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January 2008

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

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

ALSO IN THIS ISSUE

  • 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 limited progress made in getting this sector moving again in Europe has run aground on renewed nervousness.
  • More on sovereign wealth funds
  • Market participants are confident that Scandinavian exchange operator OMX’s acquisition of the Armenian Stock Exchange (Armex) will help to boost interest in the Caucasian republic’s burgeoning capital markets in 2008.
  • But cheer up – things might get better later in 2008.
  • 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.
  • With capital markets fragile and expensive, sovereign wealth funds are playing an important role in recapitalizing banks.
  • 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%.
  • 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.
  • A shortage of primary convertibles issuance has moved synthetic convertible bonds out of obscurity and into near ubiquity among European institutional investors.
  • More supply means more funds. But where to put them?
  • 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".
  • Private equity in Latin America is set to remain buoyant next year despite global credit problems because of the lower levels of leverage that the market demands compared with the US and Europe. With the leveraged loan market still effectively shut in developed markets, investors are turning their attention to the emerging markets in the hope of locking in growth stories.
  • 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.
  • 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.
  • The priority for banks in 2008 will be shoring up balance sheets by raising capital.
  • 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.
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