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GC Asia
Comment - All Articles
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Pillar 2: see or not to see
Disclosing Pillar 2 ‘guidance’ is discretionary and perhaps even discouraged, but banks risk falling foul of speculation if they choose to keep their full supervisory capital demands a secret.
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Without specifics, Trump’s deregulation order just a soundbite
Monday’s executive order from President Donald Trump pledging to cut regulation for US businesses by forcing agencies to get rid of two regulations for every one they introduce was derided by his opponents, but it isn't ridiculous. It just lacks the specifics to be taken seriously.
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Operational risk capital is the worst regulation of all
Of all the strange distortions and economic madnesses introduced by capital rules, operational risk capital tops the table. Rather than simplify it, the new Basel rules should scrap it.
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P&M Notebook: the new HSBC?
HSBC, despite riding high in the bond league tables, has never had a reputation for being the fiercest global investment bank on the Street. Is that changing?
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MTN Leak: The home stretch
The MTN market can breathe a sigh of relief as those punishing themselves for Christmas indulgence with Dry January are about to be reprieved.
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Trump timebomb ticks but where is the vol?
In an age of irony, financial markets are hitting their peak. Measures of volatility, across almost any asset suggest squeezed trading ranges and pricing exactitude just as the most volatile US president in living memory settles into his new job. Something has to give.
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Cryan’s compensation call shows tough tenor of the times
Deutsche Bank’s tough stance on compensation echoes earlier moves by rivals, but it doesn’t solve the talent crisis at big banks, writes David Rothnie.
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Biggest green bang for the buck is not the GrOAT
France’s €7bn green OAT is a cert for the awards ceremonies. But are investors in it really helping the environment?
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An idle mind is the perfect workshop
One thing my contemporaries in banking can never be accused of is lacking optimism. And sometimes, the tactics they deploy to stay positive amid dwindling deal flow surprises even me.
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New US administration unlikely to radically reform GSEs
US Treasury secretary nominee Steve Mnuchin’s statement during his confirmation hearing that he did not support the recapitalisation and release of Fannie Mae and Freddie Mac should confirm observers’ suspicions that the new administration is not going to prioritise the reform of the government sponsored enterprises (GSEs).
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Coms are poor but Privat-Bank bail-in means bail-in
Holders of newly nationalised PrivatBank’s Eurobonds are pushing back on the National Bank of Ukraine’s plans to bail-in the debt, but the government should not have to take on the liabilities of sophisticated lenders in event of a default. But it does need to be much clearer about its plans.
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The covered bond squeeze has legs
Dealers are already running low on covered bond inventory and with this year’s first rush of new issues now done, a squeeze is already starting to get underway.
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Regulatory easing is fine, but a yield curve is better
Investors in US banks might be looking forward to regulatory easing under President Trump’s administration, backed by a Republican Congress. They might eventually see some benefit, but a steeper yield curve is much more important.
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Hong Kong IPOs: bleaker than ever
Hong Kong’s primary equity capital market is in trouble. The city was the top global IPO destination by volume last year — a title it also held from 2009 to 2011. But the market is in the midst of change with disgruntled investors and restrictions on capital outflows from China set to start hitting business. With no fix in sight, the worst is only yet to come.
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P&M Notebook: Buy-side the new banking as bonuses bomb
Much attention this week was focused on politics, again. UK prime minister Theresa May’s speech, offered some measure of Brexit clarity, and all watched for figurative fireworks at Donald Trump's inauguration as US president on Friday. But there were a few hints about the future of investment banking smuggled in with all the geopolitics.
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Corporate bonds offer lesson in pragmatism
While its barnstorming start to the year gave fee-earning bankers joy, the corporate bond market’s sturdiness in the face of shrill political risk is in some ways its most impressive feat this month.
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Trump, on reflection
Even by Donald Trump’s standards, it was quite a comment. After leaving traders and investors weak at the knees with talk of big spending and bumper tax cuts, the US president-elect caused more than a few scratched heads this week as he said the dollar was too strong.
