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February 2009

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  • Kuwait's central bank has announced new credit facilities for local companies.
  • The Private Banking and Wealth Management Survey 2009 received 1643 valid votes (1244 'part B' votes, 399 'part A' votes), representing $11.8 trillion of Assets under Management.
  • Beleaguered European corporates can only dream of such quick and easy access to equity capital.
  • The UK Treasury’s latest bank bail-out plan will fail unless it works out what bad assets are worth.
  • "The $1.2 million reported in the press was for the renovation of my office, two conference rooms and a reception area. The expenses were incurred over a year ago in a very different environment"
  • Claims of special access to the best managers and extraordinary due-diligence skills are not rooted in reality.
  • The scale of the loss at RBS plus the talk of full nationalization and the circumstances at Merrill Lynch diverted attention from Deutsche Bank. But its losses are perhaps the most disheartening of the three.
  • UBS’s chief executive was the first global bank head to tackle the impact of the credit crunch. His actions may have saved the bank. Much remains to be done. The future of the firm’s investment bank is in doubt. And so will Rohner’s own position be, if he doesn’t quickly return the bank to profit and shut the door on outflows in its wealth management franchise. Clive Horwood reports
  • The resolution of one Latin America banking crisis in the early 1980s could provide lessons for today’s policymakers.
  • According to analysts at JPMorgan, there is little certainty among all the doom, gloom and despondency in the financial markets. But although few people can confidently predict the outcome of the global financial crisis, JPMorgan believes it can be relatively sure that 2009 will be a year of less leverage and more regulation.
  • HFR data reveal that $152 billion of capital was withdrawn by hedge fund investors in the fourth quarter of 2008 – the largest withdrawal in a quarter on record. Estimates that hedge fund assets would reach $2.25 trillion by 2010 now seem far too optimistic. HFR estimates that the industry at present has $1.4 trillion in assets. The HFRI Fund Weighted Composite Index fell by 18.3% for all of 2008, only the second calendar-year decline since 1990.
  • Can this year be any worse for IPOs? 296 is the number of IPOs withdrawn or postponed in 2008; $1.1 billion is the amount raised from the seven IPOs completed in the US during the second half of 2008, with the $145 million offering by Grand Canyon Education being the only US deal to price in the fourth quarter of 2008, when global IPO revenues to bank arrangers slumped 98% compared with the fourth quarter of 2007. Bankers aren’t enthusiastic about IPO prospects for 2009 but at least the annual comparisons are going to be easier.
  • Paulson & Co and Hong Kong financial group Sun Hung Kai Financial are to launch a distressed asset investment fund that will focus on financial companies.
  • Key numbers from the equity capital markets in 2008 include $257.4 billion, the value of equity raised by financial sector issuers, accounting for 41% of total ECM volume of $634.4 billion. That’s up from just 11%, the financial sector’s share of new issues in 2007. In 2007, total global ECM volume was $943.7 billion
  • This year is not set to be one of economic recovery – the financial assets that are cheap are cheap for a very good reason, and it’s not a propitious one.
  • Sales of distressed real estate assets in Mexico could total more than $10 billion this year. “Mexico is very interesting at the moment,” says a local portfolio manager. “There are four big companies that are struggling that have big real estate portfolios in the country. Now there is an expectation that they will have to sell some of these assets.”
  • As the ban on shorting 34 financial stocks lifted in the UK on January 16, shares at first rose but then fell sharply the following week after more bad news from banks. The Financial Services Authority is forcing hedge funds to disclose short sales of financials. Lansdowne Partners admitted to shorting Barclays Bank on one day that the bank lost 25% of its value. There were only six reports of short sales of more than 0.25% of a company. Barclays and RBS, however, saw much of their value wiped out in January as stock was sold off. The Australian Securities and Investments Commission extended its ban on shorting financials that it imposed last September. The ban will remain in place until March 6.
