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August 2001

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LATEST ARTICLES

  • A new emerging-market crisis, to follow that of 1998, has surfaced. The immediate Argentine crisis will be resolved. The politicians there have proposed budget cuts that, if supported domestically and implemented, will provide some relief for a while. But this won't address Argentina's growth dilemma. That's a supply-side issue and the downside of a vastly overvalued currency. And it won't do the trick of getting interest rates down to levels where Argentina could grow either. As for Turkey, I have no hope that interest rates there can be got down to sustainable levels either.
  • With its growing presence in investor portfolios, credit’s importance as an asset class increases daily. Euromoney gathered bankers and fund managers together to discuss the problems that popularity brings.
  • The latest round of bank capital proposals from the Basel Committee offers few incentives to banks to introduce more sophisticated risk rating methods while rasing concerns over increases in regulatory capital.
  • No respite seems in sight for India's equity markets. Reeling from a share price rigging scam in March and brokers' protests against new trading rules, the markets were felled once again last month by news of trouble at India's largest manager of mutual fund assets, the Unit Trust of India (UTI).
  • Although many industrial companies remain stubbornly unwilling to measure, let alone hedge, their trade credit exposures, there is no shortage of people looking to help them trade away their credit risk.
  • Some problems occurred in the production of our Middle Eastern awards last month. The correct text of the awards for best bank in the region and in Kuwait follows below:
  • "The people of France have regarded it as a badge of honour since time immemorial to find imaginative ways to avoid paying taxes," says a banking analyst from BNP Paribas.
  • It was a rare sight. He got onto the downtown F train at 23rd street, the edge of New York's silicon alley, a more sombre place now than it was 12 months ago.
  • Technology companies have played a major role in forcing the investment community to start taking intellectual property seriously. Telecoms and their equivalents in the software and biotechnology sectors, for example, are all dependent to a greater or lesser extent on patents and other forms of intellectual property.
  • If you're desperately trying to pocket a bigger bonus than you know you deserve, do as the Gesellschaftler in Berlin did. Approve some dodgy credits (take some political donations on the way, too, if you are in the right party) reduce the risk provisions for the loans, then wait until profits amass in the next year, and voila - the bonus is yours to collect.
  • The number of banks competing for LBO arranger mandates has increased significantly over the past six years. Almost every major continental European bank now has a leveraged loan team. BNP Paribas and HypoVereinsbank are both expanding their coverage as are - to a lesser extent - Crédit Agricole and HSBC.
  • Around this time of year bankers are struck by a strange affliction. Maybe they're bored - summer markets are notoriously quiet - or perhaps they reckon most people will be on vacation and won't notice. Whatever the reason, there's a marked increase in silly deals. Two recent issues have left observers scratching their heads.
  • The growing use of the internet in financial services provides a new challenge to banks' already stretched in-house technology teams. They must build new systems quickly at a time of rapid and fundamental developments in software and financial operations. The risk is that banks may spend heavily to develop proprietary systems that are already out of date by the time they are up and running. Application service providers may offer the answer, if banks can bring themselves to trust them.
  • The European leveraged buy-out market appears to have found its feet again after a nervous first quarter. But banks remain cautious about lending to highly geared deals. Can institutional investors such as collateralized debt obligation funds fill the gap?
  • InterSec Research, the international investment management consultant, has produced the first top-50 table of asset managers ranked by European-sourced business. InterSec's Tabitha Rendall reports on the survey's findings
  • Chief economist of Raiffeisenbank, Prague
  • Secondary loan trading has traditionally been seen as rather a dirty business by European financial institutions.
  • As the going gets tough for Europe’s online brokers, a new leader has emerged from Italy. Fineco’s success in attracting new business suggests that players in the European asset-gathering market must be wary of wedding themselves too strictly to a single business model. Fineco combines online broking with direct banking, branches and a network of financial planners. So far, it’s working well, but it takes two co-chief executives to run it.
  • Despite having the backing of six of Europe’s leading investment banks, BondClick has bitten the dust. Though its mission to create an electronic platform for trading European government bonds seemed straightforward enough, just three months after it launched its trading operation it was already in big trouble. The whole episode is an embarrassment for the banks that backed the new venture.
  • Vice-chairman, Jefferies & Company
  • What better way to start off an awards ceremony than with a quick reminder of one's place in the world? That's the tack comedian Stephen Fry took as he introduced Euromoney's second annual awards dinner at the Natural History Museum in London last month.
  • Like the unseen rule-master in the British television show Big Brother, the Basel Accord encourages infantile behaviour among its charges. Within the confines of the system, rational, intelligent adults are transformed into pouting, tantrum-throwing, devious children.
  • A giant advertisement is being pasted on to a billboard sign along one of Mexico City's urban motorways. In bright red colours, the promotion offers to help change your life.
  • When bankers involved in European credit issuance enthuse about the astonishing growth in the market they are only in part talking their own book. The euro revolution means demand is certainly there. Supply of the right mix of paper in the right amounts and with sufficient liquidity is another question. And beyond that there are growing suspicions that most buyers are not taking enough account of risk.
  • The unthinkable became true when the German government agreed to the demands of the European Commission to abolish state support for Landesbanks and savings banks last month. German private banks were quick to announce their interest in taking over some of the 562 savings banks, which have a market share of around 50% - the highest share of public banks world wide. But it might not be that easy. Although the agreement catapults the process of consolidation of Germany's overcrowded banking sector into a higher gear, it won't happen in the very near future.
  • This year’s ranking of the largest 250 emerging-market banks indicates that China’s banks are still way ahead of their rivals in terms of size. Citigroup’s acquisition of Banamex will give impetus to consolidation in Latin America where banks will need sheer size to survive. Few of the handful of east European banks in the tables are expected to be still there in 2002. By Andrew Newby, with data from Moody’s Investors Service.
  • In the June 2001 edition of Euromoney the Bank Atlas table of the world's biggest 250 banks incorrectly indicated that fifth ranked Sumitomo Mitsui Banking Corporation (SMBC) was a subsidiary of the holding company of the Mizuho Financial group. We are happy to point out that SMBC is in no way affiliated to the Mizuho Financial Group.
  • David Komansky doesn’t step down as Merrill Lynch’s CEO until 2004 but he has recognized that his most important remaining task is to engineer a smooth succession. With the sector seemingly moving into a deep downturn this is all the more important. Antony Currie reports on the emergence of Stan O’Neal as Komansky’s anointed successor
  • The arrival of John Mack as CEO of CSFB was preceded by an execution that would have done "the Knife" himself proud. Credit Suisse Group chief executive Lukas Mühlemann hired Mack before he despatched Allen Wheat and after telling his old CEO his job was safe. But with CSFB mired in regulatory problems, struggling to digest ill-advised acquisitions and riven with in-fighting generated by Wheat's distinctive approach to growing the business, he had little choice. Mack has a formidable reputation, but can he dismantle CSFB's byzantine cliques and create a single culture?
  • Recent defaults on equipment vendor loans have prompted questions about the way corporates manage credit risk. Industrial companies have amassed many billions in credit exposure as a side product of their main business. Now, under growing pressure from equity investors and rating agencies, some companies are starting to quantify and reduce their mountains of trade debt.