Activity to update the banking systems is continuing in mainland China, one of the latest moves being Bank of China’s implementation of Summit Systems’ treasury and capital markets software across its interest rate derivatives trading desks.
French bank BNP Paribas has signed a multi-year services deal with IBM worth up to E1bn, signalling the spread of outsourcing in continental Europe.
BNP Paribas and IBM will set up a single purpose joint venture to transform the bank’s IT into an on-demand infrastructure. Both BNP Paribas and IBM will staff this new entity, which is expected to employ 450 people, to help BNP Paribas achieve additional performance improvements and cost savings.
Hervé Gouëzel, CIO of BNP Paribas, said: “This long-term partnership ensures that our technical staff will remain with BNP Paribas. The new entity that we are setting up with IBM is already positioning itself as on-demand reference in the banking industry. It is scalable enough to sustain future growth and adapt to changes in the banking industry.”
SunGard is changing direction, with plans to launch an integrated systems platform that will allow clients to mix and match its products, Frances Maguire reports.
Trusted relationships are the cornerstone of banking services. Customer needs for specialised financial advice, tailored credit and widespread collection points are boosting the role of bank branches. The younger generation, however, has grown up with electronic devices at their fingertips, and their dynamic lifestyles demand real-time, anywhere access. Therefore, remote distribution channels (for example, the internet, call centres and new generations of wireless services) are extending the more traditional banking services capabilities.
Chief information officers’ attitude of not replacing core systems unless there is a problem is outmoded and will lead to banks losing customers in the digital decade, says Chris Skinner.
Mitchel Lenson, CIO for technology and operations at Deutsche Bank, tells Parveen Bansal that he sees his role as the “conscience” of the organisation when it comes to technology spending – forcing people to think more about the decisions they make.
Salah Jaidah: ‘You need to address the specific segments in order to satisfy the mass’
With more than three-quarters of Qatar’s population come from overseas, Doha Bank is focusing on expatriate customers, says Parveen Bansal.
With energy needs expanding worldwide and oil prices remaining high, the Qatari economy is booming. Under the prudent leadership of His Highness Sheikh Hamad Ben Khalifa Al Thani, the state’s development strategy is focusing on diversification of the economy away from oil, toward extensive gas reserves and industrial expansion. Oil and natural gas revenues enable Qatar to have a per capita income not far below the leading industrial countries in western Europe.
Currency devaluation, new provisioning requirements for banks and the question of a presidential successor are creating a climate that is discouraging investors. Mark Wallace and Jon Marks report.
Hugh O’Shaughnessy talks to Grenada’s Prime Minister, Dr Keith Mitchell, about why the island’s time as an offshore financial services centre was so shortlived.
The new plans for an FTAA fall far short of ideals and economic growth could suffer, says Jonathan Wheatley.
Alfredo Setubal: ‘Nowhere else in Latin America comes close to having an asset management industry the size of Brazil’s’
Jonathan Wheatley reports on the phenomenal growth opportunities of the asset management industry in Latin America, with Brazil leading the pack.
When Brazil introduced a temporary tax on financial transactions, the CPMF, in 1997, it was met with howls of protest. It was a regressive tax that would damage the competitiveness of Brazilian companies, critics said, and once introduced, it was unlikely to be withdrawn. The tax has indeed persisted and is much despised. But one industry has done well from it: asset management.
The cost/benefit analysis for prospective financial criminals in Taiwan has shifted sharply toward higher costs in the wake of the national legislature’s passage on January 13 of stiffer penalties for a wide variety of offences and the Democratic Progressive Party (DPP) government’s willingness to prosecute influential perpetrators.
Prospects for economic upgrade and liberalisation depend on the results of the coming presidential elections. Dennis Engbarth reports from Taipei.
When Indonesia graduated from the IMF programme at the end of last year, it brought to an end a traumatic six-year relationship, but since then the country has emerged stronger and more fiscally disciplined.
Some companies are already reaping the rewards of a bold decision to invest in Indonesia’s banking sector, but one investor is asking how long they will be able to operate before the big banks decide to move in.
Since the Asian crisis, Indonesia’s banking system has been shaken up and streamlined. Despite this, scandals still occur. Tim Johnston assesses progress so far, and discusses what the priorities must be for the recovering industry.
Indonesia is looking forward to growth this year, but this depends on whether the government can reduce corruption and achieve political and economic stability, writes Peter Janssen in Jakarta.
