Foreign exchange has arguably held up better than any other financial market in the fallout from the sub-prime crisis. Will its robustness result in it being taken more seriously as both a business and as an asset class? And which banks have fared best in Euromoney’s benchmark industry poll?

ING has released a report on the economic and market implications of US obesity. Entitled The fat of the land, the report looks at possible effects on the US economy of the growing numbers of obese people. In 1980, some 15% of Americans were classified as obese, under the (admittedly questionable) BMI method. By 2004, that figure had risen to about 33%.

While elsewhere the mortgage market is drying up and securitization is quiescent, the biggest economy in the Gulf is trying to expand both. The finishing touches are being applied to laws on the Saudi mortgage market but it’s uncertain they will provide enough flow to meet demand for funding. Dominic O’Neill reports from Riyadh.

Ukraine’s financial institutions are thriving despite renewed political upheaval. A surge in M&A and IPO activity could be the next stage.

Sepa came into being in January but there is still much work to be done before the full benefits come through for banks and corporate customers. What are the main threats or opportunities of the developments? What obstacles have to be overcome? Euromoney’s debate panel wrestles with the key issues.

Osman Semerci, Merrill Lynch’s former global head of fixed income, currencies and commodities, and co-president of the EMEA global markets and investment banking business, has joined $1.7 billion alternatives group Duet as its chief executive. Duet Group, which started in 2002 with just $10 million in a single fund, now has 14 funds, and is looking to further expand its range of strategies, in addition to growing its private equity business.

The US secondary market in life insurance is being extended to sellers who can ill afford to relinquish their policies.

Kazakhstan’s banks have built up onerous debt repayments after a splurge of Eurobond issuance. Are they facing a liquidity crunch?

The crunch has precipitated a world where good credits can turn bad overnight. Research teams must adapt to the new circumstances while clients increasingly have their own expertise. Jethro Wookey reports.

Mongolia’s most profitable bank is considering accessing the capital markets later this year, according to its chief executive, Peter Morrow.

Just as banks in Russia were beginning to resemble their peers outside the country, engaging in conventional retail and corporate banking, the western financial market crisis hit. Reduced availability of long-term funding from abroad highlights the shortage of such a market in Russia and reveals a systemic vulnerability. Will this help state-owned banks, which had previously been losing market share, turn the tables on their privately owned rivals?

Conifer Securities, which provides back- and middle-office solutions to hedge funds, family offices and endowments, has bought Morgan Stanley’s outsourced trading business. The platform provides independent trade execution in equities, options and ETFs to Morgan Stanley’s prime brokerage hedge fund clients. Conifer has also recently hired UBS’s former head of prime brokerage for the Americas, Dick Del Bello, as a senior partner.

Bad infrastructure, a weak economy and vulnerable financial assets – but bankers in South Africa remain confident.

A reduction in foreign capital flows means that many banks in eastern Europe are indirect victims of the credit crunch.

Tradeweb has unveiled an electronic market for deposits. The platform’s management say that Tradeweb Deposit will support the placement of new and maturing deposits in euro, sterling, dollar, Swiss franc and yen. The timing of this launch comes just as the focus on the money markets has sharpened as discrepancies between the reported fixing of the interbank offered rate and the real level of bank funding have emerged. The new offering has been running on beta since January and 1,500 placements had already been conducted as of April 22. Tradeweb’s belief that electronic trading will help price transparency in the market will no doubt be challenged by the leading brokers. But the benefits of e-finance around processing are less disputed.

The Eurasian Development Bank, which was founded in 2006 to finance infrastructure projects in Russia and Kazakhstan, is to expand its remit to include investments in financial institutions, according to its chairman.

The crisis suggests that privately owned banks are not self-evidently better managed nor more effective at allocating capital than state-owned ones.

Liquidity remains the primary challenge in the present environment, meaning that few credit managers have ventured beyond the relatively liquid credit derivative indices. Managers including BlueCrest, Cairn Capital, CQS and Pimco are all seeking to take advantage of the unique opportunities the dislocation in the credit market has created, say market participants.

