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January 2008

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  • Latin American banks work hard to keep up with demand

    Growth in Latin American high-net-worth assets continues to outstrip that of other countries as the local economies boom. Helen Avery asks the region’s top-ranking private banks how they have been reacting to burgeoning demand.
  • FX debate (part one of two): Currency markets in a post credit crisis world

    Volatility in FX has increased because of the credit crisis but not as much as some expected. Inflation will bring more pressure and central banks face a dilemma.
  • CEE Green finance: Renewables stay low on the energy agenda

    The CEE region has huge potential for renewable energy, but there are obstacles to its development – not least the apparent unconcern of the region’s largest nation. Can Russia be induced to get behind the drive for cleaner energy? Jethro Wookey reports.
  • Cash management debate: The tricky path to standardization

    The global credit crunch has underlined to banks the importance of cash management and transaction banking as core businesses.
  • Russian economy: The flight of the Russian phoenix

    In August 1998 the Russian economy looked like a busted flush. Yet less than a decade later it’s the ace in the hole for investors looking for a hedge against a US-inspired global recession. Guy Norton looks at the reasons for its recovery.
  • Asia’s best managed companies 2008: China leads the pack

    Finding the best companies in Asia is becoming a case of deciding which ones are best placed in their exposure to its main growth market. Profits equal plaudits for our investors, as Jethro Wookey finds out.
  • Equity markets: Budapest bourse fights for its life

    Rapid privatization in the 1990s in which foreigner investors took many of the best prizes has left the Budapest stock market in a fragile state. After a recent foreign attempt to acquire one of the exchange’s few blue chips, Hungary’s government and companies are on the defensive. Dominic O’Neill reports.
  • German banking: The quest for a German national champion

    They’re proud of their embassies in Berlin. Take a tour of the German capital and soon after passing the building shared by five Nordic countries your guide will point to three more embassies clustered together – those of South Africa, India and… Baden-Württemberg. It’s a symbol of Germany’s decentralization that is particularly apparent in its banking system. So is there room for – or even need of – a national champion? Philip Moore reports.
  • Structured notes: Wealthy seek to profit from unstable markets

    High-net-worth investors are keen to use structured notes to profit from volatility in the equity market, and to take advantage of opportunities elsewhere. John Ferry looks at what is on offer.
  • Hungary's prime minister Gyurcsany sticks to his guns

    If you are a fund manager interested in investing in central and eastern Europe, there is a strong possibility that you will be directed towards Hungarian government debt. The country’s debt management agency, the AKK, has issued about €2 billion annually to meet the country’s budgetary deficit in recent years. With about 30% of the debt held by foreign portfolio investors, perhaps the most important influence on its price is perception of the government’s resolve to limit an unusually large deficit.
  • Andreas Treichl, Erste Bank: Champion of the retail banking revolution

    Viennese born and bred but US investment bank trained, Andreas Treichl has been at the helm of Erste Bank for the past decade as chairman of its managing board and chief executive. During that time his combination of old-world Viennese charm and savoir-faire, allied with hard-nosed new world commercial nous, has helped the bank transform itself from a venerable but dull Austrian savings institution into the retail banking champion of central and eastern Europe. A series of audacious acquisitions means that Erste Bank is now well positioned to capture the continued high-growth potential in the region, benefiting from increased political stability and rising economic fortunes. He talks to Guy Norton about his vision for the future.
  • Erste Bank: The discreet charms of the bourgeoisie

    In barely a decade, Erste Bank has gone from being a purely Austria-focused savings bank to a regional retail banking powerhouse. Guy Norton charts its rise to prominence and asks: where does it go next?
  • Julius Baer’s pure play pays off

    COO Boris Collardi explains how his bank has gained momentum by doing the little things well.
  • European cash equity markets: The year of the MTF?

