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August 2013

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  • The 2013 Euromoney Awards for excellence dinner, held in early July, was a glittering affair. Finally, it seems, the tide might have turned in the financial industry. The room was thronged and financiers had travelled from Africa, Albania and even supposedly impoverished Greece to attend the event. The guest speaker was the former UK Member of Parliament Gyles Brandreth, who was both entertaining and enthusiastic. Guests raised over £780,000 ($1.2 million) for the nominated charity, Action against Cancer, which is researching a new treatment for the disease.
  • Activity and prices remain buoyant in China’s gold markets despite the slip in prices in the west.
  • "When I got here, the bank was a time bomb. We had £700 billion of banking assets and £300 billion of wholesale funding, half of which was short-term with an average tenor of two months. The bank was in danger of going bankrupt"
  • When António Horta-Osório took over Lloyds Banking Group in 2011, a once great institution was on its knees. The scale of the challenge he faced surprised even the new chief executive. Two-and-a-half years later, Lloyds is in the black, posting £2.1 billion in first-half profit, paving the way for the UK government to divest its 39% stake and begin discussions with regulators over resuming dividends. Euromoney tells the inside story of one of the great post-financial crisis turnarounds.
  • I am pleased to relate that finally JPMorgan is moving towards some semblance of seemly corporate governance. Perhaps senior management have been reading the Abigail with attitude column. I have been criticizing the makeup of the bank’s board since July 2009 when I wrote: ‘I find the JPMorgan board intriguing in that, although the members are impressive in their respective fields, few have in-depth financial expertise. JPMorgan is doing well today, but should it stumble the board will be scrutinized.’ I renewed my call for better corporate governance in May this year when certain investors were agitating for Jamie Dimon to split his chief executive and chairman roles. I correctly predicted that the rebellion would blow over: ‘My bet is that Dimon stays and investors back down.’ However, I did suggest that some long-standing directors with little direct financial experience – such as Ellen Futter – should go.
  • Poor millionaires!
  • There are some macro events in the next few years that will influence how the British economy goes and how British banking shares perform. The two most important for me are the fate of the Conservative-led coalition government at the May 2015 elections and whether or not the UK remains in the European Union. If the Conservatives stay in power and the UK stays in the EU, things should be fine. If either of these things does not happen, I would expect British banking shares to suffer. The UK chancellor of the exchequer, George Osborne, might well experience a warm glow when he contemplates his investment in Lloyds Banking Group, but I have no doubt he scowls as he ponders the quagmire that RBS represents. The UK taxpayer has an 80% stake in RBS and there is no clear exit strategy in sight. Indeed, since the chief executive, Stephen Hester, was unceremoniously elbowed aside last month, the bank has resembled a rudderless wreck, listing from side to side. "Amateur central," a source sniffed. "Sacking the chief executive when you have no clear successor in place is pure folly."
  • Wealthy Brazilians’ traditional dependence on positive real interest rates for investment returns has been undermined. Euromoney’s roundtable of private bankers discusses how wealth managers are developing new investment opportunities for their clients and how those clients are responding.
  • Exchange-traded funds are sold with three promises: index matching, liquidity and transparency. At least two of those claims are dubious.
  • The Archbishop of Canterbury Justin Welby has started his incumbency with a bang – or should that be, a bank.
  • The end of the commodities super-cycle of rising prices is being accompanied by a series of humiliating reverses for some of the biggest bank traders in the energy and metals markets. These banks might struggle to retreat to a sustainable, client-based commodities business model, given over-ambitious former revenue targets, the over-sized egos of some of the main players involved, and the extent to which they have alienated customers and regulators.
  • Dovish forward guidance from the European Central Bank has been followed by a similar approach from the Bank of England.
  • I’m not sure if the words ‘good corporate governance’ exist in the Russian language. But I was slightly bemused to read that John Mack, the former CEO of Morgan Stanley, had been appointed, in June, to the board of Rosneft, the Russian oil and gas company. The state owns some 70% of Rosneft. This strikes me as an odd job for a former red-blooded baron of Wall Street capitalism. Meanwhile Mack was also named to the board of Glencore Xstrata in June.
  • Following the arrest of the main shareholder of Vietnam’s Asia Commercial Bank, Nguyen Duc Kien, the Vietnamese government has introduced a state-owned asset management company to clean up the country’s opaque banking sector. But how committed to change is Vietnam’s leadership?
  • Since 2009, after John Havens had to slash headcount and reduce the investment banking business to serve far fewer customers, Citi has been fighting its way back to prominence.
  • Michael Corbat looked like a safe pair of hands when he took over from Vikram Pandit as Citi’s chief executive. Known as a details man, a leader and strong manager, he will execute the strategy Pandit first laid out. But overseeing the rundown of Citi Holdings has given him a taste for better deploying scarce resources. And every business in Citi’s renowned 100-country network, the bank’s defining differentiator, will have to justify itself to his scrutiny.
  • Amid unabated political change, Middle East investment bankers are seeing a gradual return of deal flow after years of scarcity. Euromoney asks them where and why that might be happening, and how far it can go.
  • Incoming governor holds bank’s first press conference; launches new refinancing facility.
  • Federal Republic prices $1 billion bond; Ghana returns; banks working on Kenya debut
  • In an exclusive interview, Benoît Coeuré, member of the executive board of the European Central Bank, discusses the challenges that Europe faces in stimulating financing to small and medium-sized enterprises, including the creation of a truly pan-European and cross-border capital market in the region and how securitization can be used to re-establish funding to these firms.
  • Some six million businesses were created in the US in 2012. The country is experiencing a start-up boom. What impact is the wave of entrepreneurs having, and how are the angel investor and venture capital industry adapting?
  • Deal halved and relaunched after being pulled; robust investor appetite for alpha generation.
  • Tankan survey turns positive; largest buyer of southeast Asian companies.
  • No conflict of interest with derivatives business, says CEO; rate must be anchored to market data.
  • Guaranteed purchases make ‘deal’s floor the ceiling as well’; Valuation expectations of sellers and buyers persistently diverge
  • Bank CFOs warn market of mortgage impact; drop in refinancings to hit revenues.
  • Legitimate rival to Switzerland; M&A robust in spite of banking downgrade
  • Vince Cable, the UK’s business secretary, has coined a phrase. He described the continuing efforts of the Bank of England to make banks in the country hold more capital as being one of the biggest brakes on economic recovery.
  • Pemex surprised by level of demand; Banco do Brasil builds on América Móvil’s euro success