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October 2008

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  • For so long seen as a banking backwater, cash management’s time has come. Revenues are high-margin, stable and growing. Products such as liquidity management will only grow in importance. And, with the huge client bases involved for the biggest players, it’s a gateway into a lot of other business. Laurence Neville reports.
  • A week after Lehman Brothers collapsed, the United Arab Emirates central bank announced a new credit line of a dirham equivalent of $14 billion. Was it a signal to investors that the federation would not sit by and watch as the economy of Dubai – its second-biggest constituent – went into free fall?
  • President of Panama’s Bolsa de Valores expects new exchange to be created next year.
  • Onexim Group, one of Russia’s largest private investment funds, with more than $25 billion in assets, has entered into a strategic agreement whereby it will acquire a 50% interest in Renaissance Capital, the market-leading investment bank in Russia, the CIS and Africa. Commenting on the transaction, Stephen Jennings, Renaissance Group chief executive, says: "The partnership with Onexim creates a financial powerhouse with the resources, skills and ambition to be the clear leader in all its markets."
  • International market access not yet certain.
  • Fortis announced in a statement on September 30 that it would not complete a planned sale of 50% of its asset management business to China’s Ping An. The recently part-nationalized Belgian/Dutch group cited "the current severe market disruption and the ongoing uncertainty in the global capital markets" as the reason for pulling the deal, which would have been worth $3 billion. Fortis will instead retain 100% control of Fortis Investments, which has now completely integrated ABN Amro’s asset management business.
  • Millennium Global Investments has been awarded a A$450 million ($370 million) active currency overlay mandate by Vision Super, the A$4.3 billion Australian superannuation fund. The fund manages defined contribution and defined benefit schemes on behalf of 100,000 members and provides superannuation and retirement incomes to local government authorities, primarily in the State of Victoria.
  • Hugo Chávez, the president of Venezuela, ordered the US ambassador, Patrick Duddy, to leave the country last month. Chávez accused the Bush administration of planning a coup to overthrow him. Alleged conspirators have been detained. The Venezuelan president also recalled his envoy in Washington. Chávez said: "When there is a new government in the US, we’ll send an ambassador." These moves came shortly after the US government expelled the Bolivian ambassador after the Bolivians sent the US ambassador home. Chávez is a close ally of Bolivia’s president, Evo Morales. Both are antagonists of president George W Bush.
  • Broadly, hedge funds began to feel the full effects of market turmoil in the second half of 2008, although pockets of outperformance persist. Neil Wilson identifies the strategies likely to do best in a transformed market.
  • Dubai Islamic Bank has appointed a new chief executive. Abdulla Al Hamli moves to the position from his role as chief of operations and information technology at the bank. Al Hamli has worked at DIB for nine years. For more than 10 years before that, he was director of information systems at the Dubai Ports Authority and Jebel Ali Free Zone.The previous chief executive, Saad Abdul Razak, left in late 2007 to join the Investment Corporation of Dubai.
  • The growth in Islamic finance has slowed with the deepening credit crunch but the Saudi Binladin Group has raised the first sukuk for the world’s most holy boom town: Mecca.
  • As the region’s stock markets tumble and the international bond market shows no sign of opening, Latin American companies in need of cash are turning to plan B. "The loan market is still open in Brazil. There is also securitization. At the moment there is a plan B beyond the international bond market that will work for many Latin companies, especially for those in Brazil," Dan Vallimarescu, head of debt capital markets at Santander, told Euromoney just days after Lehman Brothers’ collapse. "Several issuers are getting a bank deal done quietly," says Chris Gilfond, joint head of Latin American debt at Citi. "People are also staying local and/or regional. For example, in Mexico and Peru the local debt capital markets business has been doing very well."
  • "I’m nothing like Howard Hughes. He was something of an eccentric. I have a very normal life"
  • The Spanish central bank prevented its financial institutions from investing heavily in the US sub-prime related securities. But Spain’s mid-tier banks are heavily exposed to a local property sector in crisis. Can they ride out the downturn? Peter Koh reports.
  • It will take months if not years before we know with any certainty who the ultimate winners from the financial crisis will be. But having purchased the US businesses of Lehman Brothers it seems that Barclays Capital will be among them.
  • Chris Lees has been officially unveiled as the new head of financial institutions group origination in debt capital markets at Citi. He reports to Eirik Winter, head of DCM EMEA. Lees previously spent much of his career at Citi in the European syndicate team where he worked in the high-grade sector. His appointment fills a gap in the origination wall chart at Citi since Alan Patterson moved to run its capital markets product group in March 2007.
  • Colombia’s financial institutions continue to be in good shape. They expect record profits for 2008, despite the global turmoil. For the first seven months of 2008, the Colombian banking system reported a net profit of $1.43 billion, a 30.9% increase on the same period in 2007. "Last year was a record year for Citi Colombia in terms of profit and growth, but we expect to close this year with even better profit growth rates," says Francisco Aristeguieta, country head of Citi Colombia and head of the Andean region for Citi.
  • UniCredit is one of the world’s biggest financial groups but concerns over its capital base have made it vulnerable to panic-stricken investors.
  • "I remember going into the Fed for meetings on the LTCM rescue plan. At one end of the table there was Jimmy Cayne, at the other Dick Fuld. Now the table is a lot smaller and the faces are not so familiar"
  • Have the big Japanese banks been over-cautious about buying stakes in troubled western peers?
  • Indian bank suffers from loss of confidence as crisis spreads beyond the US and Europe.
  • Surely it was high time Lloyds TSB made a life-changing acquisition? Surely it had the balance sheet to do so? And surely assets were available at a never-to-be-repeated price? Philip Moore put these questions to Lloyds’ finance director less than a month before its shotgun wedding with HBOS. It’s clear that making a transformational deal for the UK bank was only a matter of time.
  • Eurasia Capital Management (ECM) has created the first-ever Uzbekistan-dedicated hedge fund. The Uzbekistan Growth Fund was launched in September with initial capital of just $5 million but ECM founder and managing partner Alisher Ali Djumanov believes that the open-ended investment vehicle could grow substantially over the next couple of years.
  • Funds seek alternative methods to sell options.
  • Unibanco, which has a 52% stake in Brazilian insurance joint venture Unibanco AIG, is looking at buying the remaining share of the company if it goes on sale. The unit’s president, Jose Rudge, hinted in a conference call in September that Unibanco had the first right of refusal for the 48% share. "We are very attuned to opportunities that may arise from this and would analyse the opportunity to buy if it were for sale," says Rudge, adding that this would be a natural step for Unibanco. He declined to comment on whether AIG had offered to sell, or if Unibanco was in direct acquisition talks.
  • Greek banks’ share prices plummeted in 2008 – even before Lehman collapsed. Despite this, as well as higher inflation, slower economic growth and more taxes, they have ploughed on with ambitious regional expansion plans. Can Greek banks defy the global financial crisis? Dominic O’Neill reports from Athens.
  • Just a few months into the chief executive role at Westpac, Gail Kelly has bought out her former employer, St George Bank. A convinced advocate of the power of branding, Kelly has pledged that St George will retain its identity. Chris Wright spoke to Kelly about the prospects for the combined entity.
  • Investors who bought into the bank hybrid argument are unlikely to do so again in a hurry.
  • The failure of the US House of Representatives to pass the Emergency Economic Stabilization Act of 2008 at its first reading on September 29 came despite the entreaties of the Securities Industry and Financial Markets Association to its members to call their congressmen before noon that day to explain to them why the legislation must pass.