December 2011
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LATEST ARTICLES
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Senior unsecured debt appears unfeasible; Italy could repeat Spanish funding war
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Mortgage lenders under threat; Fischer clashes with housing chief
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US ratings agency Moody’s has announced it is buying a majority stake in Copal Partners, a provider of outsourced research and analytics to institutional clients.
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Deposits flow to US banks; Syndicated loan market opens up
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Lack of repossessions hides extent of US’s dire economic situation.
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Focus Media’s plight shows how quickly a short report can smash a company.
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The Turkish banking regulator has awarded its first deposit-taking bank licence in more than a decade to Lebanese banking group Audi.
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The decision by Congressman Barney Frank not to seek re-election to the US House of Representatives next year could result in an unexpected financial windfall for some employees of Goldman Sachs.
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Santander cashes out in Chile; HSBC puts up Losango
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Predominant retail investors deterred; Stability favoured over market growth
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China-style system; Test trades completed
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China’s reserves offset imbalance; HSBC and Standard Chartered benefit
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The UK banking system is reasonably well fixed, but relentless regulatory pressure renders it useless to the real economy.
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Mercator talks extended; NLB seeks new capital
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It is always nice to meet someone who is enthusiastic about what they do. And few come more enthusiastic than Theo Vermaelen, professor of finance at Insead. When he is not teaching MBA and executive programmes, Vermaelen has set himself a challenging task. "I am on a mission to save the world!" he excitedly told a gathering of financiers at a recent meeting on capital innovation and CoCo bonds in London. He plans to do this using his new invention, a new form of contingent capital known as Coerc – the call option enhanced reverse convertible. This essentially avoids the death spiral risk associated with CoCo bonds as they approach their trigger by giving shareholders the option to buy from CoCo holders when the trigger is hit. He says that this will address the risk of market manipulation from short-sellers when the trigger is tripped. Vermaelen is vehemently opposed to capital ratio triggers. "Sometimes the market is right, sometimes it is wrong – but accounting is always wrong!" he declares. For those investors that can be coerc-ed (geddit?) to get behind his new instrument, Vermaelen declares: "Under my Coerc design you will be risk-free – better than a government bond!" Hmmm... perhaps not such a challenging task after all.
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"I have told senior management that if they insist on taking multi-billion dollar bonuses this year, they might as well hire a bodyguard because they could end up getting shot"
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New investment fund Vinculum is promising to do things differently. Set up by former Liontrust chief executive Nigel Legge, Vinculum says its global equity fund – launched into the UK retail market on January 3 – will be free of the star fund manager premium that many of its rivals demand payment for.
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"We think this is a once in 35 year opportunity for the banking system. We are in a perfect storm as customer loyalty to their bank is low and customer service has been a key differentiator"
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One firm in particular will be celebrating if Greece, and indeed any other country, has to leave the euro – Fortress Paper.
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Decoupling the country’s economy from inflation will take a long time and prevents long-term credit from developing.
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Euromoney goes where other publications fear to tread. And at the end of a long day, there’s nothing like a quiet drink at a local bar to get a feel for what people in the city we’re visiting really think. On a recent trip to Moscow, one of the team was doing just that in a rather unassuming hostelry.
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New channels for domestic investment; Eastern governments pay lower premiums
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Bank of America recently issued a footnoted warning in a regulatory filing about $11.5 billion of additional collateral payments on derivatives it faces because of rating agency downgrades. At the end of September the bank was on the hook for $4.9 billion of extra collateral that it might be required to pay but had not yet posted, including $3.2 billion linked to its September 21 downgrade by Moody’s.
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Polish media entrepreneur Zygmunt Solorz-Zak took control of mobile operator Polkomtel last month in a $5 billion buyout, the country’s largest ever. Companies controlled by the tycoon bought 100% of the mobile phone operator from four state-owned Polish firms and the UK’s Vodafone, which owned 24.4%.
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Investors offered a banking growth story; No shortage of liquidity
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PM vows to retain economic sovereignty; Moody’s downgrades bonds to junk status
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BR Partners enters investment banking; Acquisition route proves quickest
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Talk of a Chinese property bubble and potential crash is misleading. The country’s real estate sector is as varied as China itself. But what unites Chinese property investors, and the government, is concerns about the pace at which building continues, prices are falling and the extent of exposure in a growing shadow banking sector.
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Press offensive launched; Q&A faux pas
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The near-term dangers in emerging markets remain high, even assuming a breakthrough in the eurozone crisis – and emerging Europe is most at risk.
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Rebuilding Europe’s banks will take a long time and cost a fortune. Ireland, which has done more than any other country to rebuild and right size its banking system, offers important lessons for this process.
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Does a failed Bund auction last month reveal serious investor concerns about Germany’s credit fundamentals if treaty changes lead to closer fiscal union and put it on the hook for the periphery’s debts?
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Banks are under pressure to improve controls against corrupt practices as the UK’s 2011 Bribery Act kicks in and increased use is made of the US Foreign Corrupt Practices Act.
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The demise of MF Global shows that, more than three years after Lehman, financial watchdogs remain miles off the pace. But there is a solution.
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Gas exploitation set to reduce US deficit; SWFs will have less influence on dollar’s value
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Sales and trading volumes slump in third quarter but CVA masks true extent of damage.
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Near record bets against single currency; Banks road test Greek exit
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Politicians and market participants, seeing investors turn their backs on the EFSF and abandon the European government bond markets, are pressing the ECB to save the day and increase its buying. That will require a dramatic change of heart. And could an already stressed ECB balance sheet even cope with the demands that such a programme would entail?
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Risk from a large dealer failure; Window dressing of exposure common
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FIG issuance to collapse; Corporates could be bright spot
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As a seventh bank is taken under state control, Spain faces a race against time to deal with its bad real estate assets before they contaminate the entire banking sector. A bad bank could be the only solution, despite opposition from bankers and politicians.
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Banks are turning to the covered bond market to replace prohibitively expensive senior unsecured funding, fuelling anxious investors’ concerns over encumbrance levels. But should they be looking closer at claims elsewhere on the balance sheet?
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In the past two years, Deutsche Bank has enjoyed strong growth in its debt capital markets business in Latin America – its eighth autonomous region. Now Bernardo Parnes, its regional chief executive, reveals his plans to take on the competition in equities and M&A.
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Unless crucial links in the chain of contagion are broken and sufficient resources are provided to cover all sovereign liabilities, the eurozone is doomed.
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The allure of public listings has been tarnished by offshore scandals while banks are tightening their lending, forcing CEOs of China’s most dynamic companies to look to new funding sources. Is the offshore IPO market dead?
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There is no solution to indebtedness and the inevitable and painful process of deleveraging, so lean back and protect yourself like Muhammad Ali and the US Congress.
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Eurozone-based lenders dominate banking in central and eastern Europe. They have faced writedowns and intransigence in parts of the region. But good profit growth means the CEE is still the central focus of their business.
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Universal banks need retail revenues more than ever as investment banking profits plummet. The US industry is facing its biggest challenge as some 7,000 banks battle to make their business models work. The main battleground: deposits.
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Microfinance has its problems, but it can drive the economies of developing nations. So what if it wasn’t there? To find out, Euromoney went to the former Soviet republics of Tajikistan and Kyrgyzstan to meet its lenders and clients.
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Foreign exchange provides the best return on equity of any capital markets business. To drive more volume through their franchises, banks need a successful prime brokerage business. For RBS, it holds the key to making up lost ground in foreign exchange.