Financial News

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Articles from January 4, 2004

ABS Bankers Hope for a Boring Year
Byline: Philip Moore It is rare to come across bankers celebrating when an asset class becomes boring. But that is just what several practitioners in the European securitisation market are doing. They hope 2004 will prove to be the market's dullest...
Activism Set to Rise in 2004
Byline: Kit Bingham After arguably the most interesting year ever for European investor activism, executives can expect fund managers to keep up the pressure this year. The new approach to corporate governance can be summed up in one word: engagement.Fund...
Aggressive Deals Struggle in Uncertain Markets
Byline: Shanny Basar Two bought deals vie for the dubious title of the Dud of 2003: the [euro]1bn ($1.2bn) convertible bond from Alcatel, the French telecoms manufacturer; and the [euro]2.2bn block sale of shares in Enel, the Italian utility. Both...
America Moves from Despair to Bonanza
Byline: Jeremy Adams in New York Equity capital markets bankers are unlikely to have got much of a holiday rest as they prepared for a deal bonanza in January. Raw optimism for 2004 completes the journey of last year, which started in the depths...
Analysts Must Adapt to Changing Environment
Byline: Sophie Brodie Equity analysts in investment banks will be spending 2004 adapting to the market and regulatory forces that made far-reaching changes to their business last year.Nimrod Schwarzmann, European head of research at Deutsche Bank,...
Asset Managers Prepare for Age of Outsourcing
Byline: Tim Steele After innumerable false dawns, asset-manager outsourcing has turned the corner and seems poised to make the long-promised leap into the mainstream. Ramy Bourgi, business executive at JP Morgan Investor Services, said: "This industry...
Bankers Look to Upturn in Issuance
Byline: Shanny Basar After three years of falling volumes in European equity capital markets (ECM), bankers are looking forward to better times following the apparent end of the bear market.Three consecutive years of negative returns in European...
Bazy Position at UBS France in Doubt over Executive Life
Byline: Samer Iskandar in Paris Dominique Bazy's future as head of UBS in France is looking uncertain after US prosecutors published the list of criminal charges he is facing in relation to the illegal purchase of Californian insurer Executive Life...
Boards Look to a More Professional Future
Byline: Kit Bingham The role of the non-executive director is likely to be revamped this year as companies put into practice last year's theories. The UK's Higgs review, published last January, provided a detailed new statement of board practice,...
Bonuses to Rise for Star Performers
Byline: Mark Fisher It is conventional wisdom that almost everyone in banking will receive higher bonuses in 2004, after two years of steep falls. This optimism rests on healthy profits at banks, continued shedding of underperforming staff and a...
Boom Time for Wall Street despite Ever More Watchful Regulators
Byline: Jeremy Adams After two years of trying to prop up the economy, the American consumer appears tired. Weary shoppers trekking round discount stores were a symbol of the Christmas shopping season. Their Stars and Stripes Discover cards are...
Boutiques Face Capacity Catch-22
Byline: Ben Wright Joseph Heller's anti-war masterpiece, Catch-22, enjoyed a surge in popularity last year thanks to its inclusion on the BBC's Big Read, where the UK public voted for their favourite book.Boutique fund managers, inspired to take...
Business as Usual for Goldman Sachs
The Paris air is thickening with talk of a deal between Vodafone, the UK's biggest mobile phone company, and Vivendi Universal (VU), the French media conglomerate. The emergence of a bid would put the famed coverage skills of Goldman Sachs to the test...
Buy-Out Firms Fill Gap Left by Trade Buyers
Byline: Ted Wilson In the third consecutive bear market year for M&A, private equity players have provided a welcome boost to deal volumes. The trend looks set to continue in 2004 as flush financial buyers seek exits from their bulging portfolios...
Chinese Bubble Looks Set to Inflate in 2004
Byline: Mike Foster The Chinese government is expected to push ahead with initial public offerings worth $12.5bn ([euro]10.2bn) this year in the wake of the storming market debut of China Life, the life insurer. Flotations will include China Life's...
Collins Stewart Jumps into European Issuance Top 10
Byline: Shanny Basar Collins Stewart, the UK stockbroking firm, ended last year placed among the bulge-bracket houses in the top 10 rankings for bookrunners of European equity issues.The UK firm, led by Terry Smith its chief executive, rose from...
Companies Figure out the Expanded Roles of CFOs
Byline: Alice Hohler The role of the chief financial officer (CFO) has gradually but definitively changed over the past decade. CFOs are increasingly involved in their company's strategy and operational management, and are even seen as chief executives...