Figures released by Isda during April show that the notional amount of credit default swaps outstanding during 2007 grew by 37% from the first half of the year to the second half. After the first six months of 2007 – before problems in the US sub-prime mortgage market tipped the credit markets into turmoil – there were $45.5 trillion of CDS outstanding but by the end of the year there were $62.2 billion. CDS notional growth for the whole year was a full 81%. The figures are a stark illustration of the extent to which CDS were embraced as a means of hedging credit risk when the markets turned.

Competition between trading venues is leading to soaring trading volumes in Europe. Brokers are reaping the benefits and incumbent exchanges have yet to feel any pain, despite the success of new competitors.

It is too early to call the end of the credit crunch but evidence that the crisis is not worsening, if not starting to ease, was in abundance last month. If March marked the lowest point in the financial crisis, the first half of April gave ample reasons to believe that sentiment is improving – at least in the short term.

Barclays Capital has poached Adrian McGowan from Deutsche Bank, where he was head of FX complex risk, to head its FX business in Asia. McGowan will be based in Singapore and report to Ivan Ritossa, the bank’s head of global markets – trading, Asia Pacific, and global head of FX and prime services.

Standard Chartered Bank has made three senior appointments of former Lehman Brothers staff to boost its financial markets management team. Remy Klammers becomes the bank’s new global head of fixed-income trading with responsibility for FX, rates, credit and structured products trading. Klammers reports to Lenny Feder, the bank’s group head of financial markets. Klammers was previously managing director of structured products Asia at Lehman. He is being joined by Alexis Suzat, who has been appointed as global head of structured products trading, and Marten Agren, who joins as global head of modelling and analytics group, financial markets.

UniCredit Markets and Investment Banking has hired Xavier Alexandre as its head of e-commerce and electronic trading for FICC. The bank has yet to finalize the reporting lines for this new position. Alexandre will be based in London.

Retail FX provider Oanda is building up its presence in Asia following the recent appointment of K Duker as its managing director for Asia Pacific. The company has hired Maxine Loh, formerly a marketing director at UBS; Zena Tong, formerly a senior sales executive at Saxo Bank; and Tracey Tan, who was a senior customer service executive at Bloomberg, to work out of its Singapore office.

The Bank of England levelled the playing field for UK financial institutions last month when it followed the lead of the Federal Reserve and provided a facility for domestic banks and building societies to refinance mortgage-backed bonds for government bonds. Continental European banks have long been able to use the European Central Bank’s repo facility for their mortgage-backed securities. Until the European securitization market shut down, UK banks were by far its biggest users – accounting for between 40% and 50% of annual issuance over the past three years alone. The Bank of England has carefully constructed its programme to ensure that banks retain all credit risk.

The world is starting to resemble a spinning top: one week the markets soar, the next they sink. Even mighty masters of the universe are confused: hedge funds and banks had a dire month in March. And could there be a mightier master than Hank Paulson, the present US Treasury secretary and former Goldman Sachs chief executive?

"Who is this?"

BNP Paribas is presenting MillionTreesNYC in New York, a citywide, public-private scheme with the goal of planting and caring for a million trees across New York’s five boroughs over the next 10 years. Introduced as one of mayor Michael Bloomberg’s 127 PlaNYC initiatives to create a healthier, sustainable city, MillionTreesNYC will increase the city’s tree-count by 20%.

The rise of alternative beta strategies seems inevitable as investors chase greater levels of diversification in their portfolios. What are the secrets of alternative beta’s success and what obstacles can still impede its progress?

The sideways, low-volatility markets of the past two years are gone, so how should investors review their currency management strategies? Should they consider shifting mandates from quant to discretionary? And should capital preservation take over from return maximization?

As a new approach to financial PR it may take some time to bed in.

