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July 2007

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  • In the July 2007 edition of Euromoney, Bank of America CEO Ken Lewis gave a rare in-depth interview. Lewis said: "We are not believers in the build it and they will come mantra. We need to look our shareholders in the eye". "In time, we want to be one of the top five investment banks in the world". More than 18 months ago Euromoney said: "Bank of America is at a tipping point. Ken Lewis is about to face his biggest challenge yet." Little did we know how great the challenge would be. Re-read the story here
  • Its pivotal role in the most important transactions of a hectic year in M&A makes Goldman Sachs the outstanding player in the most competitive market of all.
  • John Mack has the job he always wanted. One of Wall Street’s leading firms has the leader it desperately needed. Morgan Stanley is now the investment bank with momentum. Mack and his senior management tell Clive Horwood how they revived the firm’s fortunes.
  • Find out which institutions have excelled this year in providing high-quality products and services across all areas of commercial and investment banking.
  • The UK’s Financial Services Authority has granted CME the status of a recognized overseas clearing house. This will allow it to clear products that are not traded on the centralized markets run by the CME in the US, including currency forwards.
  • Jack Jeffery, chief executive of electronic broking at Icap, quit the broker almost a year to the day after its purchase of EBS. Jeffery, who was parachuted into EBS from Citi in February 2002, had overseen EBS’s integration into Icap, which moved swiftly to replace him, announcing that market veteran John Nixon had assumed the role.
  • As covered bond markets continue to thrive worldwide, it appears that the demands of ratings agencies might be becoming a stumbling block.
  • Rob Lichten has left his role as global head of FX sales and trading at JPMorgan to take what the bank described as a long sabbatical. His decision came after the bank decided to merge its G10 FX and rates businesses and combine all its emerging markets into its wider EM platform. The bank later announced that Chris Willcox and Matt Zames would co-head global rates and currency trading, excluding Asia ex-Japan.
  • In June, investors began to reject low returns on subordinated structures such as PIK toggle notes from riskier issuers. It will be tougher for sponsors to pile more debt on their already leveraged acquisitions. But public company managers aren’t free from the private equity threat.
  • S&P this June launched the new S&P Pan Asia Shariah Index, a new addition to its Global Shariah Index Series.
  • According to a study by Greenwich Associates, funds of hedge funds are beating high-net-worth individuals and family offices as a source of assets for hedge funds with more than $1 billion in assets under management. HNWIs and family offices contribute 21% of assets, while FoHFs contribute 25%. Pension funds, endowments and foundations directly investing comprise 25%. US institutional allocations to hedge funds are now at more than double the 2001 level, says Greenwich. Some 36% of US institutions invest in hedge funds.
  • Sub-prime-induced volatility was cited as the reason for the withdrawal of a five-year and 10-year euro-denominated transaction by Arcelor. The lead managers – Calyon, Citi, Commerzbank and RBS – sent out a terse statement saying that the borrower would return when stability returned.
  • The launch of further FX indices by Citi and Axa underlines the acceptance of FX as an asset class, which has attractions across the entire investment spectrum.
  • The Securities and Futures Commission of Hong Kong announced in June that it would be "streamlining and simplifying" the licensing process for hedge fund managers with immediate effect. Alexa Lam, the SFC’s executive director of intermediaries and investment products, said: "These initiatives will make the licensing process easier for fund managers and more particularly for overseas hedge fund managers. They are not intended to lower our regulatory requirements because we recognize that these contribute to Hong Kong’s reputation among investors as being a jurisdiction in which appropriate standards are insisted upon among its market participants."
  • "My only expectation is that I am going to continue to work my ass off"
  • As part of Deutsche Bank’s recent expansion initiatives for its overall prime brokerage business, the firm has launched a hedge fund consultancy.
  • Broker/dealer Louis Capital Markets is recommending auction houses as investment of the month. Sotheby’s, it says, is benefiting from the "soaring fortunes of the ultra-rich". The firm is auctioning works by Monet, Matisse, Warhol and Bacon in July that should – after rises in commission rates earlier this year – significantly increase auctioneer’s earnings.
  • The storm clouds that were once on the horizon are now overhead.
  • Head appointed of a new strategic solutions group.
  • The world economy is set to keep growing fast for the next few months. But this will take an inevitable toll on the cost of capital, which is already rising.
  • Hedge fund research group HFR says that in response to enquiries from investors, it is launching an index of hedge funds run by women and minorities called the Diversity Index. Since January 2003, the number of minority and women-owned hedge funds in the HFR database has doubled to more than 100. HFR president Ken Heinz says that requests have come from institutional investors that are required to invest a certain percentage with minority groups. On a historical basis, from January 2003 to May 2007, the index would have produced an annualized net return of 11.26%.
  • Private financing and the crossover space between debt and equity is an increasingly attractive area of business for investment banks. Already a player in the sector, Deutsche Bank is making a renewed push for dominance in Asia with a significant hiring programme.
  • Proxy season in Japan is in full swing, with hundreds of companies holding annual general meetings at the end of June, often on the same date. There is nothing new in that: Japanese companies began clustering shareholder meetings in this way years ago to avoid extortion by yakuza (Japan’s criminal gangs), who would threaten disruptive action unless they were paid off.
  • There’s trouble brewing in the Chinese stock market. But a short, sharp shock could be just what is needed.
  • New head of European flow credit trading; new head of European investment-grade trading.
  • In a move that demonstrates the broadening appeal of Russian assets, HSBC Investments has launched the first pure Russian equity fund for Japanese investors, raising more than $150 million since launching a marketing campaign at the end of March.
  • A basket approach to pricing currencies could help curb Gulf inflation.
  • Latin America’s largest issuers have for a while been competing on pretty much a level playing field with their competitors in fully developed countries. That’s important for Brazilian miner Companhia Vale do Rio Doce, which in the wake of its acquisition of Canada’s Inco is now one of the world’s four largest mining companies, alongside BHP Billiton, Rio Tinto, and Anglo American.
  • Telefónica has successfully closed the largest multi-tranche Czech koruna bond issue by a foreign corporate. The main purpose of the transaction was to extend the company’s investor base to Czech investors – a move the Spanish telephone company has been interested in since its arrival in the Czech Republic after it acquired a majority stake in the country’s main telecom operator, Cesky Telecom, in mid-2005.
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