Continental Placement Shows Signs of Life
Byline: Sarah Butcher "May you live in interesting times," goes the Chinese curse. If it is true, recruiters in continental Europe can consider themselves charmed. Last year was distinctly dull. But 2004 promises to be livelier.After the frenzied...
Credit Products to Lead Growth
Byline: Natasha de Teran Credit derivatives are on a roll. The fastest-growing segment of the derivatives market is scheduled to reach $4.8 trillion ([euro]3.9 trillion) by the end of 2004. The British Bankers Association (BBA) predicts that credit...
Debenhams Offers Investors Rich Pickings
Byline: Caroline Meehan Debenhams, this year's largest UK public-to-private deal, looked like a foregone conclusion when a private equity consortium led by Permira put in a bid that some shareholders felt was too cheap for the UK retail group.What...
Dollar Flows into Asia Pose Big Questions
Byline: Sophie Brodie and Mike Foster The flow of funds out of Western markets into Asia looks set to continue in 2004. The big question is whether support from Asian banks will be sufficient to stop a dollar rout as the year grinds on.More funds...
Dud of the Year: Stormy Ride for Follow-On Offering by EADS
Byline: Miles Costello Choosing a Dud of the Year raises plenty of hackles. Vexed bankers who grappled into the early hours over the pricing and timing of a new issue will say: "At least we got the deal away in the face of appalling odds and dreadful...
ECM Deal of the Year 2003: KfW Issue Raised the Visibility of Convertibles
Byline: Yasmine Chinwala In a year when equity-linked deals contributed nearly half of equity capital markets (ECM) issuance, it is no surprise that the deal of the year is a convertible bond. It is even less surprising that it should be the record-breaking...
Electronic Networks Poach Volume
Byline: Frances Maguire Traders will always go to the most-efficient marketplace. To them, it matters little whether this is a traditional stock or derivatives exchange, an electronic alternative platform or simply the over-the-counter (OTC) market.Exchange...
Emerging Markets Have Tough Act to Follow
Byline: Nigel Dudley Will the good times continue to roll for emerging market debt in 2004? That question faces bankers specialising in the sector as they look back on 12 months in which performance has far exceeded expectations.Emerging market...
Equity-Linked Overview: High Hopes after Record-Breaking Year
Byline: Yasmine Chinwala Hopes are high for the equity-linked market in 2004 after a record-breaking 2003 for issuance in Europe. While straight equities remained in the doldrums, equity-linked issuance topped 2001's high, accounting for just under...
Eurex Entry Will Alter US Landscape
Byline: Natasha de Teran The first weeks of this year will be decisive for the big derivatives exchanges. Swiss-German exchange Eurex is waiting for regulatory approval to launch its own US futures and options market, which the exchange hopes to...
Euroclear and Clearstream Closer to Dream of Unity
Byline: Tim Steele The two international central securities depositories, Euroclear and Clearstream, enter the new year better positioned to realise their dream of a unified European post-trade infrastructure. However, after a series of skirmishes...
European Debt and Credit Market Deals 2003
Deal of the quarterQ1 Olivetti: [euro]3bn multi-tranche deal via Caboto, Goldman Sachs, JP Morgan, Lehman Brothers and Mediobanca, which included a [euro]1.75bn 30-year bond - the first euro-denominated corporate bond in that maturity, and paved...
European Equity Capital Markets - Summary of 2003
Deal of the quarterQ1 Telkom South Africa (Deutsche Bank, JP Morgan). As volatile markets kept other issuers away from the market the two banks finally managed to get away the R4.3bn ([euro]554m) IPO away after a three-year slog. The government...
Europe Embraces Better Corporate Governance
Byline: Kit Bingham The architecture of corporate governance in Europe will continue to change in 2004 after a year of reforms. National regulators have been active: new best practice code requirements have been established in the UK, Spain and...
Europe's Large Buy-Out Pipeline Reaches [Euro]26bn
Byline: William Hutchings Senior investment bankers have identified more than 20 large European companies worth a combined [euro]26bn ($33bn) as likely targets for buy-outs this year, which they predict will be busier than 2003.Targets include Ish,...
Faces to Watch in 2004
With all the signs pointing to a strong recovery in capital markets this year, Financial News has selected some of the star performers who will make their mark in 2004David Bassett, Global head of loan syndication, Royal Bank of Scotland Bassett...
Facing Up to a Year on the Edge
Byline: Barry Railey First, the good news. On the face of it, 2004 will be the strongest year for the global economy in the 21st century, with 4% growth, according to the Organisation of Economic Co-operation and Development. The stock market has...
