The bank has an initial capital of $7bn and is designed to support regional development and integration projects, ranging from road building to anti-poverty programmes and regional integration plans. It aims to offer Latin American countries loans with fewer strings attached than those given by the World Bank, the International Monetary Fund (IMF) or the Inter-American Development Bank.
“I can understand the political idea [behind the bank’s creation],” IMF director general Dominique Strauss-Kahn, a French former finance and economy minister, told the press. “It’s not a problem, it may be an opportunity.
“There is no reason why another development bank couldn’t be useful,” he added, stressing that the new bank’s activities were not exactly the same as the IMF’s, because it would primarily deal with financing development projects.
Finance ministers of Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela will sit on the bank’s board and an agreement will have to be reached on whether the entity will take into account the differences in economic weight of the nations.
The Bank of the South was the brainchild of Venezuelan President Hugo Chávez in his campaign against the US and international financial institutions like the IMF and World Bank, which he claims are tools of the US. The institution is one of several proposals under Mr Chávez’s call to unite Latin American countries in a “confederation of republics”. His vision includes a transcontinental natural gas pipeline and trade alliances.
Bolivian President Evo Morales, whose country is the continent’s poorest, praised the bank as a new tool to fight poverty and ease inequalities, and criticised what he characterised as the heavy-handed practices of international lenders that demand austerity prescriptions as conditions for extending credit.
Several of the governments that joined the project do not share the ideology of the leftist Venezuelan president. What they do have in common is the rejection of what they consider the negative influence of the IMF and the World Bank.Northern Rock finalistsPrivate equity group Olivant and a consortium led by Virgin Group are the final bidders for the acquisition of Northern Rock, the UK bank stricken by the current credit crunch. Virgin has been named as the preferred bidder by the bank. Private equity groups JC Flowers and Cerberus have both walked away from the bid. Both Olivant and Virgin are relying on getting financing from commercial banks to repay a large part of the Bank of England loan, which totals £25bn (€34bn). The takeover bid was not expected to be concluded before mid-January.ABN AMRO and Rothschild Group have discontinued their international equity capital markets joint venture. ABN AMRO Rothschild was established in 1996 for the execution of equity and equity-linked offerings for both banks’ clients. Its closure follows the acquisition of ABN AMRO by the consortium of the Royal Bank of Scotland, Fortis and Banco Santander.Intesa winds up ventureItaly’s Intesa Sanpaolo has ended its joint venture in consumer finance with Crédit Agricole by selling back a 49% stake in Agos to the French bank. This reverses the banks’ agreement in late 2006 to continue their consumer credit joint venture for an additional three years, following the merger of Banca Intesa with Sanpaolo IMI. Intesa Sanpaolo has also increased its shareholding in Cassa dei Risparmi di Forli’ e della Romagna from 38% to 61%.Intesa Sanpaolo has launched a bank dedicated exclusively to social and non-profit entities. It claims the new bank, Banca Prossima, is the first European bank of its kind. Prossima will operate through Intesa Sanpaolo’s 6200 branches and aims to serve at least 10,000 non-profit entities in addition to the 50,000 that Intesa Sanpaolo already assists in Italy. All of the proceeds will be reinvested in the Social Enterprise Development Fund to support projects that otherwise would not have access to credit.HSBC is re-examining the strategy for its French retail banking network, French daily Les Echos reported. It said it wanted to evaluate its strategic and financial options for developing retail banking in France.Morgan Stanley has put its private banking business in Spain up for sale with a price tag of €800m ($1.2bn). The investment bank is believed to want to focus on the ultra high net worth segment of wealth management. The Spanish business has 29 branches and about €8bn in assets under management. Morgan Stanley has reportedly received expressions of interest from a range of Spanish and European lenders.Stock exchange operator NYSE Euronext has reached an agreement with French power exchange Powernext for the acquisition of Powernext Carbon, the company’s emission permit division. As part of the transaction, NYSE Euronext would withdraw from Powernext through the sale of its 34% interest in the company.Index tracks carbon market Barclays Capital launched the Global Carbon Index last month to track the international carbon markets, which are expected to reach $70bn in the next months. The index is formed by two sub-indices and follows issues of new credits under the EU’s emissions trading scheme and the United Nations’ clean development mechanism.TSX Group, owner of the Toronto Stock Exchange, and the Montreal Stock Exchange have restarted merger negotiations before their 10-year non-competition deal reaches its termination in 2009. Toronto and Montreal remain the main Canadian exchanges following a consolidation trend in the market eight years ago. Toronto is focused on equities, while Montreal concentrates on derivatives.UBS has expanded its Canadian Key Client Group by increasing the number of advisers to cope with higher demand for its services. The group provides wealth management services to Canadians with investible assets of more than C$50m ($49.7m). Advisers to the ultra high net worth individuals in the country have now doubled to eight.Singapore government investment firm Temasek has announced it will provide $1bn in funding for a new China private-equity fund set up by Fang Fenglei, the chairman of Goldman Sachs’ Chinese joint venture. The fund aims to raise $2bn and to invest in state-owned Chinese companies. Mr Fang would reduce his day-to-day role in Goldman Sachs Gao Hua but retain his title as chairman, said Temasek.Taiwan’s Shin Kong Financial has announced that its subsidiary Shin Kong Commercial Bank will auction T$9.67bn ($299m) of bad assets in the credit card operations. The firm’s aim is to speed up management of bad assets.Credit Suisse and Morgan Stanley have each signed agreements with Chinese partners to establish mainland investment banking joint ventures. The deals signal that Beijing is poised to relax a two-year ban on foreign investment in the country’s security industry. Only Goldman Sachs and UBS won approvals before China stopped such deals.The Dubai International Financial Exchange (DIFX) has announced its largest initial public offering (IPO), which is also the largest in the region. International ports operator DP World’s IPO was valued at $4.96bn and is reportedly the first stock to list exclusively on the DIFX. Deutsche Bank has announced plans to double the number of its employees in the Middle East in the next two years, German daily Die Welt reported. The bank said it wanted to sell products for both private wealth management, and corporate and merger financing in the region. Deutsche Bank has 170 employees in six countries in the Middle East.BNP Paribas Securities Asia has announced it has set up a research team of 27 people in India, the largest after its Hong Kong and China team. The team will service the fast-growing domestic securities business, as well as the Asian region. The firm said it planned to cover multi-product research offerings and stocks, as well as execution and trading on the Bombay and National stock exchanges.Liechtenstein-based VP Bank has announced it received a licence to open a new asset management firm in Singapore. It said it had also made an application for a banking licence.ING acquires FSPING Australia, a joint venture of ANZ Banking Group and ING Bank, has bought FSP Group, Australia’s third largest group of independent financial planners, to compete with the sector leader AMP, the Sydney Morning Herald reported. ING Australia said its A$55m purchase would boost the number of advisers in its network to 1500, compared with AMP’s 1900. ING Australia fought off competition from AMP and life insurer Axa Asia Pacific to buy FSP.Indonesia’s Bank Mandiri has agreed on the acquisition of a majority stake in Bank Sinar Harapan Bali, whose business is focused mainly on microfinance. JPMorgan has opened an office in Stockholm, Sweden, further enhancing the reach of its investment banking and equities franchises in the Nordic region and underscoring its commitment to these markets. The bank’s asset management business already had an office in the country.CorrectionThe Bank of the Year winner in Paraguay was erroneously reported in the last edition of The Banker as Banco Continental, a Peruvian bank that is part of BBVA group. The winner is BBVA Paraguay. We apologise for the mistake.
