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August 2008

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  • BNP Paribas argues coordinated action to support the dollar can work.
  • I hate to be the ugly fairy at the wedding but I'm starting to wonder if John Thain will turn out ot be Merrill's messiah after all.
  • Investment into UK mortgage bank Bradford & Bingley by private equity firm TPG has been scrapped following a downgrade of the firm. TPG was due to invest about $350 million in B&B but had protected its agreement by including an escape clause that allowed it to withdraw if Moody’s downgraded B&B twice prior to investment. Moody’s downgraded B&B from A3 to Baa1 last month.
  • There will be more rallies but the equity market trend is downward, and there’s a worrying backdrop of rising inflation mixed with declining growth.
  • The role of the European Central Bank as the saviour of the European securitization market over the last year is not even up for debate.
  • The bad news has been piling up at HBOS, but we shouldn’t call in the movers just yet.
  • The market, it is said, is always right, but the performance of Icap’s share price is seemingly at odds with the company’s financial growth. Of course, Icap’s shares have been caught up with the general malaise affecting global equity valuations in general and financial stocks in particular but as the company pointed out in an interim management statement issued in mid-July, it has continued to benefit as a result of the continuing volatility in financial markets.
  • It seems astonishing that misuse of models still takes place in the foreign exchange market. But there is no doubt it does, although the industry’s self-imposed code of Omertà means that even those cases that seemingly everyone knows about rarely get exposed.
  • MTF (that’s multilateral trading facilities to you and me) is about to become the acronym of the autumn, with umpteen new systems launching in Europe. It might be bad news for the incumbent exchanges; is it good news for anyone?
  • In the new world of covered bonds, it really does matter where you come from.
  • Panic over the state of Fannie and Freddie may have been overplayed, but more transparency over their role in US housing should be welcomed.
  • The audience fell silent as they listened to his advice: don’t buy things you don’t understand; if you wouldn’t buy something, don’t sell it to anyone else; and don’t lend money to customers you don’t know.
  • "Putting an idiot in a suit doesn’t make him a private banker"
  • The Federal Deposit Insurance Corporation recently issued a statement laying the foundations for the regulation of a US covered bond market, specifically concerning the preferred treatment of bondholders in the event of an issuer default.
  • Euromoney’s annual structured credit poll reveals that JPMorgan is leading a much reduced pack.
  • In-house hedge funds look to have been a costly mistake for investment banks. Far better, it seems, is to take stakes in independent ones.
  • The strong performance of BBVA and Santander can’t mask the impact of a looming housing crash on domestic institutions.
  • One might be forgiven for doubting that an invitation to a pension fund conference could bring light relief from the doom and gloom of the financial markets. But a US fire and police pension fund conference being held in September might prove an exception. The California forum is called Guns ’n’ Hoses. If that isn’t reason enough to go, the "beer round tables" might be the clincher.
  • "If you don’t fully understand an instrument, don’t buy it. If you would not buy for yourself a specific product, don’t try to sell it. If you don’t know very well your customers, don’t lend them any money. If you do all these things, you will be a better banker, my son"
  • It’s not often you overhear comments about commercial banks on the upper deck of the number 26 bus heading for the London borough of Hackney. Situated on the City of London’s doorstep, Hackney is known for trendy pubs as well as street gangs, drug dealing and general villainy. Banter on the number 26 includes, but is not limited to, sincere discussions on the merits of mobile phone models, kebabs, gambling and stern child-rearing.
  • Former GMAC chief executive Eric Feldstein has joined $13 billion hedge fund Eton Park as CFO; Jamil Baz, portfolio manager for Pimco’s global multi-asset fund, joins GLG as chief investment strategist; KKR has hired William Sonneborn, president and COO of TCW, to develop its asset management business.
  • Professional cycling is a sport that has a long association with doping. In reality, it is probably no worse than any other and its fans will tell you it has done more to clean its tarnished image than those sports that are not regarded with such suspicion.
  • US fixed-income trading volume generated by hedge funds declined to 20% over 2007-08 from 29% in 2006-07 according to Greenwich Associates. In distressed debt, however, hedge funds account for 95% of US trading volume. Lehman Brothers ranked as top dealer to hedge funds in the survey despite decreases in hedge fund trading share.
  • The precise responsibility of parties such as accountants and administrators in the event of hedge fund portfolio valuation discrepancies has been of growing concern among service providers.
  • The Merrill chief’s honeymoon is over. The question now is whether he’s guilty of misjudgment or mismanagement.
  • James Crosby, former head of HBOS, delivered his interim report on the state of mortgage finance in the UK to the government on July 29. But it does not make for good holiday reading. Despite outlining the extent to which lenders have completely withdrawn from the market and the effect that the shortage of mortgage finance is having on the housing market, Crosby emphasizes that his final recommendation might well be to do nothing. "I should stress that I may yet recommend that the government should not intervene in the market, on the grounds that such intervention would create more problems than it would solve," he says.
  • At a difficult time for the global asset management industry, the GCC countries are increasingly attractive markets. The region’s oil and gas fuelled wealth and increasing investment sophistication offer huge opportunities. Regional financial centres equipped with world-class regulation and facilities provide the right environments for international firms to establish local operations, while the Shariah-compliant investment market is growing in popularity and diversity. Stuart Pearce, CEO of Qatar Financial Centre Authority, introduces this report.
  • Shinsei Bank has announced that it is to acquire General Electric’s Japanese consumer finance business for ¥580 billion ($5.4 billion). The deal comprises GE’s personal loans unit, Lake, as well as its mortgage loans and credit card arms, and will bring Shinsei more than 2 million new customers as it seeks to combine its consumer finance and retail operations.
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