Financial News Best and Worst European M&A Deals of 2003
Deals and duds of the quarterQ1: Olivetti/Telecom Italia. The [euro]25.2bn ($29bn) bid by Olivetti (JP Morgan, Unicredito, Mediobanca), the Italian holding company for the 45% of subsidiary Telecom Italia (Lazard, Goldman Sachs) it did not already...
FN Outlook for 2004 and Year-End Review: Main US Watchdogs Struggle for Supremacy
The mutual fund investigation will continue in 2004 but the two forces driving it are working increasingly apart.In April, Eliot Spitzer, New York state Attorney General, was standing shoulder to shoulder with Stephen Cutler, head of enforcement at...
FN Outlook for 2004 and Year-End Review: Take Care as the Rampant Bulls Come Charging Back to Market
Byline: Margareta Pagano Beware the year of the bull. Bankers are bullish again, back on the road hustling chief executives to float their companies after three of the worst years for financial markets in more than a generation.However, Peter Meinertzhagen,...
FN Outlook for 2004 and Year-End Review: Tidal Wave of Rules Provides Opportunities
Byline: Jeremy Adams in New York As a wave of proposed new rules and regulations come in this year, banks and mutual funds will be struggling to keep up with the paperwork. However, some specialists are rubbing their hands with glee at the expectation...
French Companies Learn to Box Clever
Byline: Samer Iskandar in Paris This year promises to be much busier in the French mergers and acquisitions market as bankers eagerly anticipate bids for some important targets. Although last year was far from memorable if judged purely on transaction...
French Reform Opens Door to Pension Choice
Byline: Samer Iskandar in Paris The French fund management industry is gearing up to offer a slew of new pension products this year as the ink dries on a raft of reforming legislation.Rarely has an industry witnessed so many changes in such a short...
Fund Management to Lead Recruitment Drive
Byline: Mark Fisher Fund management and corporate finance will lead a recruitment upswing in the City of London this year, according to a leading think-tank.Staff numbers will rise by 4% and 3.1% respectively in those areas from last year, says...
Fund Managers and Buy-Out Firms Square Up
Byline: Caroline Meehan Private equity firms will continue to eye up public companies this year, after a great deal of interest last year. However, despite enticingly low valuations, surprisingly few public-to-private deals were completed in 2003....
Funds of Funds Set for Shake-Up as Asset Growth Explodes
Byline: Caroline Allen The boom in the funds of hedge funds business last year could bring problems for managers and investors. Funds of hedge funds have been hugely successful in terms of growing assets under management but performance has been...
Germany Buoyed by Large Buy-Out Activity
Byline: Ed Roby Foreign and domestic private equity firms expect the wave of corporate restructuring in Germany to continue this year, keeping them busy doing large buy-outs. Industry players predict steady business in this segment in 2004, in contrast...
Germany Grapples with Pension Time-Bomb
Byline: Alistair Graham Nowhere is the pension time-bomb ticking more loudly than in Germany, where efforts during 2003 to reform the local investment market failed to have the desired effect. The problems have meant big trouble for the German government,...
GM Beats Credit Fears with Record Bond
Byline: Vivek Ahuja General Motors, the auto group, stunned debt bankers and investors by shrugging off concerns about a pension deficit that was putting its credit ratings under pressure when it launched the bond market's largest deal in June.In...
Good Times Ahead for Buy-Out Survivors
Byline: William Hutchings European buy-out firms are into their third year of groping through a dark tunnel of uncertainty, but prospects are looking bright for those that find an exit.Investment activity was depressed in 2003, with negotiations...
Harmless Hedge Funds Preach Conservatism
Byline: Anuj Gangahar "Above all, do no harm." The Hippocratic oath is not the first thing that springs to mind when thinking about the hedge fund industry. While medicine men through the ages have sworn by their pledge, hedge fund managers have...
High-Yield Hungry Lenders Turn to Leveraged Loans
Byline: Joanna Hickey Liquidity for leveraged and investment-grade loans is strong in Europe, leading to aggressive terms across high and low-grade markets. The outlook for leveraged buy-outs (LBOs) for this year is positive.All the drivers of activity...
How Custody Became Global
Byline: Richard Greensted When the Ford Foundation, an American charity, asked Chase Manhattan Bank to look after its international investment assets in 1974, neither side could have foreseen the long-term implications of the arrangement.The foundation...
Industry Braces for More Regulation
Byline: Sophie Brodie After a year of US-led regulation, including the $1.4bn ([euro]1.1bn) global settlement in April 2003, research heads at the largest investment banks are bracing themselves for another round of rule-making from UK and European...