Heavy losses in Poland and a fraud in Hungary have tarnished KBC’s central European crown but it plans to persevere in the region. Nicholas Spiro reports from Warsaw.
The Czech Republic’s distressed debt market is burgeoning. If insolvency law and other legal obstacles are addressed, banks could begin to extend new loans with confidence, says Robert Anderson.
Erol Sabanci: ‘the outlook is good for Akbank and for Turkey and we look forward to better years ahead’
Erol Sabanci, chairman of Akbank, tells Stephen Timewell of his optimism on recent sector reforms and the political and economic outlook for Turkey.
Pierre Richard: ‘dealing with regulatory issues
is a significant part of our costs’
Dexia is the result of a pioneering cross-border merger in Europe. Its experiences demonstrate the difficulties of executing an international strategy across a region within which regulations differ, writes Brian Caplen.
Collateral management is becoming increasingly important in a commoditised market, especially in Europe. Frances Maguire finds that Europe’s fragmented infrastructure and lack of netting have created the need for outsourced collateral management.
Volker Potthoff, managing director, banking and custody business at Clearstream, tells The Banker about Clearstream’s strategy and the challenges it faces in differentiating itself from the competition.
Treasurers’ use of money-market funds has grown in the US and, more recently but to a lesser extent, in Europe. William Essex looks at the latest innovations that are attracting treasurers to these products.
What Eliot Spitzer was to Wall Street, the Stuttgart private law firm Binz & Partners may now be to Finanzplatz Deutschland – the instigator of a legal process that calls investment banks and company executives to account but raises the question of whether this is the best way of doing it or merely the most politically exciting.
Securitisation is dead, long live covered bonds – that would be one interpretation of events in the capital markets driven by the onslaught of Basel II and IAS 39.
Arun Gandhi: ‘US inflation swap market is growing quickly: during the first week of January we saw more volume in the US than we did in Europe’
Inflation is once again being discussed and inflation-linked instruments have stepped back into the spotlight. Natasha De Teran finds that derivatives have as much of a role to play as inflation-protected securities.
Employment giant Adecco has been hit by a raft of problems at its North American arm, resulting in a stock slide, rating downgrade and official investigations in New York. Geraldine Lambe reports.
Smooth operators: (left to right) Ziad Awad, Alban de Clermont-Tonnerre and Alejandro Garcia were responsible for developing the pricing methodology
Goldman Sachs drew on its expertise in inflation-linked bonds in an innovative 15-year issue for Agence France Trésor. Geraldine Lambe reports on how it suggested the move and helped make the deal.
Julian van Kan: lenders outnumber deals
Amid a dearth of alternative investment grade lending opportunities, banks continue to provide their relationship clients with aggressively-priced syndicated loans. Unless M&A activity increases this year, bankers fear loan pricing could fall even further. Joanna Hickey reports.
The president of Merrill Lynch’s global markets and investment banking division tells Suzanne Miller about Merrill’s new regime of profitability as it focuses on rebuilding business following the brutal bear market years.
Sam Zavatti, global head of financial institutions at ABN AMRO, says the bank’s breadth of operations and product offerings make it well-placed to offer advice on adapting to Basel II requirements.
Although the amount of capital that European banks raised last year was small compared with their market capitalisation, the market was more active than superficial statistics suggest. Charles Lucas, global head of financial institutions at ABM AMRO Rothschild, reports on banks’ equity capital markets activities in 2003.
Paolo Tesoro: ‘The euro represented a substantial cost saving and a more efficient use of the bank’s capital’
Jules Stewart reports on Banca Nazionale del Lavoro’s arrival on the securitisation scene and how it has become Italy’s frontrunner for RMBS.
Banca Nazionale del Lavoro (BNL) was something of a latecomer to the securitisation market. It only started planning its first transaction in 2002, however, it has since powered into a leading market position among Italian issuers.
Spanish bank la Caixa has established a full curve of covered bonds. Jules Stewart reports on ABN AMRO’s role as joint bookrunner on some of la Caixa’s benchmark issues.
Matthias Achilles: “We decided to tap the European retail investor market”
The split that formed DEPFA Bank also halved its capital base. It turned to the hybrid capital market in the search for new opportunities, hiring ABN AMRO to joint-lead manage a E300m deal that demonstrated a groundswell of retail demand.
