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January 2008

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  • 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.
  • 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.
  • 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.
  • Julius Baer’s pure play pays off

    COO Boris Collardi explains how his bank has gained momentum by doing the little things well.
  • 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.
  • 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.
  • 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?
  • 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.
  • 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.
  • 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.
  • 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.
  • 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.
  • 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.
  • 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.
  • 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.


  • 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.
  • The US mutual fund industry might be gaining the upper hand in its fight against the country’s nascent exchange-traded notes market following a pair of rulings in December.
  • Weaving between the traditional three pillars can only get you so far.
  • Private banking 2008: When the ultra-wealthy bump into the sub-prime
  • 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.
  • 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.
  • Trading activity quadruples in November but widening spreads on small caps becomes a concern for investors.
  • State Street has launched a private equity index that will enable private equity investors to evaluate their performance against their peers.
  • 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.
  • 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.
  • 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.
  • But political palliative unlikely to have big impact, say analysts.
  • 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.
  • Lehman Brothers sells its stake.
  • The European Commission demands a comprehensive action plan to right the wrongs by the end of January.
  • The priority for banks in 2008 will be shoring up balance sheets by raising capital.
  • 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".
  • Can the index provider’s expertise in equity markets translate into fixed income?
  • Credit Suisse launched its Merlin platform for FX options in early December. The system, which the bank has used internally since 2006, allows clients to structure, price and execute complex, multi-legged exotic option transactions online. Credit Suisse says Merlin is completely automated and works on a request-for-quote basis. It adds that the platform has significantly sped up the pricing of complex structures – on average, it takes just 15 seconds to obtain a quote – and that it is now able to process far more trades.
  • Straightforward, vanilla money market funds have suddenly become topical.
  • 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.
  • Almost 70% of hedge funds are having trouble retaining back-office personnel, says a survey by Rothstein Kass. Of the hedge funds polled, 60% said they had insufficient back-office staff. Stricter reporting from the growing institutional investor base is to blame for the shortfall in qualified back-office staff.
  • 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.
  • 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.
  • The limited progress made in getting this sector moving again in Europe has run aground on renewed nervousness.
  • More supply means more funds. But where to put them?
  • An increasing number of hedge funds are cashing in on the opportunities presented in the distressed mortgage-backed securities sector as banks try to offload their sub-prime exposure. Citadel snapped up for a mere $800 million E*trade’s $3 billion ABS portfolio, which comprised mortgage-backed securities and CDOs. About 60% of the assets were rated double A and higher. Along with Goldman Sachs, Waterfall Asset Management and Solent Capital, hedge fund investments in distressed mortgage-backed securities and CDOs are believed to have surpassed $10 billion since July.
  • Guy Hart, head of ABS syndicate at BNP Paribas, is understood to be leaving the French bank. Hart has been at BNP Paribas since joining from Nomura in 1998. He is a victim of the bank’s projected business levels for next year. With so much less activity expected for 2008 in ABS and CDOs, BNP Paribas’ structured finance division has been trimmed. Accompanying Hart out of the door will be Christos Danias, head of European CDOs and fellow CDO structurer William Ma, who only joined the bank last January from Moody’s.
  • US regulator the National Futures Association decided not to wait to see what impact an increase in the minimum net capital requirement from $1 million to $5 million would have on its forex dealer members (FDMs).
  • Contrary to the conventional wisdom, there has been a massive transfer of wealth from the banks to the hedge funds, says Neil Wilson.