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This week in Keeping Tabs: optimum bank capital ratios, and also that other story everyone's been talking about. -
FIG rainmaker Andrea Orcel is stepping back into the limelight as UniCredit chief executive, just as momentum is building for large-scale banking consolidation. He has an array of M&A options, but will he be shy in pulling the trigger? David Rothnie reports.
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An undercapitalised bank in the crosshairs of a market rout can expect counterparties to demand higher margin calls, particularly when a lot of its assets are already encumbered, as is the case at many European banks. This is a problem of the European Central Bank’s making and one that only it can fix. Making covered bond repo haircuts more severe would be a good place to start.
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A new era has begun in the US, with the swearing in of Joe Biden as president. For America and the rest of the world it is a sea change in leadership style and political substance.
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This week’s burst of covered bonds was exceptionally well received and boosted supply hopes. But even though the funding was cheap and deal execution certain, the supply outlook remains grim.
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Big firms like HSBC, BlackRock and JP Morgan are always being criticised for environmental, social and governance failings. The remedy lies in their hands.
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HSBC’s aims to boost market share in investment banking and rebalance towards Asia remain intact despite the resignation of one of its most senior lieutenants. But 2021 must be about execution, writes David Rothnie.
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Cancelling debt, dual interest rates, helicopter money: if the recovery from the coronavirus crisis stalls in the developed world, we will see calls for more radical central bank action.
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Financial institution borrowers are expected to concentrate efforts on their more difficult trades at the start of this year, reflecting the view that credit conditions cannot get much better — a prudent approach to funding. But the economic recovery is unlikely to be as smooth as expected, and although central banks stand ready, credit market volatility should revive covered bonds as the rainy day funding product of choice.
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The world is watching full of hope as Joe Biden prepares to take the helm of the world’s most important economy. He has promised to act decisively on climate change, which must include financial reform. There is much worthy work to do — but four things would save Biden a lot of time.
