in growth and a respectable equity market performance have increased confidence in Egypt's economy. But privatizations and banking reform are major uncompleted tasks. Nigel Dudley reports.
  • When Coutts Bank decided to make the move from in-house investment management to external investment management, it did so in one year. "If you have a large gap to cross, you don't do it with two small steps," explains Andrew Hutton, the bank's head of investment management and group investment management.
  • Madrid has returned quickly to some kind of normality following the terrorist attack last month. There is still a steady flow of mourners to the sea of candles that commemorate the victims, but elsewhere in Atocha Station commuters were streaming from the platforms within a week of the attack, just as they did before. The market has responded in a similar fashion. Although the Ibex 35 dipped sharply following the attack and the election that came quickly after, within a week it was moving broadly in line with the other major world markets. The main reason for this is that despite the shock of the Socialist Party (PSOE) election victory and the animosity between the two main political parties, the country's political divisions are more about the war in Iraq and the style of the outgoing government than economic philosophy.