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MTN Leak: The rooster approaches
Chinese New Year is fast approaching, bringing with it the year of the rooster and, more importantly, HSBC’s annual bash.
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Accountancy firms beaten back by banks in corporate finance
A downturn in UK dealmaking and a raft of challenges to their operating models has placed the corporate finance aspirations of professional services firms under the spotlight, writes David Rothnie.
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Milk of human kindness
Banks these days go to great lengths to support new mothers, doing everything from extending vacation time to shaming managers who fire pregnant employees.
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Trump shake-up spells opportunity for Asia
Donald Trump’s US presidential victory shook markets and whatever ‘Trumponomics’ turns out to be, the early evidence is that the normal rules will not apply. But for all the turmoil Trump has created as president-elect, his term in office may not devastate Asia the way some expect. His style of leadership might even bring just the spark Asian markets need.
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May’s Brexit plan: clarity at last
Ever since Theresa May became UK prime minister in July, markets and commentators have thirsted to know what her strategy would be for the negotiations to leave the European Union. Now we know — and so far, the markets like it.
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Pace of hand pivotal in Gulf loan poker
If “keeping one’s cards close to one’s chest” in negotiations while also acknowledging the need for market certainty seems like a peculiarly Brexit paradox, try managing the funding plans of a Gulf state as it tries to deal with a budget deficit.
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EIB will be the test for tricky 10s
The European Investment Bank will look to raise cash at 10 years on Wednesday, providing an important gauge on the health of an area of the curve that has been inhospitable so far in 2017.
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Consistency in charters could improve fintech regulation
A letter published by The Conference of State Banking Supervisors (CSBS) on Friday is the latest in a round of opposition to the Office of the Comptroller of the Currency’s (OCC) fintech charter proposal. But the charter could help to streamline regulation of the fragmented industry.
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High fives for covered bonds
After a glut of long-dated covered bonds in 2016, investors are scrambling to bring the duration of their portfolio down again, and that means five year covered bonds are likely to remain a firm favourite. More issuers should turn down the ECB's TLTRO, and try covered bonds instead.
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The trouble with fixed income trading is structural
The problems of fixed income trading are still a proxy for the fortunes of the whole investment banking industry. Fourth quarter results from the major US houses suggest the Street will have had a strong year in 2016, giving senior traders a new lease of life and a good payday, while 2017 could be just as good. But the industry’s problems aren’t going away.
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SGX-bound Chinese trusts need to break with tradition
Dasin Retail Trust has become the latest Chinese issuer to tap a Singapore listing, raising S$146m ($102m) in its IPO last week. While mainland-sponsored trusts have enjoyed relative fundraising success in the city-state, they have stuck to a tried and tested formula. Future issuers should break the mould.
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RMB internationalisation is in transition, not reverse
China has come in for a lot of criticism for introducing more capital controls since the start of the year in order to combat outflows. While such restrictions clearly do not fit under the headline of financial liberalisation, the market needs to understand that they are a necessary evil for China to have enough time to correct economic imbalances.
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The road to TLAC is paved with innovation
Rather than waiting for the final go-ahead from the authorities, European banks are becoming creative with their bonds in order to bring total loss-absorbing capacity (TLAC) issuance.
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MTN Leak: A party fit for a king!
The first social events of the year are landing in Leak’s inbox and beginning to fill up the yawning months of 2017 and keep us all sane. All work and no play makes Leak a dull read.
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Lev investors must up deal term vigilance
In the leveraged loan market, where pricing has plummeted, it was inevitable that issuers would push their luck with the terms of their deals. Investors must push back.
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Don’t put down America’s post-crisis watchdog
The latest round of Republican calls in the US for president-elect Donald Trump to fire the Consumer Protection Financial Bureau (CFPB) head Richard Cordray and roll back the agency’s influence is a real threat to American consumers.
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No hiding place for Europe’s elite investment banks
European investment banks are running out of excuses. The legacy issues that have dogged them since 2008 are finally coming to an end, meaning they can now devote all their energies to fighting back against their US rivals, which have gained a bigger slice of the European investment banking pie in each of the past five years. Failure to do so will trigger far-reaching questions about whether the decline can be arrested. By David Rothnie.
