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January 2001

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  • The $700 billion trade-finance market is one of the few large pools of tradeable fixed-income assets that has not yet attracted the attention of institutional fixed-income investors. Changing that, and propelling the fragmented and illiquid trade-finance market through the same developments that transformed the emerging-market debt market in the 1980s is the ambition of a group of bankers and traders who last month launched Internet Trade Finance Exchange (ITF).
  • Head of asset-backed finance, Bear Stearns International
  • The secretive partnership of Lazard is not accustomed to public scrutiny, let alone attack from outside. But in early 2000, French entrepreneur Vincent Bolloré announced that he had acquired 31% of one company in the complex Lazard ownership chain. When Swiss bank UBS revealed that it too had acquired shares in other companies in the chain, Lazard chairman Michel David-Weill rushed to fortify the defences against the threat to his family bank's independence,which he cherishes above all else. In November 2000, David-Weill announced that Bolloré had gone away, having achieved what looked like a successful greenmail operation. But he is not the only threat to David-Weill's command. While battling his outside assailants in public, David-Weill has faced a less visible but more serious challenge from rebels inside the Lazard ranks. They have wrung significant concessions out of this last of the banking aristocrats. Now, if an independent Lazard is to thrive, it must stem the tide of departures and rebuild morale within.
  • German insurer Allianz must be happy. It says it has created a new product, developed with UBS Warburg, that will bring joy to investors, to Allianz's portfolio companies and most of all to Allianz itself. It's only a few of UBS Warburg's rival banks that cannot quite share the joy.
  • Issuer: British TelecommunicationsAmount: $10 billionType of issue: global bondDate of issue: December 5, 2000Bookrunners: Merrill Lynch, Morgan Stanley, Schroder SSB
  • Mexico ended 2000 on a high note. It was not only the fastest-growing economy in Latin America but posted its best economic performance in 20 years. Now, as it moves into 2001, analysts are divided on how it will fare. What is clear, however, is that regardless of the outcome, something must be done to improve the stock market's lacklustre showing.
  • Following the turbulence of 2000 in financial markets - with the euro in free fall, volatility in tech stocks, a climbing oil price and continuing problems in Japan - economists are divided into two camps over the outlook for 2001: the cautious and the downright worried.
  • Glenn Grossman doesn't have a lot of good words for banking consolidation. "Each year the party gets better and attendance improves, and each year we raise less money," he says.
  • Is news and trading organization chief Mike Bloomberg set to run for mayor of New York? That's certainly the impression several of his senior staff have given, and Bloomberg himself has made no denial.
  • Just when you thought it was safe to go back into the stock markets, the biggest bear on the block is back.
  • The Financial Services Authority will set up a new market abuse regime next year, but withthe proposals on the table, City lawyers doubt that it will make their lives, and those of their clients, any easier.
  • No more international fire fighting for Chip Kruger and Gary Holloway. The two men, who stepped down as co-CEOs of NatWest's capital markets business Greenwich Capital in March, have now gone back into business together. And this time they're keeping it small.
  • Investment banks are entering a tricky time as the economy slows and deals dry up. Goldman Sachs' latest earnings showed an increase of just 3% on the same quarter in 1999, a far cry from the double-digit increases of recent years. And for the second quarter in a row Morgan Stanley Dean Witter missed the analysts' earnings consensus. Last time it was by eight cents, half of that coming from a $45 million loss in its high-yield business, a fact which annoyed investors as the firm appeared determined to conceal it. This quarter, it was 23 cents off, which it put down to increased compensation costs, losses in equity investments, and lower underwriting and trading volumes.
  • CSFB is also the chief suspect in a probe into IPO allocation processes by the Securities and Exchange Commission, one which could shake up the entire industry.
  • Austria's banks may have had regional expansion thrust upon them, but they have achieved much over the past decade in broadening their franchise, developing retail banking in central and eastern Europe and acting as a bridgehead between transitional economies and the western capital base. Austrian banks reacted very quickly to the opportunities that were opened up in the region as a result of political reform.
  • Each month since last August, Vladimir Putin’s government has attempted to put in place a new aspect of economic reform. But some problems, notably the banking sector and the entrenched Soviet-style bureaucracy, are particularly intractable.
