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May 2002

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  • Cantor Fitzgerald’s prescience in buying up financial e-commerce patents could boost its earnings as it rebuilds after its tragic September 11 staff losses. Its claims, though, have not gone unchallenged and sympathy for the firm might wane as litigation proliferates.
  • Dubai is moving fast to develop an international financial centre with strategic links to western markets. Its plans are ambitious but UAE regulatory problems, regional rivalries and simmering political tensions might prove to be stumbling blocks.
  • Euromoney's largest ever foreign exchange survey reveals the market's evaluation of the leading banks.
  • In last month's column, I wrote about the revolution in Korea's economic model, moving from a high savings, high investment, export-led economy to a more mature, consumer-led, market economy. That structural change is also visible in Taiwan but with some important differences.
  • Bank of America CEO Ken Lewis is aiming for a goal that no-one has yet achieved. He wants to be the first chief executive of a commercial bank to build a successful, sizeable and sustainable US investment-banking franchise. Plenty have tried - some are still trying - but whether domestic players or European banks they have in the end all had to make one of three choices: to buy, sell, or give up.
  • Magazines also need to reinvent themselves every few years and it's been nearly a decade since Euromoney last changed its look. We do not believe in changes for their own sake. The new design has been guided by a single principle: to make every article easier to read. There are fewer words on each page and, we believe, more and better graphics that are better integrated with the text. This has always been a serious magazine but the pages had become, at times, rather daunting. There's plenty of entertaining copy in here: it should never be a chore to turn the pages and read it.
  • In the wake of the Argentine crisis the sovereign credit derivatives market is preoccupied with legal disputes about what triggers a credit event. New definitions from ISDA must bring clarity, though even that might be insufficient to lure back investors.
  • Nearly six months ago, the MTS bond markets were offered a shortlist of clearing houses. It should be a simple choice between the London Clearing House and Clearnet but the process is dragging on. The cause of this delay may be that Gianluca Garbi, CEO of EuroMTS, is trying to force decisions in Clearnet’s favour.
  • Martin Sass celebrates his thirtieth year in the distressed-debt investing business this year. He is in no doubt that business prospects are the best he's ever seen.
  • All the indications are that Singapore is losing economic ground to immediate regional neighbours and – a bigger, more distant threat – Hong Kong and mainland China to the north. The financial authorities and some investment bankers deny that there is a problem, or at least one that can’t be solved, but ideas for a change of direction are thin on the ground.
  • Asset managers face tough choices on technology spending, even as transaction volumes fall and margins shrink. Regulators’ push for T+1 settlement will require expensive upgrades of existing systems or purchase of new ones. Handing over the middle and back office to the revamped custody banks is an alternative. But fund managers are wary of outsourcing.
  • There should be cost advantages to using a pan-European equities exchange such as Virt-x. However, some potential users say complexity outweighs savings and much of Virt-x’s market share is Swiss stocks.
  • Chile
  • A typical caricature of an investment banker is an expensively besuited man with a briefcase, Breitling watch and mobile phone, evoking an image of wealth, refinement and arrogance. It's not a man wearing a camel-hair coat and a lot of gaudy jewellery. But perhaps it should be since the business of a banker is akin to that of the stereotypical second-hand car salesman in London's East End. Both banker and car dealer preach quality and respect for the client but both are middlemen, squeezing profit from the two sides of a trade.
  • Panama
  • Here's a thought for the hordes of investment bankers twiddling their thumbs at home after the latest round of job cuts. How about spending a lovely spring day in the garden thumbing through a newly published book on personal brand development?
  • One analyst is convinced that Bank of America's stock price performance is overdone, and benefits from sleight of hand. In a series of reports published since August last year, David Hendler, financial-services analyst at independent research firm CreditSights, has drawn attention to Bank of America's earnings from derivatives transactions. "We think the key driver of performance has been the company's over-reliance on interest-rate bets that previously went awry and of late have come in the money." Such activity is, he says, a volatile source of earnings. It would also seem to belie Bank of America's executives' table-pounding about the need for consistent earnings and less volatility.
  • Australian banking
  • Investment banks have resorted to classifying their staff as nothing more than numbers to simplify redundancies.
  • Fund management
  • Fund management
  • "Damn, damn you," the cabbie shouts. That's an approximation, in reality each curse began with the letter f. He quickly turns around and apologizes unreservedly before giving his "welcome to Singapore" spiel.
  • Hints of a revival of M&A activity should not breed false hopes of a new boom. Accounting rule changes are forcing acquirers to write down goodwill on pricey deals, fuelling the view that M&A doesn’t create shareholder value but destroys it.
  • Taking the advice of Benjamin Franklin that "in this world nothing can be said to be certain, except death and taxes" CIBC has latched on to a new source of stable cashflow - funeral services.
  • Investment banks are struggling to reinvent themselves amid dire markets conditions.
  • Exchange traded funds
  • It has long been the preserve of the literati and the chattering classes who might normally look to raise art high above wealth in importance.
  • Issuer: JetBlue Airways CorpAmount: $158.4 millionLaunched: April 11 2002Lead manager: Morgan Stanley