Tarp, Talf, PPIP – what’s an investor to make of it?

The top-five banks in the 2009 Euromoney FX poll remain the same as in 2008 despite big sub-prime losses. As senior FX bankers make clear, a leading position in the market reflects an established set of relationships that aspirant banks find hard to build, whatever their creditworthiness. Lee Oliver reports.

The impact of the wider financial crisis has forced firms and their corporate clients to re-examine the way they approach their foreign exchange business. A strong sense of realism bodes well for the market. Lee Oliver reports.

Losses in RBS’s investment banking division almost brought down the entire group. Many called for it to be shut down. But John Hourican, the firm’s new head of global banking and markets, believes he is positioning a new-look business to thrive in post-credit crunch markets. Could the cause of RBS’s ills be the hope for its recovery?

With a stable democracy and a business-friendly economic environment, Honduras is making the most of its central location in the Americas.

Foreign exchange, money markets and rates have returned Deutsche Bank to profitability. Anshu Jain, the firm’s global head of markets, says it’s all down to applying smart solutions to relatively simple products. But don’t be fooled into thinking he’s given up on more complex business. Clive Horwood reports.

"It’s not the quantum of what we pay people that’s changed. It’s the shape of the payments"

"I don’t see why any bank should be allowed to pay it back faster than we do"

Bahrain is trying to capitalise on Dubai’s demise and reassert its former status as the regional financial hub. The island’s infrastructure may not be sufficient, however.

Following the announcement that it intends to raise a jaw-dropping $220 billion from gilt sales to fund the UK’s budget deficit, the Debt Management Office said it would use new methods to distribute bonds to investors. These are the regular use of syndications and the continued use of mini-tenders. We at Euromoney thought it might be helpful to have a visual representation of one innovative suggestion from a reader.

Angola is to issue $8 billion of government bonds this year in the local currency, the kwanza, finance minister Severim de Morais has announced. The bonds, which will have maturities of between one and four years, will be used to finance the country’s reconstruction effort as revenue from oil and diamond exports plunges thanks to lower global prices. Sales will be to banks and to the general public, but it has not been made clear whether foreign banks will be able to buy the paper.

Poland has followed Mexico in seeking a precautionary credit line from the IMF. Prime minister Donald Tusk said that the country was interested in a one-year facility for $20.5 billion. The line was created as part of a revamp of the IMF’s lending facilities announced in March. It is a type of insurance policy for strong developing countries. Access is restricted to countries that meet strict criteria. Colombia is also hoping to gain access to the line for $10.4 billion. Mexico’s credit line is for $47 billion.

There are limited IMF funds for ailing emerging economies, available only on stiff terms, and that means serious consequences for those that have lent to them.

The potential for huge profits may no longer be there but good opportunities can still be found. Louise Bowman reports.

The European Bank for Reconstruction and Development has launched its first domestic rouble bond in three years. The proceeds of the Rbl5 billion ($439 million) five-year floating-rate issue will finance the EBRD’s existing rouble loan portfolio. In May 2005, the EBRD was the first supranational to tap the Russian domestic bond market.

Mubadala, the Abu Dhabi state investment fund, is considering launching its debut bond soon following a successful deal by the government last month. Details are scarce but the company has hired Citi, Goldman Sachs and RBS to arrange meetings with investors in the US and Europe.

Gazprom has reopened the Eurobond markets for Russia with a $2.25 billion issue. The 10-year deal, which features a put option after three years, is the largest ever corporate debt offering from the country (although Gazprom should be deemed a quasi-sovereign) and the first public issue since July 2008. The dollar transaction follows a SFr500 million ($429 million) private placement in early April.

At least two of Kazakhstan’s leading banks are likely to seek a restructuring of their foreign debts in the near future. President Nursultan Nazarbayev has requested that the Kazakh government come up with a plan to help banks resolve their debt repayment problems by the middle of May.

Herbert Stepic, chief executive of Raiffeisen International, the second-biggest lender in central and eastern Europe, remains confident that despite the short-term effects of the global credit crunch and the associated economic slowdown, central and eastern Europe will continue to offer profitable opportunities for those institutions that display a long-term commitment to the region.

Governments are committed to boosting infrastructure spending, but they must take care on how they do it. Louise Bowman reports.

[Sing this to Natasha Bedingfield’s "Pocketful of Sunshine"]

Never in the European Bank for Reconstruction and Development’s history has central and eastern Europe needed its support so much. President Thomas Mirow explains its plans to head off the threat of depression to Sudip Roy.