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Always look on the bright side
In these dark days for banking, everyone is constantly looking out for a silver lining.
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Tech can help MTNs play to strengths
Origin launched the beta version of its private placement issuance platform on Monday, aiming to speed up and simplify the process of selling MTNs. It could make a material difference to the MTN market, but only if widely adopted.
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High yield borrowers should use Channel Islands listings wisely
A growing number of European high yield bonds are being listed on the Channel Islands Securities Exchange to avoid onerous EU regulations. But borrowers should avoid too many visits to the offshore haven for the good of their market.
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HUD premium cut is political posturing
The move by the US Housing and Urban Development (HUD) secretary Julian Castro to reduce mortgage insurance premiums is a politically motivated one designed to pressure the incoming Trump administration. As such it brings the agency into the political arena at a time when non-partisanship should be the goal of one of the foremost housing authorities in the US.
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Ignorance on climate is still rife
Everyone in debt capital markets has heard of green bonds, and most in the financial world accept that sustainability and greenness are Good Things. But for all the grand commitments and PR initiatives, understanding of the issues is still as hazy as a Beijing smog.
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JP Morgan frozen out? Indonesia needs to let it go
Indonesia’s tiff with JP Morgan has brought the country unwelcome attention. While it is right to protect its own markets from instability, doling out punishments to the US bank undermines its reputation as a sophisticated, transparent country — qualities that could deter the international investors it has so successfully attracted.
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Old Money: Barclays déjà vus
It’s a back-to-the-future new year for Barclays as it forges ahead with its strategic repositioning — the latest moves in what feel like decades-long twists and turns into and out of Africa and investment banking.
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P&M Notebook: Basel by the back door?
With so many bankers hanging about waiting to be paid, there was scarce job swapping in the first week of 2017. But there are signposts for Europe’s new approach to bank capital, if you look hard enough for them.
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Sorry Poland, a GrOAT matters more
Poland may have won the race to bring the first ever sovereign green bond. But it was not the one investors were looking for — instead, France’s upcoming green benchmark will be the real milestone.
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Synthetic ABS's comeback is an organic development
With pressure on banks to tighten their belts and deleverage balance sheets, in 2017 synthetic securitization could become a much bigger part of the bank treasurer’s toolkit.
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MTN Leak: Welcome back!
Not all of the MTN market has returned from the festive break refreshed, reinvigorated and altogether ready for 2017.
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Cantor Fitzgerald's shot at fixed income big time with Jain hire
Anshu Jain’s move to Cantor Fitzgerald proves that, when it comes to building a fixed income business, the smart money is on the non-bank financial sector, argues David Rothnie.
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Ringing in the New Year on mute
I think the French got it right when they recently decided that employees should be able to ignore work emails after hours.
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ECM bankers should not let up on India
India’s IPO market shone last year with volumes reaching the highest level since 2011. And bankers are optimistic of a similar performance in the New Year too. But while there is a lot to be positive about, there is also plenty that can hold the ECM market back.
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The elephants’ graveyard
Thirty-first of December was not only the last day of a decidedly subdued year, but also the deadline by which Credit Suisse bankers in London were allegedly asked to return the mobile phones issued to them by their employer. This is only the latest nail in the coffin of a profession once seen more as a lifestyle, but which has now become (almost) like any other, writes our columnist Clawback.
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Monte: bail-in, bail-out, shake it all about
If Banca Monte dei Paschi di Siena (MPS) is able to wrangle a recapitalisation that looks more like a bail-out than a bail-in, it will set a precedent for Europe's other weakest banks.
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The beginning of the end for Basel?
The Basel Committee has agreed to delay a decision on the most controversial aspect of its new capital rules. It promises to catch up ‘in the near future’. But two years into the process, a conclusion looks no closer than at the start.
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Covered bond borrowers must get ahead on funding plans
With yields set to rise and spreads likely to widen, covered bond issuers should waste no time in getting ahead on 2017’s funding plans and doing the more difficult trades first.
