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November 2001

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LATEST ARTICLES

  • Paul Martin, chairman of the G-20, speaks on the dangers of hosting global economic summits in light of the new wave of terrorism. He also talks about the upcoming conference in Ottawa, trade finance, and the economic side of the war on terrorism.
  • The terrorist attacks of September 11 posed an unprecedented challenge to banks specializing in global custody. Most of them seemed to cope well enough. But the scale of the disruption has focused attention on the need to develop back-up and recovery systems that can cope with widespread destruction, rather than merely deal with localized IT glitches, and can encompass communications links with peer banks and clients.
  • Confidence in Russian banks is returning and funds are springing up to try to draw billions of dollars stuffed under Russian mattresses into the financial system.
  • Engin Akçakoca, the new director of Turkey's banking regulation and supervision agency, takes on the challenges of reforming the Turkish banking system, which is suffering from a deficiency of capital.
  • On October 9 representatives from three of the leading international cash management banks sat down with treasury officials from three leading international corporations to discuss the key issues of the moment: reviewing contingency planning for any future disruption to the payments system, moving onto internet technology and reducing errors in simple payments processes. While the banks feel they must invest heavily in technology to stay in this game, the corporates can’t see why they don’t share these costs and concentrate instead on getting the basic services right.
  • Parents' jobs have long been a source of playground rivalries but if your mum or dad worked for a private-equity firm it was never much to boast about. Until now.
  • It is all very un-Russian. Strong growth and a burgeoning trade surplus mean Russia is flush with money, money that would have been squandered in the past. But for once the government is thinking ahead.
  • The International Finance Corporation, the World Bank's affiliate for private-sector investment, could be ripe for an infusion of new capital, as World Bank president James Wolfensohn recently signalled (Euromoney, September 2001). There's just one catch. Key players among the 186 member governments that are the IFC's current shareholders - the G7 in particular - have been in no mood to contribute new funds.
  • Michael Dobson should have an interesting time turning around Schroders.
  • On September 11 in Indonesia, the eyes of the financial community were focused on the country's parliament. Several senior economic ministers, backed up by visiting officials from the IMF, were locked in a battle with politicians over the sale of a majority shareholding in the government-controlled Bank Central Asia.
  • The US economic recovery will be delayed by the terrorist attacks of 11 September and anthrax scares. But in the wake of the US administration's massive monetary and fiscal policy boost since that tragic day, a V-shaped recovery in 2002 is now likely.
  • "Why do car companies sell different models?" posits a banker. "They hope that by diversifying what they sell they'll capture a bigger audience and reduce their overall cost of funding." And so it is with the new French issue linked to the eurozone price index. "This is another product range in the shop window," he adds.
  • The mind-set created by the myth of a recession-proof new economy proved a disastrous preparation for the sudden sharp downturn in the world economy. Rattled US corporates have been blaming their poor figures on the American terrorist atrocities. Admittedly certain sectors have been hard hit, but none of them had been in rude health before. Nonetheless the outrages will now be a catalyst for further economic deterioration.
  • Euromoney.com's second annual internet awards went live on our website on November 1.
  • On his recent state visit to the US, Mexican president Vicente Fox bathed in the warm glow of Mexico's new friendship with its northern neighbour. George W Bush tried out his Spanish and everyone else agreed that ever-closer economic ties between the two nations were the new future for Mexican economic growth.
  • When the world tipped deeper into recession on September 11 it found that Turkey was already there deep down in the hole – a recession veteran. Assisted by the IMF, Turkey has been trying since 1999 to overcome its worst economic crisis since the Second World War. It has had little success. Its support for the US means more funding is likely, but funding alone can’t solve Turkey’s problems.
  • In the wake of recent events, bankers and their lawyers need to be much more aware of the need to balance effective legal compliance with a respect for client confidentiality.
  • A partial recovery in US equity markets looks promising. However, as bad economic news flows in there’s still uncertainty on the broader question of whether a market bottom has been reached. Bond yield curves suggest a different story to conventional equity wisdom, which implies investors should now be positioning themselves in mid-recession for a market upturn.
  • Author: Julian Marshall & Julie Dalla-Costa
  • Akbank, emerging on top of Turkey's banking crisis, has embarked on a plan to professionalize its management. As it outgrows its family origins, Atbank prepares itself for a joint venture.
  • Author: James Smalhout
  • Australia's largest domestic bank is struggling to establish a place for itself on the world stage. National Australia Bank (NAB) is presently the largest foreign acquirer in the UK domestic market. However its plans for UK expansion have suffered a setback after losses with its US mortgage-servicing subsidiary, HomeSide.
  • Deal: Merger of technology platformsStructure: MTS buys 15% stake in CoredealResult: New corporate bond structure – CoredealMTS
  • Bankers are selling hard the story of Russia’s return to the Eurobond market with City of Moscow’s latest foray. Yet investors need to be cautious given the republic’s recent debt history. The queue of credible issuers is far from endless and likely to be trimmed by the Russian government as it prepares for its own refinancing in 2002.
  • Issuance is down in the medium-term note market. September's terrorist attacks have left the market nursing its wounds. Fears about liquidity and concerns about widening spreads have persuaded many issuers and investors to stay away.
  • The first good news for Indian privatization this year came in early October. The government announced the sale of two small companies. A 51% stake in CMC, a software company, was sold to Tata Sons, which owns Tata Consultancy Services, India's biggest software exporter, for Rs1.5 billion ($31 million).
  • Monitoring thousands of accounts payable and receivable flowing daily through myriad bank accounts, while minimizing short-term borrowing costs and maximizing returns on investment of liquidity, is a huge challenge for corporate treasurers. They value highly banks that do this well. But Euromoney's poll shows few banks excel.
  • Washington's pressure on banks to crack down on illicit money will impel fearful bankers into still tougher surveillance. To the tangle of checks on money laundering and flows to tax havens must now be added the hunt for often legal money flowing to what are deemed illicit activities. Banks face a huge reputational risk. But the extent to which they can take on policing roles and take initiatives to avert crime remains highly contentious. Neither the technology nor systems exist to make tracing tainted cash straightforward. So is the ultimate answer creating more vigilant, yet less commercial, corporate cultures?
  • In a period of uncertainty, Pfandbriefe ought to flourish. Yet the German mortgage bond market is still slow, hit by adverse swap market conditions and credit concerns springing from radical restructuring among the German banks. Even so, rival breeds of covered bonds in France and Spain are doing well. And Ireland aims to create a superior legal framework to put Germany in the shade. Could this rivalry give covered bonds a much-needed shot in the arm?
  • When the largest brokerage firm in America sends an email to all its employees offering them voluntary redundancy, it's a sign that something more than a periodic bout of investment banking blood-letting is under way.
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