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December 2007

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  • What does it take to be a pioneer in Corporate Social Responsibility?
  • 800,000,000,000 the total dollar value of ECM issuance so far this year. The figure, a record, was achieved on the back of 5,350 transactions. Global convertibles issuance so far this year at $159.6 billion has already exceed 2006’s convertibles total, and global IPO and follow-on volumes are not far off from reaching the total of all ECM issuance in 2006.
  • A study by Integrity Research Associates shows a disparity between research conducted by traditional buy-side firms and their hedge fund counterparts that could explain the latter’s outperformance.
  • The closing months of 2007 are proving to be full of intrigue for watchers of the Japanese banking industry, with the year’s two biggest M&A deals experiencing setbacks while smaller banks look to forge new alliances.
  • The once-unthinkable news that super-senior CDO risk could be vulnerable to downgrade has been very bad news for the monoline guarantors as well as the banks. Most vulnerable to write-downs as a result of wrapping these tranches is Ambac, with $29.2 billion exposure to US ABS CDOs. MBIA has $19.3 billion and XLCA $16.1 billion. However, Moody’s reckons that the likelihood of any of these firms facing a capital shortfall is unlikely (MBIA) or moderate (Ambac and XLCA). The rating agencies deem Natixis-owned CIFG to be at the greatest risk of facing a capital shortfall. The firm has a $4 billion exposure to the CDO market. Of the big four firms, FSA is the most comfortably positioned, with a mere $364 million exposure to US ABS CDOs.
  • Benjamin Jacquard has been appointed global head of structured credit markets at Calyon, replacing Loïc Fery, formerly head of credit markets, who left the bank in September. Fery was forced out, along with several other senior officials in Calyon’s credit markets business, after a $250 million loss in credit indices trading. With a new leader, the French bank will hope that its newly named structured credit markets business will fare better. Jacquard ran the correlation book and was head of credit structuring at Bank of America before joining Calyon as global head of credit market trading six months ago.
  • "If the shoe was on the other foot, if these were sovereign wealth investors in France, Germany, the UK or the US earning fabulous returns, reducing national deficits, funding social security costs and investing into the rest of the world, would they think it was an issue? I suspect not"
  • A report commissioned by Deutsche Bank claims that the growth of 130:30 strategies will have a significant impact on the securities lending market. If the strategy attracts the forecast $2 trillion in assets over the next three years, an additional $600 billion in borrowed securities will be needed, says the report. It is hoped that the pressure on the market might transform the opaque and inefficient characteristics of securities lending.
  • "I was talking to a Merrill Lynch banker the other day who said he wanted his firm to be like Goldman Sachs. I replied: ‘But you’re not.’ It’s like saying you want to be cool when you’re not"
  • Standard & Poor’s finally lowered its long-term corporate credit rating on airports operator BAA to sub-investment grade on November 21. The move comes a full eight months after the agency’s own declared deadline for downgrading the credit. S&P finally acted because of BBA’s "protracted refinancing", the details of which were revealed in Euromoney’s April issue.
  • Industry veteran Albert Maasland has been appointed as Saxo Bank’s European chief operating officer. Previously, Maasland was head of business development, e-commerce at Standard Chartered. He has also held senior roles at Deutsche Bank and Chase Manhattan. "I’ve had a great time at Standard. It’s a really good bank, concentrating on what it does well. But I’m looking forward to starting at Saxo. It is hard to overestimate the impact that Saxo Bank are having in the financial services industry and their future growth potential and I am keen to be part of that winning team," says Maasland.
  • A stream of new CLOs is hitting the market – but it is far from business as usual.
  • The hoarding of cash by banks is understandable but dangerous.
  • The US bank recovered from a similar crisis in the early 1990s. But this time around it lacks strong leadership.
  • Spain’s thriving cajas show the rest of Europe the way forward.
  • The proliferation of sovereign wealth funds is an opportunity and challenge for investment banks and asset managers.
  • It is one thing to want a sovereign wealth fund but to actually set one up is a long and challenging process, as countries such as Brazil are discovering. Key issues such as infrastructure, hiring people and asset allocation need to be addressed before the investing process can even be considered.
  • Jim Turley is planning on taking a sabbatical from his role as global head of institutional client group at Deutsche Bank. Insiders at the bank say that Turley is keen to become a rugby coach. Turley, the bank’s former head of global currencies and commodities, is unusual in being both highly regarded and extremely well liked. It was during his tenure that Deutsche emerged as the global FX powerhouse it is today.
  • Global problems require global answers.
  • Citi has become the fourth member of the Euromoney top five to enter the retail FX market, following the relatively recent moves of Deutsche Bank, RBS and UBS. Like its peers, Citi has decided to partner with an established player in the retail segment, choosing Saxo Bank to provide some of the technology and client support services.
  • Spotted in India: Goldman Sachs’s chairman and CEO, Lloyd Blankfein, enjoying the festivities at a party in New Delhi hosted by Azim Premji, the silver-haired chief of one of the subcontinent’s biggest IT firms, Wipro.
  • Rumours are rife that quant funds stumbled again in November. If they are to thrive in the future, they need to learn from these mistakes.
  • The Spanish savings bank sector’s days of annual loan growth of more than 20% are over as construction wobbles and cédulas are tarnished by the international credit crunch. Cajas need to re-examine their funding strategies and business plans, writes Peter Koh.
  • Plus Markets, a London exchange group, has launched a new trading platform and expanded the list of stocks it trades. The new system, provided by OMX, will offer cheap quote-driven trading in 7,500 securities including the stocks of all the companies listed on the London Stock Exchange, 70 AIM-listed companies and several of the most liquid continental stocks. This is in addition to the more than 200 stocks listed on Plus itself. The move has come as a surprise to some market observers, who thought that Plus’s ambitions were confined to small-cap and micro-cap stocks and who believed that Plus was positioning itself as an alternative to AIM.
  • A study by Ibbotson Associates of the performance of more than 4,000 funds of hedge funds reveals that the smallest 25% under perform the other 75% of funds by more than two percentage points annually because they deliver lower alpha. However, the very largest 5% of funds of hedge funds also slightly under perform other large funds because of capacity constraints.
  • Hong Kong investors have become happily addicted to China’s flip-flop attitude to the so-called "through train" programme, under which mainland investors will in theory be allowed to buy stocks listed in the former UK colony.
  • The London and Tokyo stock exchanges this November announced a joint venture to create a new junior market in Tokyo based on the LSE’s highly successful AIM model.
  • The big banks’ Mlec fund might well unblock the present credit log jam. But there’s no escaping the fact that global liquidity has contracted and capital is being repriced upwards.
  • The sixth annual report on global investment management by KPMG has revealed that further convergence between hedge funds, private equity companies and long-only managers is to be expected.
  • Rami Hayek has left his post as global head of equity and fixed-income investments at Deutsche Bank’s private wealth management group to join Credit Suisse. Hayek joins Omar Cordes in the role of co-head of Asia Pacific distribution for asset management, and will be based in Hong Kong.
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