  • Emerging market governments were forced to bail out collapsing banking systems at huge public cost following the economic and financial crises of the 1990s and 1980s. Many are now considering setting up deposit insurance systems to bring more transparency and stability to implicit sovereign guarantees for banks. Oddly, in the US, where deposit insurance was first established and whose model emerging markets are often encouraged to follow, deposit insurance is being reconsidered. On its own, it’s no safeguard against banking crises.
  • Russia’s post-Soviet oil industry was restructured by robber barons who showed a scant regard for minority shareholders and ran their businesses on a shoestring, salting away funds abroad. Now, though, a harder government line and, above all, high oil prices, have encouraged modernization and a desire to please foreign investors
  • Super idea; shocking timing. The morning Euromoney visited the offices of the New Europe Exchange (Newex), housed in the headquarters of the Wiener Börse, CNBC was reporting once again on the travails of Germany's Neuer Markt and of EMTV in particular. Newex in Vienna cannot, of course, legislate for a German company allegedly fibbing to its shareholders; nor for a share price diving by about 90% from its peak. Nevertheless, it was probably not the most opportune time for Paul Putz, director of business development, to say that Newex wants to be comparable to the Neuer Markt in terms of its transparency and efficiency.
  • Turning money and small-value payments into digital form doesn’t interest the banks – it’s against their interests and too expensive. Into the vacuum have stepped hundreds of payment schemes, many of them claiming they have found the Holy Grail. These boasts are premature. Some ideas are elegant but don’t have critical mass. Worse still, they rely on those indifferent beasts, the banks. Find your way through the Darwinian jungle with the help of David Shirreff
  • This one's a tough one.
  • A wakeup call is hardly ever welcome. Core shareholders of Indian companies are being jolted awake by a hostile predator, a rare event in corporate India. In October, Renaissance Estates, a Delhi-based company owned by Abhishek Dalmia, made an open offer to buy Gesco, a property company owned by the Sheths, a prominent industrialist family with interests in the shipping business. Dalmia had bought up just over 10% of Gesco's shares in the market, and bid for another 45% to gain control from the Sheths who own around 13%.
  • State-owned Sberbank, the former People’s Savings Bank, accounts for a quarter of Russia’s bank assets and half of deposits. Along with other banks in which the state has a stake, it is beginning to dominate the sector. Ben Aris spoke to Andrei Kazmin, the chairman of Sberbank’s board, who claims that the state connection does not give his bank an unfair advantage
  • Russia’s banks, compared with those in other developing economies, are making a meagre contribution to economic growth. The big corporations, such as Lukoil, have their own banks, and banking institutions in which the state has a stake are beginning to dominate the rest of the sector. Most of the commercial banks are puny, the survivors mostly being those that were too small to wreck themselves in the GKO market crash. That means they have been able to do little by way of lending to smaller businesses.
  • At the end of last year, a new stock exchange was unveiled in Vienna – the New Europe Exchange. It typifies the Austrian financial markets: it’s a joint venture with a German partner aimed at trading equities of central and eastern European companies. Austrian banks have long known they cannot survive on the meagre profits at home. Increasingly their search for new business will lead them beyond even near neighbours.
  • Corporate governance is back on the agenda in Russia. Along with squashing the oligarchs and bashing the regional governors, as part of Putin's "law and order" drive, the president also wants to bring Russia's companies to heel.
  • Poland, Hungary and the Czech Republic offer three different puzzles for western European banks. While the fall of the iron curtain presented new opportunities in new markets, the transition from communist regimes to free market economies is still proving a painful struggle.
  • Stephen Jennnings, CEO at Renaissance Capital, looks at consolidation in Russian industry.
  • "If Austria's capital market can be proud of one thing above all else," says a foreign banker in Vienna, "it is the performance of the Federal Financing Agency. I would say that in sophistication and risk management Helmut Eder and his team are one of the top five borrowers in Europe."
  • Although the internet is not tearing up the rule-book in cash management, it is subtly altering the banks’ business models, both changing the way banks provide these services and creating a new class of customers. By Chris Cockerill.