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July 2008

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  • Icap has confirmed the launch of its web-based version of EBS.
  • Japan’s stock markets have struggled lately as foreign investors abandon the country in droves; the Tokyo Stock Exchange, meanwhile, suffers from the perception that listing on it is still too difficult for foreign companies and that it is prone to technological problems.
  • Widespread speculation about the likely purchaser of Bank of America’s equity prime brokerage business has come to an end.
  • FSA forces disclosure of significant short positions in companies undertaking rights issues while issuers look for a quicker route to market.
  • Michael Philipp, chairman of Middle East and Africa at Credit Suisse, left the bank last month to set up his own business. His new, independent company will focus on investment management and advisory services in the region.
  • Every cloud has a silver lining. With the international debt markets only now open to a select few Russian corporates, and with many Russian banks strapped for cash, there are plenty off opportunities for asset managers to lend to strong corporate credits at distressed debt-type margins.
  • China Merchants Bank will buy Hong Kong’s Wing Lung Bank, after beating bids from rivals including ICBC and Bank of Communications. CMB will pay HK$156.50 per share for a 53% stake in Wing Lung, valuing the bank at around $4.7 billion. Rumours of the sale have driven up Wing Lung’s share price: in a letter to shareholders on June 11, CMB’s board noted that the price paid per share represented "a premium of approximately 76.14% over the closing price of HK$88.85 per WLB Share as quoted on the Stock Exchange on 12 February 2008, being the last full trading day prior to recent news articles of the potential sale of the shares on 13 February 2008." It’s a high price to pay, and in the same letter the board of CMB announced that the bank would look to the debt markets to raise sufficient capital to finance the acquisition with an issuance of Rmb30 billion ($4.3 billion). CMB, China’s sixth-largest bank by assets, was advised by JPMorgan in the three-month bidding process. Wing Lung was advised by UBS and Credit Suisse.
  • London-listed asset management group Polar Capital is looking to launch a fund later this year to take advantage of the attractive investment opportunities it believes exists in Ukraine. Earlier this year, Polar relocated its head office for emerging Europe to Kiev from Moscow, citing the growing attractiveness of the Ukrainian economy.
  • Ceiba Investments, a closed-end fund that invests solely in Cuban assets, is set to list its shares on London junior market AIM this month.
  • The restructuring of Cheyne’s SIV could provide a blueprint for other stricken vehicles; Blackrock in the frame to manage StanChart’s SIV.
  • Hundreds of thousands of Mexicans are borrowing from a new kind of creditor, called a sofom, but experts are concerned that the unregulated lenders are charging extortionate rates of interest. In July 2006, a change in the law enabled sociedades financieras de ojeto multiple (sofomes) – financial companies that provide all classes of credit, including mortgages, car loans, personal loans, bridging loans, department store loans, credit cards, commercial loans, leasing, and microcredit – to be created.
  • The biggest retailers will regret having been blind to opportunities in emerging Europe.
  • Many hedge funds are significantly more hedged that they were one year ago, says Steve Gross, principal of Penso Capital Markets, a New York asset management and risk management firm.
  • The belief that Libor is an actual rate at which banks lend substantial money to one another is a façade that the credit crunch has torn down with a vengeance.
  • Barclays Capital has hired Rudy Alexis from Bank of America, where he was head of FX sales Europe. Sources say he will join the bank as a managing director to run its Iberian, Italian and new markets corporate FX sales team and report to Jim O’Neill, Barclays’ co-head of UK and European corporate foreign exchange and corporate risk advisory.
  • OGX, the Brazilian mining company owned by billionaire Eike Batista, and the Bolsa Mexicana de Valores, the Mexican stock exchange, both came to market last month with landmark IPOs. They were important deals in a number of respects, including getting Latin primary market issuance going again this year. At least as significant was the emergence of China’s sovereign wealth fund, China Investment Corporation, as an investor in Latin American IPOs.
  • The announcement of the creation of a central counterparty for over-the-counter credit default swap trades has been described as one of the biggest developments in the history of the market.
  • 'The Black Swan: The Impact of the Highly Improbable' is an excellent read, but anyone who talks about the credit crunch in these terms is not being intellectually honest.
  • 7 the average percentage return of US IPOs one month after listing so far this year.
  • As part of the decision-making process for the Awards for Excellence, Euromoney journalists conduct numerous interviews with senior bankers who aim to convince us why they should win.
  • NYSE plans rule changes to improve the competitiveness of its trading floor.
  • On June 11, Hugo Chávez, president of Venezuela, agreed to remove a tax of 1.5% on all financial transactions, admitting that the government did not need this revenue and that it was helping to push up inflation. He also introduced new exchange rate controls that will reduce the paperwork for capital goods imports. But this applies only to companies seeking $50,000 or less.
  • Perhaps Credit Suisse is seeking to reach the parts other banks dare not reach for?
  • In Europe and Asia, UBS is the closest challenger to the top two prime brokerage players but Deutsche Bank and Credit Suisse are arguably now the best placed to grow. Neil Wilson reports.
  • Barings, Castlepoint, AIG, Eclectica, to name but a few, have all set up agriculture funds in the past 12 months to cash in on expected commodity price increases. And if returns to date are anything to go by, more will be joining them.
  • As the structured finance market struggles to reinvent itself, the orgy of recrimination among constituents is intensifying.
  • Citi has promoted Tom King to a new position of head of EMEA banking. His role encompasses investment banking and the corporate and commercial bank. He will also oversee the newly created capital markets origination group for the region.
  • "You should come to Beirut soon. The situation has improved a lot," Adnan Kassar, chairman of Lebanon’s Fransabank, advises Euromoney.
  • Bankers that cover financial institutions’ debt capital should be in greater demand than ever given market turmoil surrounding their client base. Banks have always been the largest component of debt new issues but now are forecast to dominate primary flows to an even greater extent because of their pent-up demand for financing. Not only are many of them in desperate need of funds following the closure of structured finance markets, they are also selling bonds that earn underwriters a greater amount of fees than was the case pre-crunch.