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November 2007

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  • Spate of high-profile delistings by blue-chip European companies boosts Pink Sheets’ premium market segment.
  • What was hailed as a great success for the credit derivatives market, the tackling of the unconfirmed transaction backlog, has turned out to be far from a mission accomplished.
  • Leading specialist emerging market fund manager Ashmore Investment Management believes that local-currency and high-yield corporate debt could be the prime way for investors to take advantage of US dollar weakness and sub-prime mortgage concerns in the coming year.
  • Markit and Creditex held the first-ever LCDS credit event auction on October 23. The duo were the official administrators for the auction of US video store chain Movie Gallery’s defaulted contracts. Establishing a cash settlement price via an auction avoids difficulties arising from the fact that many contract holders might not have a position in the loans underlying CDS contracts.
  • Singapore has made great strides as a private banking centre, attracting almost every bank that matters to set up shop there to service the region’s rich. But recent developments in Burma (Myanmar) suggest that the city state’s financial success has come with a string attached to it: increasing scrutiny of its morality.
  • If hedge funds have increased systemic risk, we need to find out by how much and whether the benefits outweigh the risks, says Andrew Lo and Amir Khandani’s paper on quants (see story on page 42). But registration is not the way forward. The authors back up proposals made by other academics that instead a monitoring board would make a good starting point. "By establishing a dedicated and experienced team of forensic accountants, lawyers, and financial engineers to monitor various aspects of systemic risk in the financial system, and by studying every financial blow-up and developing guidelines for improving our methods and models a capital markets safety board may be a more direct way to deal with the systemic risks of the hedge fund industry," concludes the paper. "A great idea," comments one manager, "but the banks will never allow it."
  • The expansion of the Panama Canal is set to draw in banks from far and wide because of the increased investment opportunities that the programme will have on all economic sectors in the country, according to bankers and analysts in the region.
  • MTS will probably unveil the mechanics behind the new trading structure for its European government bond trading platform before the year-end. A brief statement last month put to rest months of speculation on whether the MTS Supervisory Board would allow non-banking participants to trade on the platform, which up to now has been the preserve of primary dealers. The verdict was positive but surprised many as the decision has been mired in controversy for some time since it was first mooted over a year ago. In fact, such was the level of discord among bankers that few believed the platform would be able to approve a radical move and still retain its market position.
  • Mifid came into effect on November 1 but the market had already been benefiting from the innovation it encourages. Peter Koh reports.
  • Global liquidity is set to keep contracting and inflation will keep on increasing despite a growth slowdown. There is a serious risk of global recession in 2008.
  • New-issue activity in the securitization markets of Russia and the CIS has dried up in recent months but VTB Bank Europe is clearly banking on a recovery. The London-based investment banking arm of VTB, Russia’s second-largest bank, has added Eke Neumann as head of retail securitization and Daniel Stadnik as head of commercial securitization. Neumann joins from DZ Bank, and Stadnik was previously at ABN Amro. Both new hires will report to Alex Medlock, head of securitization.
  • The Hedge Fund Working Group, a UK group of managers headed by Andrew Large, has released its extensive guide to best practices for hedge funds that it hopes will encourage a global standard.
  • How do you price liquidity risk?
  • Maha Al Ghunaim’s rarity factor as a female chief executive in Middle Eastern finance makes her a celebrity. Under her leadership, Global Investment House has become one of the region’s largest investment companies. Here she talks to Euromoney about the secrets of her own and her company’s success.
  • The credit crisis has forced US enhanced cash funds, which seek to better money market returns by taking on slightly higher levels of risk than regular money market funds, to fight to secure their reputation.
  • As Euromoney went to press, Bank Saint Petersburg was set to provide an important test of investor sentiment towards the Russian banking sector, with the bank’s initial public offering sure to be closely watched as an indicator of investor appetite for Russian banking assets in the wake of the fallout from the problems in the US sub-prime mortgage market. Joint bookrunners Deutsche Bank and Renaissance Capital set the price range for the IPO at $4.35 to $5.65 per share and $13.05 to $16.95 per global depositary receipt. Post-IPO the bank should have a market capitalization of $1.2 billion to $1.6 billion. As of July, BSPB was the 27th biggest Russian bank by assets
  • The summer’s financial crisis has helped materialize in the markets a distinction between covered bonds and structured covered bonds that had been a matter of debate for some time. Philip Moore reports.