Higher-cost hydrocarbons and falling exports are separating the state from the economy and destroying its Soviet relics, starting with the banks. Dominic O’Neill reports from Minsk.

CFO Afzal Modak tells Alex Chambers why Garanti is as well positioned as any company to weather the economic downturn and even take advantage of the opportunities it presents.

In 2008, Russia’s property developers were hit by a brutal mix of fast-shrinking funding options and falling customer demand, sending equity valuations into a tailspin. Guy Norton reports from Moscow on the prospects for recovery.

Two months in and only $6.4 billion in Talf loans from the $200 billion programme have been taken up. The number of investors lined up to participate is increasing and Ben Bernanke could end up with his $1trillion dream of Talf issuance and a revival of US consumer lending. Issuers need to get on board. But will they?

In the second part of Euromoney’s emerging market equity fund manager profiles, Chloe Hayward talks to seven managers and hears what history has taught them and how they plan to find their way through the minefield of commodity-linked stock markets, notably in eastern Europe.

Euromoney has made it to the big screen!

Consider the risks of personal injury if shoe throwing catches on.

David Ricardo’s counsel of despair on the fate of the working man should also give investors food for thought, writes Lincoln Rathnam.

How many mega-projects can a crippled market handle? Saudi state bodies such as the Public Investment Fund are doing more to help the financing of projects but it might not be enough. Dominic O’Neill reports from Riyadh.

A stabilized currency and higher oil prices have given a welcome fillip to the Russian capital markets. But could slumping economic growth and soaring non-performing loans undermine the recovery? Guy Norton reports from Moscow.

"This is my first overseas trip since I ended my presidency," said George W Bush to applause as he began his speech on the future of US-Asian relations at a dinner session on April 18 at the annual Boao Forum for Asia in Hainan province, China.

When he set up debt adviser Versatus, ex-Nomura leveraged finance chief Michael Berry joined a growing universe of ex-bankers looking to join in the corporate turnaround and restructuring business. He speaks to Louise Bowman.

Even before the global financial crisis fully hit home, Citi had recognized that its successful Asia-Pacific division could perform even better with a more centralized structure. Ajay Banga has put that in place, but the full impact of the changes might not be apparent for a while. Elliot Wilson reports.

Brazilian billionaire Andre Esteves has bought back much more than he sold just three years ago. His BTG-Pactual combination makes him one of the key players in Latin America’s largest market, and leaves UBS nowhere. Esteves outlines his ambitions to Chloe Hayward.

Gulf International Bank is finalizing a reallocation of shares in the light of a $4.8 billion bailout by its shareholders.

The sale of Pactual could be the first of many disposals of emerging markets assets by banks desperate to raise capital.

The well-liked and respected George Athanasopoulos has decided to leave Barclays Capital, where he was global head of FX and emerging markets distribution. Sources say Athanasopoulos is working his notice before heading back to Greece; he is expected to stay in the financial industry, most likely working for a buy-side entity.

Goldman Sachs received plaudits following its first-quarter results. It beat all estimates when it posted earnings of $1.8 billion, equating to $3.39 a share, compared with expectations of $1.80.

BBVA: Staying ahead?

Banking: BBVA remains bullish on regional prospects

Xetra International Market, Deutsche Börse’s new pan-European foray, will launch in the fourth quarter of this year. Xetra will enable trading participants in 19 European countries to deal in European blue-chip corporates while settling domestically.

Cheyne Capital, a $6 billion European hedge fund, has hired Chris Goekjian as its new chief investment officer. Goekjian was head of global fixed income at Credit Suisse’s investment banking arm until 2001 when he left to set up fund of funds Altedge Capital. Altedge is to be integrated into Cheyne as part of the hire.

Government interference in Brazil’s loan markets could lead to a new credit bubble, analysts warn. They fear cheap lending through state-owned Banco do Brasil could trigger the country’s own sub-prime crisis as other banks are forced to follow suit in order to remain competitive.

Do CDS spreads for Brazil and Mexico adequately reflect their relative economic health?

During 2008, Henderson Global Investors expanded into the advisory business and Ganesh Rajendra has been hired to drive this part of the business forward. Rajendra last worked at Deutsche Bank, where he was head of European ABS research.

The US Treasury has criticized banks for reducing lending after it bailed them out. The banks say they are doing their best and want to pay government capital back. A row is brewing.

If you want a microcosm of the bad habits global capital got into as the credit crunch hit, go to Brisbane.

The credit market has witnessed a number of unguaranteed deals from European banks. Increasingly, for well-capitalized financial institutions, there are investors willing to put money to work. Perhaps more important, the spread gap between where they can print government-guaranteed deals and issue paper backed purely by their own credit is no longer the yawning gulf it once was.