UBS has done a service to all investors in bank stocks and bonds by making public the report requested by the Swiss Federal Banking Commission into the root causes of its sub-prime losses.

The International Capital Markets Association raised SFr100,000 ($97,000) for underprivileged children with its annual ski weekend in Davos at the end of March. The event is more than 30 years old, but the potential for charitable contributions was only realized last year.

"The problem is that banks have ended up lending to these deals by accident – they thought that they were underwriting them"

If you’re sick of hearing about Goldman Sachs beating the competition, look away now. Euromoney has conducted its first (somewhat unscientific) poll of investment banks’ online popularity as measured on social networking site Facebook, and the US firm has won by a clear margin. Facebook allows companies to create ‘fan’ pages: "...a unique experience where users can become more deeply connected with your business or brand. Users can express their support by adding themselves as a fan, writing on your Wall, uploading photos and joining other fans in discussion groups."

As part of Man Investments’ plan to expand its range, the firm has joined its European credit manager, Pemba Credit Advisors, with Ore Hill, a US credit specialist. Man has taken a 50% stake in Ore Hill, and Ore Hill has taken a 50% stake in Pemba.

The fuller acceptance of volatility as an asset has moved closer with a new range of investable indices.

The Bank of England’s special liquidity scheme does nothing that hasn’t already been done by the Fed and the ECB – except on more onerous terms.

The grip of the credit crunch seems to be easing for Brazilian corporates wanting to issue debt. This optimism from Brazil is in line with the rest of Latin America, where the debt market fog is clearing.

Speakers at the EuroHedge Summit offered sound advice: leverage addicts were warned about the drug’s potency, and panickers were advised to panic in good time. Neil Wilson reports from Paris.

In April, Instinet added Korea to the growing list of markets where it operates alternative trading systems.

The African Development Bank issued its third bond on the Bond Exchange of South Africa last month. The rand-denominated bond, the ADB03S, together with the ADB01S and ADB02S, which were issued in December 2007, total $408 million. Standard Bank managed and placed the issue. AfDB’s shareholders include 53 African countries and 24 countries from the Americas, Asia, and Europe.

So much for Kenya’s Kibaki/Odinga rivalry derailing the Africa boom.

Amid fears that it is already overly indebted, the image-conscious Dubai government has embarked on its largest bond programme ever. The local-currency bonds will be used to fund improvements to Dubai’s choked transport infrastructure, in particular through a new metro and international mega-airport.

3 Degrees, a $400 million Asia distressed and special situations manager, has hired Jeff Tolk. Tolk was formerly the Asian head of structured credit at HSBC, where he established the business.

In a further sign that the world’s leading companies view Russia as a core market, US drinks company PepsiCo is paying $1.4 billion to acquire 75% of Lebedyansky, Russia’s leading juice producer. Lebedyansky, which controls 30% of the country’s juice market, reported sales of $800 million last year. "This agreement provides us with a strong platform for continued expansion in one of the world’s fastest-growing juice markets," says Michael White, PepsiCo’s international chief executive. Once the initial purchase is completed a mandatory offer to buy the balance of the outstanding shares, which are listed in Moscow, is set to be launched later this year. Lebedyansky, which controls 30% of the Russian juice market, reported sales of $800 million in 2007.

Leading Russian corporates Gazprom and Evraz both attracted strong support for Eurobond issues in April. Gas company Gazprom sold a $1.5 billion five- and 10-year deal via Citi and Morgan Stanley; steel producer Evraz sold $1.6 billion of five- and 10-year paper via ABN Amro, Calyon, Deutsche Bank, and UBS. Both issues were heavily oversubscribed and performed well in aftermarket trading. VTB, the country’s second-biggest bank, is set to follow with a $1 billion issue, the first in a series of transactions that will involve it seeking $4 billion of foreign funding this year.

Romania is vulnerable to the global credit crisis, with its current account in deficit, a budget shortfall and a domestic credit binge.