    The European cash equity market’s status quo will be put to the test in 2008 when at least four new multilateral trading facilities open for business. Encouraged by the EU’s Markets in Financial Instruments Directive and the better than expected progress of MTF Chi-X, the newcomers promise to shake things up. Peter Koh reports.
  • Credit Suisse pinpoints opportunity in Japan

    Losses from sub-prime-related securities have forced many foreign investment banks to think twice about their ambitions for Japan. However, some lower-profile foreign franchises sense an opportunity to strike while rivals are wavering or cutting back. Credit Suisse’s Japan head of investment banking, Andrew Brownfield, thinks his firm is well positioned to make such a move. Lawrence White reports.
  • GE Money: Feeling the GE force

    GE Money, the consumer finance and banking arm of General Electric, is growing quickly in central and eastern Europe. Sudip Roy talks to two of the firm’s senior executives about its expansion plans.


  • 2007 was a year of achievement for Islamic finance, with growth on all fronts. Yet the sector still faces great challenges, not least in finding and training enough Islamic bankers.
  • Trading activity quadruples in November but widening spreads on small caps becomes a concern for investors.
  • On Wall Street the backstabbing has started, and with good reason – bonus season has arrived. While Latin American bankers watched their counterparts in the structured finance world write down billions of dollars in losses, they, by contrast, quietly brought in good profits.
  • The European Commission demands a comprehensive action plan to right the wrongs by the end of January.
  • Local retail investors will become a bigger force in Brazilian equity offerings, according to senior investment bankers, after Banco do Brasil completed a transaction last month that attracted record interest from individuals in a single deal.
  • The International Finance Corporation, a member of the World Bank Group, and Wachovia Capital Markets have co-arranged the first international syndication for a microfinance institution in Latin America. The $40 million syndicated financing agreement will enable Peru’s Mibanco to offer longer loan maturities to its micro-enterprise clients and reach more customers in rural areas. Mibanco is Peru’s largest provider of microfinance loans by number of clients served and the second-largest by loan volume, with market share of about 14.2%.
  • Moody’s increased the pressure on some monoline guarantors last month by placing two firms, FGIC and XLCA, on review for possible downgrade from their triple-A ratings. MBIA and FGIC’s outlook has changed to negative and Ambac, Assured Guarantee, FSA and Radian are on stable outlook. In a brief conference call, in which the agency refused to make public the capital shortfalls of the firms, it stated that further changes are unlikely while the firms address their capital-raising plans, a process likely to take "some months".
  • Straightforward, vanilla money market funds have suddenly become topical.
  • Investors search for regional opportunities.
  • Despite reeling from billions of dollars of losses in the US sub-prime mortgage markets, Citi is looking to expand its franchise in the high-growth Russian banking market. Bill Mills, chairman of Citi markets and banking for Europe, the Middle East and Africa, recently announced that the US bank would open new offices in Kazan, Perm, Ufa, Chelyabinsk, Omsk and Novosibirsk in 2008-09. Since 2002, the bank has opened more than 60 offices in Russia, including outlets in Moscow, Nizhni Novgorod, Samara, Rostov-on-Don, St Petersburg and Yekaterinburg.
  • Banks in Kazakhstan continue to be the subject of concern in the wake of the global credit crunch, with Standard & Poor’s the latest organization to turn its spotlight on the sector. In mid-December, the ratings agency revised from stable to negative the outlook on its ratings on eight banks – including the leading quartet of Kazkommertsbank, Bank TuranAlem, Halyk Savings Bank of Kazakhstan and Alliance Bank.
  • Private banking 2008: When the ultra-wealthy bump into the sub-prime
  • Despite being caught up in the perceived vulnerability of Kazakh banks to the global credit crunch, Kazkommertsbank has established a 100% subsidiary in the fast-growing market of Tajikistan. Banking assets in Tajikistan grew 43% in 2006, with deposits and loans growth up 93% and 79%, respectively. Including the central bank there are 20 bank and credit societies registered in the country.
  • Goldman Sachs has appointed Jim Esposito as global head of investment-grade financing, a new role that incorporates both the syndicate and origination businesses. Esposito was previously the head of US debt syndicate.