Nigerian controls endanger foreign investment in Africa as a whole.

Rating agency treatment of distressed buybacks will make it even harder to salvage value in the battered loan market.

It was no secret in the market that dissatisfaction at UniCredit, a conglomerate formed by the merger of about 20 different financial institutions, rose sharply after the bank told its FX staff by email that none of them would be receiving any form of bonus for their performance in 2008. This was despite the business having what insiders say was a very good year. Sources suggest that the move was one of the factors that prompted the departure of Ben Welsh from the bank in early April. Welsh was hired in September 2007 at a time when hopes were high within UniCredit that it would be able to meld together its numerous disparate parts and capitalize on what it described as its size and distribution network.

Eddie George’s skills are missed now more than ever.

Trade body representations at the G20 Summit helped reduce the pressure for heavy-handed regulation of hedge funds. Neil Wilson reports.

Latest figures show that new hedge fund launches and the total assets raised were both hit by the economic downturn. Neil Wilson reports.

China’s economic stimulus package offers only a temporary respite from the country’s – and indeed the world’s – current woes, believes Nouriel Roubini, professor of economics at the Stern School of Business, New York University and chairman of consultancy firm RGE Monitor. "We have to think about changing the system of global current account imbalances," he said on a panel discussion at the Boao forum in China, "because we cannot continue with the present system of having the US as the consumer of first and last resort, over-borrowing and over-leveraging, while surplus countries like China are spending less than their income."

In April, MSCI Barra issued a research report: Currency hedging: a free lunch? This immediately reminded me of the mantra one of my old brokers repeated whenever I met him for lunch: "No biz, no fizz." In other words, as we all know and as I used to say, you don’t get nuffing for nuffing. The report is well researched but ultimately somewhat simplistic. So much so, that I was moved to ask if it should be subtitled: Stating the bleeding obvious. In effect, it says that if you hedge, you might increase your risk and might not make as much money as if you didn’t.

Much pressure has been placed on many market participants’ back offices as a result of the rapid expansion in foreign exchange trading volumes over the past few years.

When it was known as the Honda Racing F1 Team, it couldn’t even win a raffle. However, now that it has been relaunched as Brawn GP – with the same drivers, same backroom staff and management – the team is setting the pace in Formula 1. Inevitably, this initial success has attracted a crowd of media-hungry players and reports have suggested that a high-profile company was going to step in as the team’s main sponsor.

Asset manager BlackRock is absorbing $1.5 billion credit manager R3 Capital Management. R3 was founded by former Lehman Brothers executive Rick Rieder. The beleaguered investment bank also sold about $5 billion in assets to R3 to manage last summer in return for a stake that it was later forced to sell under bankruptcy proceedings. In a letter to investors, BlackRock senior management stressed the importance of having the right employees and resources in order to take advantage of increased opportunities in mortgages and structured assets that are trading at distressed levels. The firm also hired Akiva Dickstein from Merrill Lynch to head its mortgage portfolio team and Randy Robertson from Wachovia to co-head its securitized assets team.

IFSL (International Financial Services London) says hedge fund assets could fall another 20% over 2009. A report by the non-profit group suggests that the 30% fall in 2008 would have been bigger had redemptions not been halted, particularly in the US. As those redemptions take place this year, assets will naturally decline further. Falls in assets are a result of both redemptions and investment losses, although IFSL reports that the former had greater impact on asset reduction in Europe, while in the US and Japan negative performance accounted for a bigger proportion.

Pakistan’s president, Asif Ali Zardari, strayed off-message to startling effect during the opening session of the Boao forum for Asia, a conference that aims to be a kind of Davos of the east. After Chinese premier Wen Jiabao opened with a measured discourse on the theme of strength and confidence, essentially reiterating his country’s policies of fiscal stimulus and infrastructure spending, Kazakh president Nursultan Nazarbayev continued the optimistic mood with his views on the plausibility and desirability of a single Asian currency. Then it was Zardari’s turn. "I had another speech prepared," he began, "but listening to Premier Jiabao speaking about hope... I just felt I would not being doing my duty if I did not bring up the issue of terrorism. Excuse me if I spoil your thought processes today..." Zardari’s brief but passionate speech focused solely on that issue, reminding audience members that he had set up a new forum – with China’s participation – on a recent trip to Japan, and urging them to join the fight. Vietnam’s prime minister, Nguyen Tan Dung, showed solidarity with his Chinese hosts by returning to a procession of platitudes and statistics on FDI and GDP, but Zardari’s plea had at least got the audience talking.

