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July 2004

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  • Can the traditionally close relationship between private banks and hedge funds survive growing inflows of new money from institutional investors with huge volumes of funds to allocate and a less agile investment process?
  • Banks with excess liquidity are desperate to lend but companies in Europe feel no compelling need to borrow. That's tough for pure commercial banks faced with razor-thin fees. Lenders are praying for an M&A revival soon. More worrying in the long term than declining margins may be weaker credit standards.
  • Hugo Chávez, Venezuela?s unpredictable president, will face a referendum on his six-year rule on August 15 that could oust him from office. The move has unnerved investors, as even though Chávez is sometimes accused of dragging the country towards communism, he uses oil revenues to pay his debts on time. Venezuela has been one of Latin America?s best-performing credits so far this year. Total returns on its debt have contracted by around 1%, compared with a fall across the JPMorgan Emerging Market Bond Index Plus of 4%. Since last month?s referendum announcement, however, Venezuela?s 2027 benchmark bonds have begun to slide in price and the country?s risk spread widened to 615 basis points over US treasuries.
  • The national elections held in May have cast a shadow on India's shining economic story. Foreign investors are reassessing growth prospects now that the Congress Party, which relies on communist allies, has taken over. A jump in the annual inflation rate to 5.5% in early June caused bond yields to rise to a one-year high, and the rupee slid as foreign portfolio investors sold over $700 million in the six weeks from May. Those investors had pumped a record $7 billion into the Indian stock market last year and a further $4 billion in the four months to April this year.
  • Deutsche Bank's hire of Gary Jenkins, former global head of credit research at Barclays Capital, and his former European strategist colleague, Jim Reid, is a coup for the bank and a big blow for BarCap, which had wanted the pair to return.
  • The Swiss banking sector is expected to shrink by 2010, forcing job losses and salary cuts, according to recent research.
  • New tax rules could help the UK take the lead in the nascent property derivatives market in the second half of 2004.
  • Is an oil disaster just around the corner? Barring political upheaval in the Middle East, which will not come right away, probably not. Rather, look toward benefits from falling oil prices by the year-end.
  • Stable but low-growth companies that would once have had difficulty exciting the interest of investors could get higher valuations through new high-yield IPO structures. The pipeline of deals shows that vendors and issuers are keen to exploit the opportunity.
  • JPMorgan Fleming Asset Management?s Sino-foreign joint venture is set to launch its first open-ended fund. Last month, the joint venture was given approval from the China Securities Regulatory Commission for the launch. This approval also marked the official founding of the global asset manager?s joint venture with Shanghai International Trust and Investment Company, called China International Fund Management.
  • The new Basle II capital adequacy rules have been approved by central bankers and regulators of the G10 group of nations but banks remain confused about how to implement the credit monitoring requirements.
  • Has a deal been cut between embattled oil company Yukos and the Kremlin? Yukos’s management offered a deal in the second half of June and president Vladimir Putin, explicitly commenting on the woes of the oil company for the first time, suggested that it had been accepted in principle. But some analysts warn that despite Putin’s reassurances, Yukos remains in as much danger of being closed down and broken up as ever.
  • In the first half of 2004, as bond investors worried about rising interest rates and borrowers congratulated themselves on pre-funding at low absolute rates and spreads in 2003, global debt capital markets volumes fell 11% from first-half 2003 levels. Banks? revenues from the business fell by 10% to $8 billion from $8.9 billion, according to Dealogic.
  • After years of speculation, Tata Consultancy Services (TCS), India's largest IT services company, is ready to list on the Indian stock market.
  • The Swiss stock exchange hopes to steal business from rivals in EU countries by offering favourable listing rules.
  • With the takeover battle for UK retailer Marks & Spencer gathering momentum, the Financial Services Authority is keen to find out who knew what when they bought M&S shares before Philip Green announced a bid.
  • Managed CDOs push structured credit technology in new directions as investors look for enhanced yield.
  • Alastair Campbell, former director of strategy and communications and spin doctor extraordinaire for UK prime minister Tony Blair, chose the Euromoney Global Borrowers and Investors Forum in London to espouse his theory that the financial and business communities would be more effective if they were helpful to government ministers, rather than ?just nagging them?.
  • Never mind the rumoured $500 million sale of guitar maker Fender. If just one of its guitars is touched by the hand of God, it can raise $1 million by itself.
  • The Euro 2004 football championships generated fierce rivalry off the pitch as well as on it. Nowhere more so than at London fund manager Gartmore, which ran a fantasy league for staff, clients and journalists during the tournament.
  • Managing director, Citigroup Private Bank Peter White confesses to having no financial background and very little financial knowledge. Yet for the past four-and-a-half years, he has been managing director of Citigroup Private Bank’s family advisory practice. Thankfully, his role there is completely non-financial in nature.
  • Private bankers in Spain and Portugal are working hard to tap a rapidly increasing group of high-net-worth individuals. In an undeveloped market, foreign banks are fighting over the spoils with local commercial banks that already have strong customer bases and a few local private banks. Clients can expect great personal service, if not the best advice and products.
  • Pan-African coverage moves closer for Celtel with a deal that raises the possibility of further debt financing.
  • Business travel management companies now have an impressive array of high-tech tools to enable them to meet their customers' needs. But they must always bear in mind that those customers often require the personal touch and are eager to have cut-price options built into the offering.
  • The annual Euromoney Awards for Excellence are a crucial benchmark of the global banking industry. Now in their 13th year, the awards recognize the finest banks across the world in a range of disciplines, including debt, M&A, equity, cash management and much more.
  • Last month, Euromoney reported on the challenges facing CSFB CEO John Mack in rebuilding the firm's global investment banking franchise after three years' cost-cutting and damage limitation. Other banks' earnings and share prices had powered ahead. Mack had unveiled plans to double profits in three years. He won't be around to see them through. Late last month he was pushed out. What happened?
  • Dubai is fighting to preserve the reputation of its embryonic international financial centre following the shock decision to dismiss the two men in charge of setting up its regulatory system.
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