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March 2011

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  • International investor interest in Latin America has intensified scrutiny of the corporate governance and investor relations of companies in the region. Big companies such as Vale, Petrobras and bank BBVA have responded remarkably well to this scrutiny. Rob Dwyer reports.
  • Over the past year, Euromoney has written often of the generational shifts in the economic and financial balance of power between the old world and the new. Many of the world’s biggest banks are pinning their hopes for growth on such shifts, and express nothing but excitement at their prospect.
  • Banks tap emerging markets growth The rapid expansion of trade within emerging markets is a big opportunity. But Basle III requirements represent a huge risk to trade finance.
  • The bank hasn’t pushed too hard into marquee investment banking businesses; Shareholders stand to benefit from a low cost-income ratio and high returns
  • The bank finds that it can’t have its cake and eat it.
  • Deutsche Börse and NYSE Euronext create powerhouse; Competitive playing field not level
  • Euromoney Country Risk
  • IPO suffers from high pricing; Debt restructuring completed after five years
  • Conditions for expanding the EU’s EFSF are set to be agreed by the end of the month. Even if only some of the Franco-German proposals are implemented, the euro will be greatly strengthened.
  • Goldman Sachs’s Gary Cohn thinks hedge funds, not banks, are likely to cause the next financial crisis. He needs to take a long hard stare in the looking glass.
  • "Fucking well turn that music down. I’ve asked you twice TO TURN THE MUSIC. DOWN"
  • To cricket aficionados, great writers such as EW Swanton and CLR James are as integral a part of the game’s rich tapestry as any player. Now a new name can be added to the list of cricket writers: Anshu Jain, Deutsche Bank’s corporate and investment bank chief.
  • Euromoney: "So will they just pick the four banks that pitch the best?"
  • Euromoney is a great believer in mucking in with the tough jobs. So, in a recent media versus Barclays Capital football challenge in Singapore for the Beyond Social Services children’s charity, your correspondent put up his hand to go in goal. We had expected to be facing a few unfit FX traders. Instead we found ourselves playing a team from EPSN Star Sports who had brought along Steve McMahon, the former Liverpool and England player, renowned as one of the true hard men of the English game through the late 1980s and early 1990s.
  • Has Barclays perfected the art of interest rate alchemy? It seems to think it might be close to mastery of the vagaries of interest rate curve management, judging by statements in its recently released annual report for 2010. Barclays said that interest rate hedges of product balances such as deposits had generated a gain of £1.403 billion ($2.28 billion) in 2010, while comparable hedges of group equity brought in £1.788 billion.
  • Investment bankers are often described in the financial media as being in combat with each other, battling for deals, fighting for market share and warring for promotion. It is of course not unheard of for this metaphorical fighting to become real, and this alas appears to have been the case when seasoned bankers from two top Wall Street banks squared up at the Grand Khaan Irish Pub in Ulaan Baatar, Mongolia’s capital. The scrap arose during the early stages of the pitching process for the IPO of Mongolia’s Tavan Tolgoi mining assets, a deal that is expected to raise more than $2 billion and has lured senior Asia bankers from at least 18 global firms to the city. Reports as to the ferocity of the encounter vary. One source who was in town at the time tells Euromoney that blows were exchanged; a banker from another firm not involved in the incident tells us that it was "not much more than boozy insults and posturing". The deal has certainly led global banks to employ every trick in the book to try to win favour: Morgan Stanley, which ultimately failed in its bid, attracted much controversy in Mongolia for hiring the son of prime minister Sükhbaatar Batbold to help its cause. With the banks to be involved in the deal now selected (see Asia news section), most of the combatants have left the arena, but with billions more dollars-worth of deals expected to come out of Mongolia in the next couple of years the beleaguered staff at the Grand Khaan might have to brace themselves for more incursions by beer-fuelled, BlackBerry-armed pugilists.
  • In an attempt to establish an equity investment culture in Kazakhstan, the authorities in Astana have announced plans to launch a series of initial public offerings in state-controlled companies, in the hope of attracting widespread interest from ordinary local citizens.
  • New Eurobond set to test market sentiment; State sales planned to boost local stock market
  • Issuers/investors baulk at valuation levels; Russia outperforms on the fund inflow front
  • The country’s leaders and financiers are looking to build a unique gateway into Latin America.
  • At least three SOEs expected to list; Debate over currency unresolved
  • Is the Brazilian real overvalued? Is there a credit bubble? Is Brazil headed for a correction?
  • Morgan Stanley is seeking out the niche in the wealth management business that used to belong to Merrill Lynch.
  • Loans grow in appeal for both banks and munis; State infrastructure banks offer viable alternative
  • The country should not be held up as a model for other peripheral sovereigns to follow.
  • Investors are learning to price in factors such as autocracy premia and remembering that oil and democracy rarely mix easily.
  • To Berlin, where film star Kevin Spacey was ruminating on life as a senior bank executive in his new movie Margin Call, which was screened at the city’s film festival in mid-February. Spacey muses that he found it "fascinating to try to humanize" bankers, people who – in his words – "in a lot of cases are just regular people who have regular jobs". According to the New York Times’s Andrew Ross Sorkin, the actor researched the role at Citigroup’s Lower Manhattan offices last June, asking employees: "Is it possible to be good at what you do without liking the company you work for?" Presumably not too many people rushed to answer that one. He also wanted to know: "If you knew a security was worthless and wanted to sell it, how would you grapple with the moral implications of doing so?" That must have produced a few furrowed brows as well. The film (which focuses on MBS traders) is directed by JC Chandor, whose father used to work at Merrill Lynch and might have provided some illuminating insights. "The film to me is a tragedy," he says, because these people are "realizing that they have wasted a little bit of their lives, or a lot of their lives." But it can’t be too realistic a portrayal of the sub-prime meltdown: the chief risk officer is... Demi Moore.
  • The merger of the Peruvian and Colombian stock exchanges will transform the equity capital markets of the Andean region and help them to compete with Brazil for investment, say local experts. Jason Mitchell reports.
  • Nigeria’s finance minister, Olusegun Aganga, says he has nothing to hide about the pre-election depletion of the country’s Excess Crude Account. But, as he explains to Dominic O’Neill, with a new sovereign wealth fund the government will save more, protecting the economy from shocks and encouraging private and foreign investment in key infrastructure projects.
  • Is equity issuance faltering in Latin America, in particular Brazil, because of overoptimistic expectations from issuers and their lead banks? Might a shift in focus away from Brazil be beneficial? Rob Dwyer finds out.