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February 2007

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  • Any football supporter will tell you that the team is usually only as good as the person who runs it. The same applies to investment banking. The CEO sets the agenda for the entire firm. It is a highly pressurized role that will culminate in their removal if the team they manage fails to perform. And the performance that ultimately matters for bank CEOs is to deliver returns to shareholders.
  • RBC Capital Markets announced the completion of two of the first ever rouble-denominated bonds since the rouble became fully convertible.
  • Gulf institutions maintain their dominance of Euromoney’s rankings as growth continues for third successive year. Morris Helal reports.
  • “Whereas western European banks are afraid to go to the Balkans because they’re not used to the environment of corruption, black money and illegal activities, we are used to this here in Greece”
  • A European transaction-cost-analysis survey conducted by business school Edhec and commissioned by HSBC came up with figures in January that show just how unprepared many fund managers are to meet the requirements of the EU’s Markets in Financial Instruments Directive (Mifid) and the best execution requirements of their clients.
  • Given CMC Markets’ success story, it was hardly surprising that the company’s planned initial public offering in the summer of 2006 attracted so much press attention, especially in the UK.
  • Summary table of top banks, with quick links to more related content on euromoney.com
  • UBS has made its global head of debt capital markets, Suneel Kamlani, chief of staff of the investment bank.
  • This year more Americans will file for bankruptcy than graduate from college or file for divorce.
  • Proponents of the merger between the New York Stock Exchange and Euronext believe it will enhance Paris’s position as a financial centre as the $14 billion deal promises to maintain independence. One cheerleader has been Daniel Bouton, chairman and CEO of Société Générale. At the Euromoney Paris Forum, held at the close of 2006, he was interviewed by Mark Johnson, Euromoney’s editor of conferences.
  • The Big Mac index is old hat. Who, in these health-conscious times, buys a Big Mac any more? Instead, please welcome a more pertinent yardstick for our time: the iPod index.
  • Jochen Andritzky’s book demonstrates the importance of analysing CDS prices alongside bond prices in assessing the likelihood of sovereign default and expected recovery values. Felix Salmon examines the evidence.
  • “I guess if Goldman Sachs can’t even read our P/E off a screen then the chances of them being good at the rest of the numbers is pretty low!”
  • “I think we need to improve even more on the customer front. Customers are listening to what you say in terms of capital structure, liability management as a whole and then you can focus on one specific topic, one particular product. But you need to have people fully aligned”
  • The unbundling of research is gathering pace again, this time driven by ­customer demand. Clients with more discerning appetites would prefer to order individual bits and pieces from a menu where the prices are clearly ­written. However, both investment banks and smaller clients are addicted to the buffet approach. Peter Koh reports.
  • Mergers and acquisitions are the hot topic in Tokyo as corporate Japan shifts into investment mode. And although Japan’s M&A market is flawed, structural changes are slowly under way and global bulge-bracket firms will be the ­ultimate winners. Chris Leahy reports.
  • There are sound reasons why volatility has fallen across asset classes. But a safe bet for 2007 is that it will rise again.
  • Leading Russian investment bank Renaissance Capital has added yet another banker to its already impressive staff, which has extensive investment banking experience in emerging European capital markets.
  • There are generally clear advance indications of ECB interest rate increases. However, the precise dimensions of change over the longer term are harder to predict, leaving market adjustments trailing.
  • Investment banks continued to ride high in 2006 on good fundamentals and the added boost of strong hedge fund and private equity activity, proprietary trading and continuing globalization. Alex Chambers assesses whether they can sustain the good times in 2007.
  • Numerical proof of how tough the foreign exchange market was for many participants through the summer of 2006 has been provided by semi-annual volume data released by the Federal Reserve Bank of New York’s Foreign Exchange Committee and the Bank of England’s FX Joint Standing Committee. According to the FXC, average daily volume in over-the-counter FX instruments in October 2006 totalled $534 billion, 7.5% down on April 2006.
  • BBA writes to UK Treasury over ‘informal actions of US officials’.
  • OMX bids for Slovenian stock exchange.
  • "Go to hell"
  • Demand for mortgages and consumer loans from low-income borrowers will provide a big opportunity for private sector lenders, according to a new report by Merrill Lynch called The Merrill Lynch guide to emerging mortgage and consumer credit markets. The bank says currently government agencies provide a large chunk of this kind of finance. But in the long run demand will only be satisfied by building capital market instruments, such as residential mortgage-backed securities and mortgage covered bonds. The bank reckons Colombia has the strongest RMBS market in Latin America.
  • Mexican fixed-line operator Maxcom almost defaulted on its debt a few years ago. But in December the company successfully returned to the international capital markets, proving that the appetite for Latin American high-yield credits is as strong as ever. Chloe Hayward speaks to CFO José-Antonio Solbes about the company’s turnaround.
  • Liability management can be a double-edged sword. Get it right and everyone showers you with plaudits about your relative sophistication as a borrower and how attentive you are to addressing investors’ wants and needs. Get it wrong, however, and your name is quickly mud and the world and his fund manager wife are soon griping about how naive you are and how difficult it will be for you to achieve your funding target for the year if you carry on in a such a cavalier, market-unfriendly manner.
  • Deutsche Bank’s European securitization research notes the market’s impressive growth rate in Russia in 2006.
  • Nothing is more likely to cause instability than a long period of stability. And excessive growth of credit and liquidity is a clear warning sign of crashes to come, probably within the next year.
  • Dutch pension funds ABP and PGGM both recently reported their quarterly results. Cover ratios at both are rising nicely but ABP’s new strategic portfolio catches the eye. Mark Ramsden asks if it points to less demand for long-dated bonds and more for inflation-linked assets.