  • Scotiabank has long had an interest in Latin America, with assets throughout the Caribbean and Mexico. Recently Canada’s number two bank has stepped up its presence by buying a bank in Chile, expanding in the Caribbean and announcing plans to open 100 branches in Mexico. Along with this push, the CEO announced the appointment of Anatol von Hahn, who will take over as head of Latin America in January. Chloe Hayward talks to Peter Cardinal, the head of Latin America at Scotiabank, about its plans for the future before he bows out.
  • Citi announced on October 2 that it would acquire the remaining shares in broker Nikko Cordial that it does not already own to make the company a wholly owned subsidiary. The move marks the first usage by a foreign firm of the new triangular merger legislation, which allows firms to use their shares rather than cash to make acquisitions and which has been available since May after a ban on the practice was rescinded.
  • As Brazil’s economy and financial markets pick up, Credit Suisse and UBS face growing competition from other foreign banks and domestic contenders. Chloe Hayward reports.
  • BNP Paribas has hired Kai Harden, who joins from Goldman Sachs, to co-head its Germany, Austria and Switzerland FIG business alongside Menko Jaekel. He is based in London and reports to Anthony Fane, head of DCM FIG Europe. Harden spent two years at Goldman Sachs and before that worked at JPMorgan.
  • Deutsche Bank has appointed Marzio Keiling and Mark Graham as co-heads of the European securitized products group (SPG). Keiling and Graham will report jointly to Erik Falk and Frank Byrne, co-heads of global SPG. The two are responsible for the origination and distribution of securitization products and services in Europe. Graham was a senior member of the Morgan Stanley real estate securitization team behind the Eloc programme. At Deutsche, he previously ran the European special situations group within SPG, focusing on illiquid securitized financings and whole-business securitization. Keiling was head of institutional client coverage for Europe. They replace Jeff Stolz, who joined Goldman Sachs in mid-August.
  • Click here to download pdf including photos of the event
  • The US dollar’s long-term weakness looks set to persist as the currency seems to fall to a fresh historical low against the euro on a weekly basis. The latest G7 meeting, held over the weekend of October 20-21, did nothing to provide any support. In the immediate aftermath of the meeting, the dollar fell to 1.4349 against the euro before bouncing. The reasons for the recovery, at this stage, are not clear.
  • In October Venezuela’s president, Hugo Chávez, signed a number of new economic cooperation agreements in Havana with Raul Castro, the island’s temporary leader, in a move to reaffirm the countries’ anti-US alliance and strengthen their bilateral ties.
  • Saybrook’s Tax-Exempt Opportunity Funds are making money by investing in distressed and defaulted municipal bonds. CIO Jon Schotz talks to Helen Avery about the growth of opportunities in the sector.
  • If you cast doubt on the future of the Dubai real estate market, those with stakes invariably tell you that they have heard it all before. "Every year they tell me something will go wrong, and every year I see Dubai growing stronger," Adel Al-Shirawi, CFO of Dubai home financier Tamweel, told Euromoney earlier this year.
  • Monte Kristo Capital of the UK is the latest foreign entrant to the burgeoning Georgian banking market, having bought a 70% stake in Tetri Bank for an undisclosed sum. Following the deal, Tetri Bank, the country’s 16th biggest bank by assets, will be renamed First British Bank. Monte Kristo’s move is the latest in a series of acquisitions by foreign banking groups in recent months. France’s Société Générale, Russia’s VTB and Ukraine’s Privatbank have all bought banks in the Caucasian republic.
  • 180,600,000,000 the dollar amount of equity capital raised in Bric countries (Brazil, Russia, India and China) so far this year. The total is up 137% on the same period in 2006 thanks to record volumes across all Bric markets.
  • The liquidity crunch of August and September highlighted the intricate relationship between prime brokers and their hedge fund clients. Some managers had their livelihoods threatened by increased margin requirements, while asset valuations were brought into question. Do the two sides of the relationship know each other at all? Helen Avery reports.