A plentiful supply of cheap, high-quality farmland means Russia may become key in the drive to solve global food shortages.

Turkish companies are the rising stars of corporate governance in emerging Europe. But CEZ remains the one to beat.

Sberbank’s chief German Gref has the task of creating a national banking champion for Russia. That includes building a presence overseas.

More on sovereign wealth funds

Senior officials at the US Treasury are urging Latin American countries to pursue policies that will help grow their mortgage markets, despite the sub-prime woes of the US.

Citi has appointed Andrew Au as chairman of Citibank China and chief executive Citi China after an extended search to replace the previous incumbent, Richard Stanley, who was nabbed by DBS in February. Citi’s press release made no mention of Stanley, who presided over a successful period of investment for the bank in China, but described the search for a replacement as "comprehensive". Au has been with the firm for 24 years, and was previously country head for New Zealand before moving to Hong Kong to take on various regional oversight roles including head of trade for Asia-Pacific.

The Argentine central bank will shortly start operating as a counterparty in the local swap market traded at the country’s main fixed-income exchange, the Mercado Abierto Electrónico.

A $259 million loan to support an acquisition financing for an offshore drilling vessel in Brazil completed syndication last month. The transaction, which was underwritten by GE Transportation Finance, GE Energy Financial Services and WestLB, was oversubscribed. The syndication, launched in February, has been deemed a great success. Mike Mullen Energy Equipment Resource, a Dallas offshore investor, has bought the vessel from Petrobras.

Mexico is expected to take the first crucial steps towards improving its oil sector and liberalizing aspects of state-owned Pemex’s management. An energy reform proposal was sent to the Mexican congress on April 9 by president Felipe Calderón, and will be voted on shortly. Analysts are confident that the bill will be passed and, despite one opposition party, PRD, claiming this is "back door privatization", key players of the other opposition party, the PRI, support the reform.

Market sources suggest that Advent, a leading private equity firm, is set to exit from its majority stake in Nuevo Banco Comercial, the second-largest privately owned bank in Uruguay. This follows an agreement to sell NBC to the Gilinski family, who own GNB Sudameris, a small commercial bank in Colombia. The deal will probably be concluded this month.

Last month Hugo Chávez, the president of Venezuela, named Roberto Hernández, a long-term member of the Venezuelan Communist Party, as the new labour minister. The decision came days after Chavez ordered the nationalization of a leading steel-making company. The Ternium Sidor steel works was taken over in April after the company refused to raise workers’ pay. Ternium is Argentine-controlled and this nationalization adds strain to the good relations between Chávez and the Argentine government. Chávez also put pressure on relations with the Mexican president last month when he ordered the nationalization of the cement industry, a move that included Cemex’s Venezuelan operations.

Only suckers believe that the remedies applied to the credit crisis have cured the underlying sickness. There’s more painful adjustment to come, and it could last two to five years.

Uncertainty worldwide on the next move in interest rates is leading to short-term volatility and price gyrations in the foreign exchange market.

Non-performing loans in Mexico are growing at a worrying pace. Despite official estimates putting consumer NPLs at 5.8% of the total consumer loan market, some analysts believe that real levels are in double digits already.

The weather might not have been very spring-like (at least in London), but April heralded definite signs of a thaw in the loan markets. The standoff between the banks and opportunity funds that resulted in the $237 billion logjam of loans in the leveraged finance market (see Leveraged finance: Funds go hungry as distressed trough fails to fill , Euromoney, December 2007) has finally ended, with the former having blinked first.

Banks are paying the price for hanging on to their stuck leveraged loans for so long.

The number of new equity-linked issues in the first quarter of 2008 fell dramatically across all regions in comparison with the same period in 2007.

According to press reports, Polygon Investment Partners, an $8 billion UK hedge fund, is changing its redemption system in a bid to slow investor withdrawals. The fund, which had lost 4% by the end of March, operates a first-come, first-served redemption system that limits the amount of withdrawals at any particular time. But management reportedly claims that this has resulted in investors applying to withdraw money in a bid to be first out of the gate, simply to avoid being caught last if the fund were to get into serious trouble.