  • With the current scrutiny on budgets, it is inevitable that IT spending will come under some pressure. According to a recent report from consultancy Celent Communications: "Global information technology spending by financial services institutions will reach $358 billion in 2008." This is a 4.5% increase over 2007, but is, says the firm, "substantially lower than the 6.4% growth achieved in 2007. The financial crisis and economic uncertainty have financial institutions tightening their belts."
  • Dan Condon has joined Standard Chartered as e-channels product manager in Singapore. Condon was previously vice-president, sales, at FXMarketSpace. Meanwhile, sources say Jens Andersen has left his role at Morgan Stanley in New York, where he was head of Americas trading for FXEM. He is believed to be going to Caxton.
  • The Central Bank of Nigeria tightened its foreign exchange management on January 19, moving from a wholesale to a retail Dutch auction system. Applications for international currency must therefore now be deal-specific.
  • The CME is expanding its international incentive programmes, which also cover FX products. The programmes will include a simplified fee structure and run until December 31 2010.
  • Latin American sovereigns are on track to meet their 2009 financing needs after an impressive start to the year, according to senior debt bankers. Barclays Capital reckons that 34% of this year’s estimated total of $19 billion of emerging market sovereign issuance has already been successfully placed despite fears that the US and Europe would crowd them out. Latin American corporates, in contrast, are facing more difficult and expensive financing.
  • VTB, Russia’s second-biggest bank, announced worse-than-expected results for the third quarter after making a loss of $369 million following the doubling of its provisioning levels. Analysts at Nomura reckon that the biggest challenge facing VTB is that the equity capital of the bank declined by $1.5 billion in the third quarter alone. The bank’s chief financial officer has said that it needs to raise tier 1 capital and is hopeful that its minority shareholders will come to the rescue. In the third quarter, the bank’s capital adequacy ratio fell to 14% from 15.8%, although it’s still well above the Russian minimum level of 10%. The bank’s tier 1 ratio dropped to 12.7% from 14.4% in the second quarter.
  • With US president Barack Obama taking power last month, there were hopes that US-Venezuela relations would improve. Obama initially announced plans to talk to president Hugo Chávez but has since been reported as saying that Chávez exports terrorism, supports the Farc insurgents in Colombia and has obstructed progress in Latin America. "There is still time" for Obama to correct his views, Chávez says. He adds: "No one can say that I threw the first stone at Obama. He threw it at me." He concludes that Obama has the "same stench" as his predecessor, George W Bush.
  • A research report by Gulf Finance House raises the possibility of Kuwait going back to a dollar peg because of extreme volatility in the FX markets and to unfreeze its money markets. "Based on conversations with treasurers, the presence of FX risk premium is effectively imposing a barrier against the flow of funds from cheaper sources in the GCC to Kuwaiti banks," says the report. "Accordingly, dinar interbank rates remain the highest in the region, even after the recent moves of the Central Bank of Kuwait to activate repo facilities of 1% overnight and 3% one-month." Kuwait adopted a basket peg in May 2007 to contain inflationary pressures. The other GCC countries have their currencies pegged to the dollar.
  • Chile is on track to weather the financial crisis and avoid a recession. “Chile managed the boom years incredibly well and now they have the funds to help smooth the financial cycles and work through this crisis. We have a pretty favourable outlook on Chile for 2009,” says Casey Reckman, associate director in Fitch’s Latin American sovereign group.
  • In a high-profile move, Grigory Marchenko has been appointed as chairman of the National Bank of Kazakhstan (NBK) for the second time, replacing his successor, Anvar Saidenov.
  • Bill Schwab has been appointed global head of real estate at the Abu Dhabi Investment Authority (Adia). Schwab joins from JPMorgan, where he was managing director of European real estate finance.
  • Despite remaining a largely centrally planned economy, Belarus has not been immune to the fallout from the global credit crunch and the associated macroeconomic slowdown. At the beginning of the year the country was forced to devalue the Belarussian rouble by 20% to BR2,650 to the dollar and raise its key refinancing rate to 14% from 12%.
  • Consolidation among investment banks has had a big impact on the equity capital markets league table results in 2008 and will do so again in 2009.