By the mid-1990s, it was clear that the framework of the German Mortgage Bank Act had become too restrictive for the ongoing development of DEPFA’s public finance and property activities. A proposal was tabled in 2001 to split the group into two specialist banks, a public finance bank headquartered in Dublin (DEPFA Bank) and Aareal Bank, a German-based property bank. DEPFA Bank is today a leading global provider of financial services to public sector clients, from budget-related financing to the funding of infrastructure projects and investment banking solutions for public sector authorities.
ABN AMRO’s Niels Slikker illustrates the covered bond versus securitisation debate with a case study.
Has securitisation had its day? Though the markets may change, William Ross of ABN AMRO says the story is far from over.
ABN AMRO’s Christoph Anhamm explores the reasons behind the growth of covered bonds and considers future market drivers.
ABN AMRO’s Ronan Donohue charts the progress of hybrid capital and the ever-increasing appeal around the world of this once revolutionary product.
Tom de Swaan: ‘The need to change Basel I is obvious. It no longer meets the needs of modern risk management and it contains some fundamental flaws”
Tom de Swaan, chief financial officer at ABN AMRO, tells Jules Stewart what Basel II and IAS will bring to the finance industry and why it’s time to get moving on implementation.
Spiro Pappas: ‘changes arising from Basel II will oblige the banking industry, at least in the
developed markets, to think carefully about which asset classes and associated risks they wish
to retain on and off-balance sheet’
Spiro Pappas of ABN AMRO and Charles Lucas of ABN AMRO Rothschild talk to Jules Stewart about the future of capital management post-Basel II and how preparation for the Accord’s implementation has changed the thinking of financial institutions.
Basel II may be just round the corner or it may be three years down the road, depending which commentators you listen to. Nevertheless, the final draft is on the table and financial institutions worldwide are being forced to think in a different way.
Morgan Stanley acted as adviser to GM for its $17.88bn debt offering.
See best corporate bond deal.
Deutsche Bank acted as lead arranger, bookrunner and financial adviser for Metronet
Deutsche Bank and Dresdner Kleinwort Wasserstein were joint lead managers for the Republic of Turkey’s E500m bond issue.
Deutsche Bank was mandated as financial adviser, rating adviser, risk management adviser and sole bookrunner for The Aromatics (Thailand) plc (ATC) note offering.
Credit Suisse First Boston acted as financial adviser to Zimmer Holdings in acquisitions of Centerpulse and InCentive Capital.
Deutsche Bank acted as sole bookrunner and sole manager of a Svenska Cellulosa (SCA) 144A/Reg. S Note
ABN-Amro, Barclays and JP Morgan acted as joint lead-managers for Telefónica Europe’s 10-year and 30-year issues.
Morgan Stanley and Samsung Securities acted as advisers to the Korea Deposit Insurance Corporation on the sale of its 80.04% stake in Chohung Bank to Shinhan Financial Group.
Deutsche Bank and JP Morgan were joint global co-ordinators and bookrunners on the Telkom IPO. African Harvest, Legae Securities, Standard Bank and Wipcapital completed the lead consortium.
Morgan Stanley and Dresdner Kleinwort Wasserstein were joint lead managers and bookrunners for OAO Gazprom’s debut 144A $1.75bn transaction.
HSBC was structure adviser and sole bookrunner to the Republic of the Philippines’ retail treasury bond issues.
Morgan Stanley acted as sole financial adviser to ANZ on its $3.8bn acquisition of The National Bank of New Zealand (NBNZ).
Barclays Capital was mandated by Heineken to assemble a package of financings
Barclays Capital and JP Morgan were joint bookrunners for United Mexican States’ global bond issues.
HSBC and Barclays Capital were joint bookrunners for SES Global’s $1bn and Ł28m private placement
Nomura and Morgan Stanley were joint global co-ordinators for Mitsubishi Tokyo Financial Group’s (MTFG) $2.9bn follow-on offering.
Credit Suisse First Boston (CSFB) advised on the purchase of Telecom Italia’s controlling stake in SEAT Directories.