The volume of equity raised by issuers from eastern Europe so far this year amounts to just $2 billion, down from $11.1 billion over the same time in 2007. Eastern Europe ECM volume accounts for just 6% of the total EMEA ECM volume raised in 2008, compared with 14% this time last year.

High-ticket foreign purchases by Tata Steel and Hindalco have grabbed the headlines but India’s SMEs are also increasingly acquisitive. Cash-rich, or funded by enthusiastic local banks or foreign investors, they are taking advantage of turmoil in the US. Elliot Wilson reports.

In the run-up to the annual general meeting of the European Bank for Reconstruction and Development in Kiev there were encouraging indications that dire predictions about the economic demise of the countries of central and eastern Europe are looking increasingly wide of the mark.

Freeing up markets would help the country lose its tag as the poor man of Latin America.

The volume of equity raised in the Middle East so far this year is up 62% on the same period in 2007. Issuers from the region have raised $11 billion-worth of equity year to date, mainly through IPOs, which account for 60% of total volume, up from just 47% in 2007.

Can the rapid growth of e-trading in recent years continue?

29.4 and 44,000,000,000

The net new inflow into hedge funds collectively was a meagre $16.5 billion over the first quarter of 2008, according to Hedge Fund Research, in comparison with almost $200 billion in 2007. Some strategies fared better than others: macro hedge strategies posted $1 billion in redemptions; merger arbitrage strategies had outflows of $4 billion; while distressed strategies attracted $8 billion. Macro strategies, however, posted returns of 4.7% in Q1, while the overall hedge fund index was down more than 3%.

London’s position as a centre for hedge funds is under threat. Brevan Howard is the latest to warn the UK government that it will be moving its headquarters abroad if proposed tax changes are implemented.

Does the EC need to force clarity on clearing?

Not content with its £10 billion-a-year PFI programmes, the UK government plans to extend its use of securitization to its student loan book. This is worth about £18.1 billion and is expected to increase in value to £55 billion over the next 10 years. Legislation is now in the House of Lords to enable the government to sell these loans to the capital markets – a process that it hopes will raise £6 billion by 2010.

In the first few weeks of April, the Tadawul, the Middle East’s most liquid equity exchange, had returned to form and bucked the downward trend of developed global markets. But until then, 2008 seemed to be the year of recoupling with western markets, rather than decoupling, as far as the Saudi stock market was concerned.

There are complaints that investors are being misled by funds.

There may be plenty of doom and gloom among private equity practitioners in the US and western Europe as a result of the global credit crunch that has all but dried up their cheap financing. In Russia, though, the mood among their peers is almost euphoric. "I am amazed by how relatively easy it is to raise money for a private equity fund in Russia," says Florian Fenner, managing partner at UFG Asset Management in Moscow, which is fundraising for its second private equity vehicle. UFG is looking to raise at least $500 million and expects to make a first close at least half that figure in May.

It has become increasingly recognized that the attraction of flow from the retail aggregators can have a huge impact on the volumes of sell-side institutions.

Private equity businesses have taken a battering from the credit crisis but the industry remains flush with cash commitments from investors and appears to be trying to adapt to a world devoid of easy and cheap financing.

With the euro hitting fresh record highs against the dollar, it must be tempting for European policymakers to crow. However, complacency could lead to crisis.

UK PFI deal taps loan market for entire £2.2 billion.

More on LTROs

South Korea’s new president, Lee Myung Bak, urgently wants the privatization of Korea Development Bank; he hopes it will become globally competitive. But some question the wisdom of the deal. Lawrence White reports from Seoul.

New organization for the merged RBS/ABN business is unveiled.

Russia’s infrastructure will cost trillions of dollars to fix. How are bankers and investors looking to profit from the rebuilding?