The year of bumper debt issuance continues: after a record start to the year, as reported in February’s Euromoney, that saw more than $30 billion of bonds sold, the trend for large-scale deals from the region’s sovereign borrowers and top companies continues. In April, Hong Kong-based Hutchison Whampoa sold $1.5 billion-worth of 10-year notes and Australia’s Suncorp-Metway issued $2.5 billion of government-backed debt. On the sovereign side, Indonesia launched its long-awaited debut global sukuk. The $650 million five-year notes yield 8.8%, providing much cheaper funding for the issuer than the five-year tranche of February’s regular bonds from Indonesia, which yield 10.5%.

With the international debt market still inaccessible for most Colombian corporates, the local market provides a ray of hope.

Venezuelan president Hugo Chávez is finally turning to the private sector to prop up the country’s increasingly insipid economy, creating a strange relationship between the bankers and a socialist government that continually threatens to nationalize them. Chávez is pressuring the banks to buy the $15.8 billion the government plans to issue in local debt in 2009. The money is essential to Chávez’s plan to prop up the economy in the face of falling oil prices. The president appeared to deliver a veiled threat when he restated plans to privatize Banco Santander’s local offshoot at the same time as announcing the new economic funding. Analysts expect bankers to comply with his demands.

Argentine officials are hopeful that a new currency swap deal with China will increase confidence in the peso and give the monetary authority greater power to defend the currency. On March 30 the two nations finalized a three-year currency swap worth $10 billion in order to facilitate mutual trade. So far China has limited these agreements to other Asian countries and this is the first such contract with any Latin currency. China contributes only 12% of Argentina’s total trade and so the real impact on the peso is likely to be small. However, this deal is an important political tool for the Argentinians. As elections loom, this move to maintain a stable currency is being well received.

Mexico’s transport and communications ministry, the SCT, is expecting to relaunch its federal highway re-concessions programme within weeks. The Paquete del Pacifico, or Farac II, failed to attract much attention in an initial auction held in early March but this time the government hopes to stimulate interest by splitting the package in two.

Richard Leighton has now assumed responsibility for fixed income Europe at Standard Chartered, as well as continuing to run FX globally. "Last year, our business in Europe grew an impressive 143%. To ensure our continued ability to build on our success and take our business to the next level, we will be strengthening our organization by aligning our structure with that in place in Americas, MENA and Africa and appointing Richard Leighton as head of trading for fixed income for Europe," says an internal memo, quashing talk that Leighton is going to retire.

Fubon Financial’s chief executive sees no hope at home without intensive consolidation.

Ever-so secretive hedge fund Tudor is believed to have hired Robin Wilkins from JPMorgan and Aadarsh Malde from Goldman Sachs. As ever, no confirmation from any of the parties concerned at the time of writing.

Emerging markets hedge funds returned more than any other strategy in March, producing 4.63%, according to HFR, ending eight months of continuous losses. In 2008, average losses of emerging market hedge funds were nearly 37%, and investors withdrew $6.7 billion from them in the fourth quarter. Total hedge fund capital committed to emerging markets fell to less than $67 billion globally.

Private equity stepping in to the vacuum left by lending banks.

Dierk Reuter has quit his job as global head of FX algorithmic trading at Deutsche Bank, which he joined in November 2007 from Goldman Sachs. Sources say Reuter is poised to set up a niche boutique and that he will be joined in his new venture by Matt Wilhelm from Goldman Sachs and at least two algo experts from RBS.

The imposition of a more stringent global regulatory regime for all financial markets is the talk of the town at the moment. So it is somewhat surprising to discover that the implementation of the Markets in Financial Instruments Directive (Mifid) in the EU in November 2007 resulted in a huge decrease in the number of FX brokers registered with the FSA.

Hedge funds and banks are backing out of film financing deals because of liquidity issues.

In May the European Central Bank may announce whether it will employ unconventional monetary policy measures. Throughout March speculation built that the ECB would unveil a plan to buy sovereign and even private debt in the secondary market, especially after ECB president Jean-Claude Trichet failed to deny such rumours. As it was, in addition to disappointing the market with just a 25 basis point cut in the key ECB rate to 1.25% in April, Trichet stated that any decision to deploy new non-standard monetary policy tools would be deferred until May.

Don’t just blame the locals: these are age-old derivatives-based losses.

At first glance, it is not the right time to leave the safety of a large corporation to start up a business alone. But that is exactly what a number of financial professionals are now doing.