Deutsche Bank was co-ordinating bookrunner for Valentia Telecommunications/eircom high-yield notes offering
Credit Suisse First Boston and ABN-Amro Rothschild were joint global co-ordinators and bookrunners for PT Bank Mandiri’s IPO
Goldman Sachs, Citigroup, HSBC and Merrill Lynch were joint bookrunners for Hutchison Whampoa’s $5bn multi-tranche global notes offering
Morgan Stanley and UBS acted as joint bookrunner for Siemens’ E2.5bn senior convertible notes
Goldman Sachs lead-managed Vivendi Universal’s E1.2bn high-yield offering
Barclays Capital, BNP Paribas, Citigroup and OKO Bank joint lead managed the Republic of Finland’s E5bn benchmark bond
Credit Suisse First Boston (CSFB) acted for private equity consortium in acquisition of Nycomed
Credit Suisse First Boston (CSFB) and Bank of China International were joint global co-ordinators and joint book-runners for the Sinotrans IPO
Credit Suisse First Boston was sole lead manager for Empresa Eléctrica Guacolda’s 10-year $150m project finance note
Morgan Stanley and Lazards advised Alcan on its hostile takeover of Pechiney
Merrill Lynch and UBS acted as bookrunners on Brazil’s $1bn global issue
See best sovereign deal (p34).
Credit Suisse First Boston (CSFB) acted as sole financial adviser to Heineken on its acquisition of BBAG and Brau Union
Credit Suisse First Boston advised Burns Philp on its hostile takeover of Goodman Fielder
Merrill Lynch advised Neuberger Berman on its $2.8bn sale to Lehman Brothers
Goldman Sachs and CIBC World Markets advised Manulife in its acquisition of John Hancock Financial Services, which was advised by Lazards and Morgan Stanley
Morgan Stanley and Lazards acted as lead advisers to Alcan in its $6.4bn acquisition of Pechiney
See best country deal – Canada (p39).
Merrill Lynch, United Financial Group and Morgan Stanley were lead advisers to BP in its $6.15bn acquisition of a 50% stake in TNK/Sidanco
JP Morgan advised Olivetti on its merger with Telecom Italia, which was advised by Lazard and Goldman Sachs
Credit Suisse First Boston advised General Electric (GE)/NBC in the acquisition of Vivendi Universal Entertainment (VUE) from Vivendi Universal in a transaction that values VUE at $14bn
Deutsche Bank, Citigroup, Goldman Sachs and UBS were joint global co-ordinators for Allianz AG’s E4.5bn rights issue
Merrill Lynch, Goldman Sachs and UBS Warburg were mandated as lead advisers or managers to Chunghwa Telecom $1.58bn ADR IPO
HSBC, Bank of America, BNP Paribas, Lloyds TSB and RBS were mandated lead arrangers and bookrunners for Cadbury Schweppes’ $6.1bn syndicated revolving credit facilities
Merrill Lynch and UBS acted as bookrunners on Brazil’s $1bn global issue
Nomura arranged a ticket receivables securitisation for Korean Air Lines
Deutsche Bank and JP Morgan were co-leaders of Kreditanstalt für Wiederaufbau’s E5bn convertible bond into Deutsche Telekom shares
Credit Suisse First Boston acted as lead manager on five consolidation loan offerings issued by SLM Student Loan Trust
Dresdner Kleinwort Wasserstein, Citigroup and Goldman Sachs were mandated to manage the inaugural transaction off the covered bonds programme of HBOS
Credit Suisse First Boston (CSFB) acted as sole bookrunner for American Tower, Inc.
Morgan Stanley, Merrill Lynch, Citigroup, BNP Paribas, Deutsche Bank, JP Morgan, Bank of America, Lehman Brothers and Barclays Capital were bookrunners for GM/GMAC’s $17.88bn debt offering
Last year began and ended with news-making events. The uncertainty over war in Iraq in the new year gave way as the conflict came and went. The year ended on a sour note with the uncovering of widespread fraud at Parmalat – Europe’s Enron.
Neither impacted the capital markets with any vengeance. Rather, the driving force behind capital market activity in 2003 was historically low interest rates, driving credit issues. Investors in search of yield and issuers looking to lock in low rates kept activity at a brisk pace. Whereas 2002 had been less than inspiring for the corporate bond market, 2003 proved a bumper year, particularly for convertibles. Equities, on the other hand, remained lacklustre.
This year The Banker presents its deals of the year in two ways. First are the deals of the year by category, as in previous years; then these are followed by deals of the year by country, a new feature that identifies the single best investment bank deal in each country.
‘We are not just facing a challenge from China.
India has now decided to open up. India has tremendous advantages’
Karina Robinson interviews Singapore Prime Minister Goh Chok Tong on developments in the region and in his homeland.
‘No-one who feels even a minimum for the country could wash their hands of it. I want to have a clear conscience’
Alfonso Prat-Gay, Argentina’s central bank governor, talks to Karina Robinson about his plans for recapitalising the ailing financial system.
