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December 2009

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  • Readers of the August issue of Euromoneymay recall discussion of the fate of the Cabinet email magazine, a weekly bulletin from the Japanese prime minister’s office. Would the bulletin survive the LDP’s election defeat and the installation of new prime minister Yukio Hatoyama? And would the publication’s chatty and often eccentric style survive in the transfer to a DPJ administration? We’re happy to report the answer is a resounding yes on both counts. Hatoyama’s office began broadcasting the magazine, newly subtitled ‘Yu-Ai’ but otherwise eerily similar to its former incarnation, almost immediately. The subtitle is a reference to Hatoyama’s much-derided policy of fraternity, the phrase being both a Japanese name for the concept and an evocation of the English words ‘You’ and ‘I’.
  • Citi resumed its annual London Credit Conference on November 19, having skipped a year in 2008 because of the chaos in the markets following Lehman’s collapse. It is always a popular event; this year a record 1,300 delegates registered – a reflection of the boom that fixed-income desks are enjoying. But popularity brings its own challenges. The conference was held in Westminster’s Central Hall, a venue with an array of rooms ranging from capacious to, well, not. The hordes of delegates picked clean the refreshment offerings and necessitated early attendance at some panels. It also revealed what a fine art matching potential audiences to panel topics really is. Immediately before lunch a discussion entitled ‘Investing in loan products’ was held in one of the smaller back rooms of the venue. So many delegates turned up for the talk that a queue snaked along the corridor and into the vestibule and rows of bankers were forced to squeeze into the room and stand for the duration. Meanwhile, attendees in the larger lecture hall and library enjoyed stretching out along the rows of empty seats for their presentations. A more graphic illustration of where investor interest in the credit market currently lies would be hard to find.
  • The top six firms in terms of market share are all universal banks which have been less impacted by the credit crisis than some of their more wholesale-focused counterparts. The message is clear: balance sheet counts.
  • When Lehman Brothers went bankrupt, hedge funds rushed to transfer assets from stricken prime brokers to the safety of custodians. It seemed a new competitor had emerged, but as normality returns can custodians convince hedge funds that they have what it takes? Helen Avery reports.
  • The debt trading markets are in much better shape than anyone might have thought possible at the start of 2009. They say the time for agency brokers might already have passed. But liquidity remains limited and banks are reluctant to commit capital. Will the recovery continue? Hamish Risk reports.
  • Barclays issued its third-quarter trading update on November 10, the same day as HSBC announced its results. Ten days later, its shares have slipped about 11%. In fact, Barclays’ share price is down 20% since the Qatar sovereign investment fund sold part of its stake in the UK bank on October 20. Another interesting footnote to the credit crunch has been how supposedly strategic sovereign wealth funds have transformed themselves into opportunistic short-term traders, avaricious for a quick profit. Some say that Barclays’ interim trading statement was disappointing. Group profit before tax for the nine months ended September 30 fell by 19% to £4.5 billion, profit before tax in the investment banking and investment management division was £1.9 billion (down 38% from 2008), impairments rose in the UK retail banking division and the cost/income ratio spiralled higher in the investment bank. It should be noted, however, that last year Barclays had a substantial one-off gain on the Lehman acquisition, and that it continues to increase revenues faster than expenses with a positive cost: income jaws of 7%. The bank also said that it expected impairments for the full year to be around the bottom of its anticipated range for 2009 at £9 billion.
  • Contingent convertible capital could be the new vogue in bank funding. It reforms many of the inadequacies of old-style hybrid debt and ticks all the regulatory boxes. Regulators are throwing their weight behind it, but buyers have yet to be convinced. Hamish Risk reports.
  • Macau has plenty to celebrate: gambling revenues are up, conference business is growing and investors have piled into a pair of high-profile IPOs. But the wheel of fortune has its wobbles. Chloe Hayward reports.
  • A new website advertised as the online marketplace for billionaires launched in 2009.