Initial Public Offerings Are Making a Slow Comeback
Byline: Ben Sills The last time investment bankers started talking up the initial public offering (IPO) market to financial private equity managers they did a very good job. Perhaps too good. If they want to persuade financial sponsors that the...
Interdealer Brokers Stage a Comeback
Byline: Natasha de Teran Incredibly, it was just seven or eight years ago that the marketplace deemed interdealer brokers to be a dying breed. Far from being sought-after investments, they were widely reckoned to be in their death throes, ageing...
Investor Services Change Shape as Participant List Declines
Byline: Richard Greensted Could the events of last year represent a seminal change in the global custody business?According to Ramy Bourgi, head of JP Morgan Investor Services (JPMIS) for Europe, Middle East and Africa (Emea), what has happened...
Investors Look for Concessions on Terms
Byline: Ted Wilson The shift in the balance of power between firms and investors in private equity funds is set to continue in 2004.Over the past year, the difficult financial environment has meant that investors have looked more critically at the...
IT Spending Set to Recover in 2004
Byline: Phillipa Leighton-Jones Financial institutions will spend more on information technology in 2004 than in the previous two years, with fund management firms showing the biggest growth in their IT shopping lists, according to Datamonitor,...
Lending Agents See Benefits of Size
Byline: Anuj Gangahar Mergers are the lifeblood of the securities financing and hedge fund business. When merger activity is scarce, as it was last year, times are invariably tough. Borrowers do not want to borrow, lenders cannot give away their...
Liability Headaches Grow for EU Firms
Byline: Pirkko Juntunen Regulatory pressure and the search for returns will keep the European pensions industry busy this year.Dutch and Swiss funds are grappling with new accounting standards, tougher funding-level requirements from regulators...
M&A Reloaded as Coverage Is King
Byline: David Rothnie The ability of banks to provide exemplary coverage to their clients will be crucial in 2004 as deal pipelines open up and a recovery in European mergers and acquisition (M&A) kicks in. Assigning the best bankers to the...
Market Eyes Long-Dated Corporate Debt
Byline: Vivek Ahuja Bankers have dismissed concerns that the fixed-income market boom, which saw bond yields rally spectacularly after the Iraq war last April, will halt this year.While yields underwent a huge correction in 2003, outstanding corporate...
Moribund Sectors Stir after Job Losses Slow Down
Byline: Sarah Butcher Financial recruiters have started this year with excited anticipation, preparing for a hoped-for surge in hiring.Their buoyant mood was in stark contrast to last year, which began with abject pessimism. The shaky start was...
Nordic Region Gets to Grips with Pensions
Byline: Pirkko Juntunen Pension reform is set to be a hot topic in the Nordic region this year. While Sweden attempted to tackle the issue in the late 1990s, other countries have lagged. Demographic pressure on existing state-run pension schemes...
Online Lending Gathers Pace
Byline: Nick Sudbury Online securities lending platforms will be entering 2004 in a buoyant mood. While last year will hardly count as a breakthrough, volume growth was strong enough to persuade the doubters that electronic securities lending is...
Optimism Reigns despite Regulatory Threat
Byline: Mike Foster Investment firms are starting the new year in a remarkably better frame of mind than a year ago, despite the regulatory shadow that hangs over them.Surplus liquidity has driven up returns from every asset class, excluding cash....
Outlook Brightens for TMT Sector
Byline: Brian Bollen Whisper it softly, but an air of optimism has crept into the telecommunications, media and technology (TMT) sector, which is set for a return to strategic mergers and acquisitions starting in 2004.This is welcome news for bankers...
Party Is over for Primary Bond Market
Byline: Vivek Ahuja Every party must come to an end, and debt bankers are sobering up to the realisation that the primary bond market in 2004 will tail off after a red-hot year for issuance in 2003.The market has enjoyed one of its best years. Issuance...
Pitched Battle for Portfolio Trading Business
Byline: Ben Sills The portfolio trading business looks set for cut-throat competition in 2004. As traders witness soaring volumes, margins are falling almost as fast. Good staff are in short supply as brokers scramble to expand their trading desks....
Private Buyers Must Rebuild Trust as Militancy Grows
Byline: Caroline Meehan Ears were ringing last year with the sound of defiant fund managers stamping their feet against cheap public-to-private offers. The number of take-private deals was down, despite the fallen public markets, and many have blamed...