In the run up to my meeting with 38-year-old Alfonso Prat-Gay, governor of the Central Bank of Argentina, I had met 16 top businessmen, bankers and economists who were uniformly charming and informative. So I feared for the famed trait of Argentine arrogance (the classic joke told to me by a host of locals is: How can you make a lot of money? Buy an Argentine for what you know he is worth and sell him for what he thinks he is worth). It was with a sigh of relief, then, that I encountered Mr Prat-Gay, who has that famed trait in spades.
Banks have a huge range of resources available to aid risk managers, but human nature can still result in a bad decision. Behavioural finance and prospect theory lifts the veil on poorinvestment judgement, writes Gerald Ashley.
Why do experts fail to predict company failures such as Parmalat, Enron and WorldCom? To find out, The Banker invited credit and rating analysts and auditors to a roundtable discussion to explore the issues. The discussion got quite heated as the finger was pointed at the various parties and a proposal to change the way underwriters get paid was put up for debate
The participants were:
Sam Theodore, head of European bank ratings at Moody’s
Claire McGuckin, senior credit analyst at ABN Amro
Chris Lucas, an auditor who is partner and head of the London banking, capital markets practice at PricewaterhouseCoopers
Stephen Kingsley, a partner with consultant Diamond Cluster, a former head of Arthur Andersen’s global financial services practice and a former auditor
Stephen Timewell, Editor in Chief, The Banker
Brian Caplen, Editor, The Banker
Jeffrey D Sachs, director of the Earth Institute at Columbia University, predicts a U-turn on tax cuts as George W Bush’s fiscal policy goes belly-up.
Latest sell-off: Habib Bank holds a 20% share of Pakistan’s banking sector
Pakistan has decided to sell 51% of the shares of Habib Bank to the Geneva-based Aga Khan Fund for Economic Development (AKFED) for about $400m in one of the country’s biggest privatisation deals ever, writes Farhan Bokhari.
Two private banks have opened in Syria, the first since the nationalisation of the banking system in 1961, and more are expected to open soon.
French bank Credit Lyonnais and French government banking agency CDR have pleaded guilty to fraud charges in the bank’s purchase of US insurer Executive Life more than a decade ago.
The plea deal agreed in the Los Angeles federal court also confirmed a settlement in which the defendants would pay $772m in penalties.
In the long-running financial fraud case, which extends back to the bank’s massive involvement in California in the early 1990s, Credit Lyonnais, now a subsidiary of France’s largest bank Credit Agricole, admitted to three counts of fraud linked to its acquisition of the failed insurer and its bid to cover up the transaction that flouted both US and Californian laws.
Under the deal, part of the biggest criminal settlement in US history, Credit Lyonnais was sentenced to three years probation and was ordered to pay a $100m fine, the largest ever made to the US Federal Reserve. Observers suggest that the deal allows the bank to escape a potentially long and embarrassing trial that could have resulted in it losing its US banking licence.
CDR, which inherited assets of Credit Lyonnais unit Altus that acquired the insurer’s ‘non-performing assets’ in 1995, escaped fines but was ordered to pay $375m into a settlement fund.
Two weeks before the Chinese New Year, the Chinese government provided two of the country’s biggest state-owned banks a much-needed gift: new capital of $45bn.
Net capital flows to emerging market economies jumped sharply in 2003, gaining more than 50% to reach $187bn, and are expected to rise further in 2004, according to the latest report from the Washington-based Institute of International Finance (IIF).
Top US banks, led by Citigroup, again produced strong profits growth in the fourth quarter and for all of 2003, reflecting imp-roved credit quality and strength in retail financial services.
Andrew Smithers argues that the US current account deficit is too small and its financial markets need to fall.
At a time when growth does not necessarily mean more jobs, governments must take a proactive stance to keep people in work.
Projections on growth for China that envisage a doomsday scenario for the rest of the world are both overblown and flawed.
Assumptions that Western-style democracy is superior to all other systems fail to realise that its cost and complexity may not suit countries where action, not words, are paramount.
As mergers between giant US banks spawn behemoths, it’s a case of eat or be eaten. But the appetite, for now, is for homegrown fare.
Why are financial disasters, such as Parmalat and Enron, so difficult to predict? This month The Banker asked a group of industry experts to participate in a roundtable discussion to explore the issues. Detecting fraud is far from easy, finding solutions far more so. We also look at whether risk models do the job.