  • Jonathan Chevenix-Trench, chief operating officer of institutional securities at Morgan Stanley, has followed long-time ally and former co-president Zoe Cruz in leaving the firm. Cruz and fellow former co-president Bob Scully, who has been moved to a client-support role, have been replaced by Walid Chammah and James Gorman. Morgan Stanley has said that Chevenix-Trench will not be replaced. His responsibilities are to be split up and assumed by various senior executives.
  • The credit crunch has precipitated a shift in the balance of power in the European debt capital markets.
  • Numerous celebrities made appearances in Icap’s offices around the world when the broker held its 15th annual charity day on December 12. The company donated all of the day’s brokerage – a total of £9.2 million ($18.8 million) – to various charities.
  • Austria’s Wiener Börse is looking to steal some of the London Stock Exchange’s thunder in 2008 and break its stranglehold on international equity issuance from central and eastern Europe.
  • The European Securitization Forum has elected Robert Palache, head of European securitization and asset monetization at Morgan Stanley International, as chairman for 2008. Palache succeeds Philip Tromp, managing director at Financial Security Assurance, who held the post for two years.
  • 48,800,000,000 the US dollar amount of equity raised by privatizations in the EMEA region in the first 11 months of 2007. The figure is up 80% over the same period in 2006. Privatizations accounted for 13% of all equity capital raised, compared with 10% in 2006.
  • Chile has named José De Gregorio as the country’s new central bank president. De Gregorio will step up from his role as the central bank’s vice-president when Vittorio Corbo finishes his five-year term.
  • Japan’s three megabanks have been asked by US counterparts to contribute $5 billion apiece to the fund they are setting up to bail out cash-stricken structured investment vehicles hit by the sub-prime crisis.
  • China is again reluctantly opening the door to foreign investment banks, encouraging them to set up local broking joint ventures capable of underwriting debt and equity offerings, and possibly a range of other services including wealth management, private banking, and institutional broking. China’s stock regulator, the CSRC, is expected to issue new rules on the sector in the next few weeks. So far, Citi, Credit Suisse and Morgan Stanley are ahead in the race to secure a Chinese partner.
  • Weaving between the traditional three pillars can only get you so far.
  • HSBC Saudi Arabia launched two new funds in December: the HSBC Saudi Equity Index Fund, and the HSBC Petrochemical Equity Opportunities Fund. HSBC is also offering participatory notes and swaps over these funds. HSBC’s Saudi Petrochemical Equity Index comprises 11 shares, including Sabic, which is the dominant company in the Saudi equity market. The broader equity index tracks 36 stocks across a broad range of sectors. Both funds are passively managed and aimed at institutional investors and third-party distributors. HSBC Saudi Arabia already offers participatory notes and swaps to its existing funds: Amanah Saudi Equity, Amanah Saudi Industrial Companies, Financial Institutions, Saudi Equity and the Saudi Equity Trading fund.
  • Hugo Chávez, president of Venezuela, got a surprise at the start of December when he failed to win his bid to remove restrictions on the number of terms a president can serve. The referendum result was apparently close. The president is reported to have said that this was just one battle in a long war to strengthen his grip. Despite this setback, Chávez is still clearly in power and able to push through other self-serving legislation.
  • AQR Capital, a super quant house with about $36 billion in assets under management in quantitative strategies, is having a bad spell. The $4 billion Absolute Return fund lost almost 6% in November, putting it down almost 12% for the year. Given the losses, it is unlikely that the firm will undertake an IPO in the near future, as was once expected. "The year 2007 is going to go down in history as the one that quants want to forget," says a hedge fund manager.
  • State Street has launched a private equity index that will enable private equity investors to evaluate their performance against their peers.
  • FXMarketSpace (FXMS) announced a fresh initiative to try to attract some liquidity on to its screens when it unveiled its so-called JumpBall strategy. The JumpBall scheme intends to reward institutions that deal on the platform. FXMS says it is open to bank and non-bank participants and that it will reward the 16 most active traders from January 15 2008 until September 30. Those who qualify will then receive a share of FXMS’s profits for up to four years.