Radical New Code Makes Tough Demands
Byline: Bob Garrett Listed company chairmen are beginning to realise that the UK's new Combined Code of Corporate Governance is more demanding than many thought when it was published quietly at the end of last August.The new regulations from the...
Rally Offers Pension Funds Breathing Space
Byline: Alistair Graham Soul searching and asset reallocation is expected to continue among UK pension funds this year after 2003 saw them finally gain some breathing space.At the start of last year a lot of pension schemes were in a bad way following...
Rebirth of M&A Could Turn the Tables
Byline: Shanny Basar The fall in equity issuance last year meant that the league tables were affected by single deals, although bankers predict that any upsurge in mergers and acquisitions this year should result in sharp swings.Goldman Sachs and...
Recruitment Firms Gear Up for Spring Revival
Byline: Mark Fisher Headhunters are bursting with seasonal joy. The season in question is bonus season, rather than those irritating holidays known as Christmas and New Year when banks fail to return phone calls.Recruitment firms believe the 2004...
Research Costs Soar as Lawyers Take Over
Byline: Jeremy Adams in New York The cost of running a research division has soared as securities firms 'employ 'expensive lawyers to make sure they comply with last year's global settlement over conflicts of interest and ever-more complicated regulations.Research...
Ring in the New and Prepare for the Unexpected
Byline: William Wright, executive editor For nearly two decades Byron Wien, a strategist at Morgan Stanley, has produced a list of 10 investment surprises for the year ahead in which he predicts events to which most investors would attach a probability...
Rush of IPOs Threatens to Overheat the Market
Byline: Margareta Pagano and William Wright Leading investment bankers and brokers are predicting a flood of initial public offerings this year, while warning that the rush to bring companies to market may lead to dubious valuations and even a glut.Peter...
Scandal Hits Record Levels
Byline: William Wright Fraud and scandal in the securities and investment banking industry are running at record levels after jumping sharply in 2003, according to the inaugural Financial News Fraud index.However, bankers and fund managers will...
Sceptics Still See Value in German Bonds
Byline: Ed Roby It takes courage to be optimistic about the outlook for bond prices in 2004 - especially after a run-up of 100 basis points for the 10-year German government bond since yields hit a multi-year low last June.This is particularly true...
Service Industries Set to Generate Dealflow
Byline: William Hutchings Buy-out firms hope to make a mint from the financial services industry in 2004 as they turn away from the pubs, leisure centres and shops that have long formed their staple diet.Acquisitions of insurance companies and mortgage...
Star European Managers Fight to Keep Hold of Funds
Byline: Mike Foster Albert Morillo, star European equities fund manager at BlackRock, will have a fight on his hands to retain business this year, following an appalling performance during 2003.The equity fund which his team at BlackRock manages...
Talking Heads: Views from the Top for 2004
Heads of investment banks and asset managers give their views on 2003 and the risks and opportunities for the year ahead - from a crisis for the US dollar and embarrassing failures in the IPO market to a bloodbath in fixed income.Marcus Agius, Chairman,...
Technology Companies to Trim the Fat
Byline: Phillipa Leighton-Jones Keeping technology projects for fund management groups specific as well as lean and relevant are the key issues for 2004. This will be in contrast with the "scatter-gun" approach that characterised the e-commerce...
Third Contender Joins Information Market
Byline: Phillipa Leighton-Jones There may be hope this year for Tom Glocer, chief executive of Reuters, who has weathered a storm of criticism since taking over at the troubled UK media and information group in 2001.Subscription cancellations may...
Traders Rule the Roost at Goldman
Byline: Ian Kerr If you were on your way to five-star ski slopes in Europe or sun-drenched beaches in the Caribbean, you may have missed Goldman Sachs' fourth-quarter results last month.In its usual inimitable style, Goldman's breakdown of earnings,...
WestLB Takes the Biscuit for Mismanagement
Byline: Ian Kerr If Financial News ran a competition for the worst-managed company of 2003, how would readers vote? Bookmakers might make Parmalat favourite, but the smart money would go on WestLB for its sheer consistency of glorious, sustained...
Wright and Fourtou Put Bankers in the Shade
When Bob Wright, chief executive of NBC, and Jean-Rene Fourtou, chairman and chief executive of Vivendi Universal, met to hammer out the details in the sale of Vivendi Universal Entertainment to NBC, investment bankers were excluded.General Electric...
Year of Broken Promises Brings a New Realism
Byline: Frances Maguire This year could turn out as disappointing as the last for financial IT. Despite lofty predictions that expenditure was on the increase, 2003 was a year of realism and broken promises, with cuts in budgets and staff.Tower...