  • Book review: Too big to fail, Andrew Ross Sorkin
  • "We were sure of it before. Now we’re double sure of it"
  • A spat between a company controlled by one of Asia’s richest families and a group of well-known western investors is turning ugly. Owners of Red Dragon’s exchangeable bonds have moved to put the company in default. Parent company CP Prima is fighting back hard. As Eric Ellis reports, it’s all part of the bitter cocktail that is Indonesia’s capital markets.
  • Standard Bank is cultivating alliances in a strategy of expanding outside South Africa. How worried should competitors such as Standard Chartered be? Dominic O’Neill speaks to Standard’s chief executive and head of investment banking about the bank’s future as a global emerging markets institution.
  • "He was a single-handed business prevention unit"
  • Full merger plans become two subsidiaries; Alliance prevents sale of stake in MS for now.
  • While most have spent the past two years hunkering down, Standard Chartered has used the financial crisis as an opportunity to grow its wholesale business. Sudip Roy asks CEO Peter Sands if this signifies a change in the bank’s culture.
  • Reluctant investors under pressure to buy, while bookrunners await fee bonanza; Analysts say extra capital will not solve banks’ inherent problems
  • Bank of America Merrill Lynch is believed to have hired Liam Hudson from Barclays NY, where he was a director of FX algorithmic execution. Rumour has it that he will be the bank’s new global head of FX e-trading.
  • Both the London Stock Exchange and the Johannesburg Stock Exchange announced the listing of currency-based products in November. The LSE listed 18 currency exchange traded funds. The ETCs were admitted to the exchange by ETF Securities, which is one of the world’s largest providers of commodity-based ETFs. The JSE has listed currency reference warrants, backed by Standard Bank, in what it said was a "response to the growing popularity of currency trading in South Africa".
  • Capital markets business is booming; But bankers fear pressure of public opinion
  • ING’s European Commission-enforced restructuring is rather different to the continuation of strategy that the bank is trying to claim. Analysts are starting to question the entire premise that banking and insurance can work together. Louise Bowman reports.
  • Investors furious at failures of Isda committee; Credibility of CDS market in Japan is at stake
  • From the ruins of a failed, large investment bank, Vikram Pandit and John Havens are trying to build the foundations of a much better, smaller one. It’s still global in ambition but designed to deal with fewer clients, commit its capital much more thoughtfully and this time in the right businesses. Sceptics either say they’ve heard it all before or question why it took the bank’s leaders so long to reach the obvious conclusion. But the early signs are that it’s working rather well. Peter Lee reports.
  • Government likely to miss 2012 goal by $100 billion; Land acquisition is biggest constraint
  • Focus returns to core investment banking; Bajpai claims synergies from merger
  • Assailed on all sides for preparing to pay huge bonuses from a financial market kept alive by systemic government support, Lloyd Blankfein is having to fight Goldman’s corner almost as fiercely as when the crisis was at its worst. He tells Peter Lee that it is not business as usual.
  • Steve ‘Wham’ Braithwaite has resigned from his role as Saxo Bank’s head of FX and fixed-income trading and returned to his London roots as RBC Dexia’s global head of FX trading. Sources close to Braithwaite suggest that he had grown tired of the commute between London and Copenhagen and that he is looking forward to his new challenge.
  • After holding together through the worst of the sub-prime crisis, the wheels now appear to be falling off at Royal Bank of Scotland. The bank’s foreign exchange sales team has suffered a wave of senior departures since the resignation of Brad Leek, its global head of financial institutional FX sales, around the end of October. Following him out are Nick Greenland, global head of FX risk advisory, who is off to Credit Suisse; Stefano Lupi, head of FX investor sales, who is poised to join Santander; and Mathijs Peeters, who ran FX and fixed-income sales in the Netherlands and is believed to be joining Nomura.
  • Business model new to market; So valuation remains uncertain
  • HSBC, which aspires to be a top-three player in FX, is now taking steps to update its e-commerce offering. To that end, it has appointed Richard Anthony to the new role of head of e-risk of FX and metals. Anthony, who will start in January, was previously global head of e-FICC at Dresdner Kleinwort.