Brian Bollen's Blog

The Royal Bank Of Scotland A Strong Buy? Privatisation in October 2013?

Is The Royal Bank of Scotland a strong buy, with an eye on privatisation around October 2013? I ask this not because of any quantitative analysis on my part, or even because I’ve been talking to industry analysts who cover the 84%-state-owned institution being propped by £45bn or so of taxpayers’ money. I ask it because I began musing out loud while doing a gentle jog this morning (May 31) to and from my own bank (the 41%-state-owned Lloyds TSB group) and a lot suddenly seems to make sense.

My thinking is that it is inconceivable that a Conservative-led Government will want to fight the next general election in the UK (due in early May 2014) while owning 84% of one of the country’s biggest banks. It will want to sell, and bank the political as well as the socio-economic benefits that it would hope to derive from a successful sale.

May the Marketforce Be With You

Marketforce’s 4th Annual conference 
Operational Efficiency in Financial Services, June 23 2011, Lancaster London Hotel, London
http://marketforce.eu.com/Conferences/operation11/

The organisers say this conference brings together senior representatives from across the retail banking, consumer finance, general insurance and life assurance industries to debate the impact of the evolving business environment on operations. The event allows delegates and speakers from across the retail financial services sectors to share ideas and experiences on issues such as operational efficiency, customer service, outsourcing and fraud.

Twin Appointments At J.P. Morgan WSS

J.P. Morgan Worldwide Securities Services reports a duo of top appointments. First up is the exquisitely named Dinkar Jetley, named CEO of WSS, which we would all acknowledge is one of the leading securities services franchises in the world.  Jetley will report to Mike Cavanagh, CEO of J.P. Morgan Treasury & Securities Services (TSS), and will be a member of the J.P. Morgan Chase and TSS Executive Committees.  He joins J.P. Morgan on June 16 and will be based in New York.

Jetley (pictured) joins J.P. Morgan from Deutsche Bank in London, where he was global head of trust and securities services and cash management for financial institutions, and a member of the global transaction banking business leadership team.  Prior to Jetley’s 12 years at Deutsche Bank, he spent nearly 14 years at Citibank in major financial centres around the world in a number of leadership positions in operations, technology, finance and credit risk.

Northern Trust Hails Return of Prodigal Bellows

Northern Trust has rehired 30-year veteran Clive Bellows as country head, Ireland. Though I do slightly bridle at the attachment of the word veteran (NT's decision, not mine) to someone who's been around the financial services industry for less time than I have.

Bellows, who will be based in Northern Trust’s Dublin office, will have responsibility for leading the company’s Irish operations. He will also play a key role in ensuring the integration of Bank of Ireland Securities Services, which Northern Trust announced it intended to acquire in late February this year. Bellows (pictured below) will report to Toby Glaysher, head of global fund services in Europe.

I Don’t Buy BRICs

I don’t buy the whole BRIC story, personally speaking. This is largely because throughout my professional working life, which formally began on September 1 1979, China, for one, has been described as a sleeping giant about to awaken, generating massive consumer markets. Last time I looked, per capita income there is about 20% of that in the USA. So I remain unconvinced.

I watch with great interest, though, as western firms try to work out how to profit from them. AllianceBernstein has just launched what it describes as an innovative (dread word that, innovative) fixed-income fund which aims to exploit the growth prospects of the Chinese economy, while tapping into the higher yields available from bonds issued by other Asian countries.

RIP Ramy Bourgi. Adieu.

And so to the newly refurbished Savoy Hotel in London on the morning of May 27 for the memorial service held to celebrate the life of the legendary Ramy Bourgi, the late head of emerging markets at Societe Generale Securities Services.

Ramy died suddenly in April, at the age of just 50, giving those of us older than him a chilling reminder of our own mortality. We are nearer the exit door than we are the entrance, is one thought that comes to mind. And the exit door can suddenly fly open unexpectedly, the way they used to do on the UK’s Inter-City 125 trains. 

Arriving at the Riverside Entrance, we found a room full of financial services veterans queuing up to sign the book of condolences. All had some positive, warm thought to share about Ramy. I knew and worked with Ramy Bourgi in one way or another for around 15 years. I interviewed him on the telephone countless times during that period, following up relentlessly with emails to check facts and the accuracy of the words that I was going to insert into his mouth.

Asia Catches Top Private Equity Eye

The top 10 PE firms have increased their investment in Asia significantly over the past three years at the expense of North America-focused investment, research from Preqin confirms.

The study also found that there has been a marked change in the types of deals executed by these firms over the past five years; LBOs now account for over half of deal value, compared to a quarter during the boom era of 2006/2007, while public-to-private deals account for 16% of deal value in 2011 to date, compared to 74% in 2007.

The report looked at the extent to which the top 10 firms, determined by fundraising in the past 10 years, dominate the private equity industry, examining fundraising statistics, investor appetite for the firms’ funds, deals data, fund performance, and levels of dry powder these firms have available for investment.

The Top 10 Firms: Fundraising and Dry Powder

Read All About It; AIMI Latest Journal On Release

The Alternative Investment Management Association is publicising the release of the latest issue of the AIMA journal, which readers can download here. We are promised that this issue contains the following goodies:

·         Address from the CEO: Hedge Funds Are Not ‘Shadow Banks’, By Andrew Baker, Chief Executive Officer, AIMA;

·         Recent Regulation And Tax Developments;                       

·         Andrew Baker Column: Why Short Selling Is Good For Capital Markets;

·         The effects of the FATCA legislation, By Sian Hill, Tax Partner, KPMG;

Schroders On QE2 And BofE’s Dangerous Game

From: Keith Wade, Chief Economist & Strategist and Azad Zangana, European Economist, Schroders Global

Macro and market impact of the end of QE

· The US Federal Reserve is planning to bring its programme of Large Scale Asset Purchases or Quantitative Easing (QE) to a close by the end of June having increased the size of its balance sheet to some $2.8 trillion (chart). Investors are divided on the impact this will have on the economy and markets, with some seeing a return to recession and a bear market in risk assets.

· Our view is that the macro impact of the second round of QE has been limited as the main effect has been to increase the level of excess reserves in the banking system. The credit multiplier has fallen as banks have not lent their increased reserves on to the private sector, thus limiting the effect on activity. From this perspective the end of QE should not derail the recovery.

Sam Shi? Who He? New Sales Director, Greater China, BP2S

BNP Paribas Securities Services (BNP Paribas) says it has appointed Sam Shi (pictured) as sales director, Greater China, for asset owners and asset managers, as it continues to expand its Asian team to drive regional growth.

In this new regional role based in Hong Kong, Sam Shi will lead the business development activities targeted at key institutional investor clients in China, Hong Kong and Taiwan, working closely with the BNP Paribas teams in these countries.

Cyrus Ardalan Appointed New Chairman of ICMA

The International Capital Market Association (ICMA) has named Cyrus Ardalan as its new chairman with immediate effect, having been elected by the Board of ICMA during its 43rd AGM and Conference being held in Paris.

Ardalan succeeds Hans-Joerg Rudloff, who has served as ICMA's chairman since June 2005. During the six years of Rudloff's tenure, ICMA says, it divested its commercial operations and refocused entirely on its core mission - improving the efficiency of the cross-border securities markets - while continuing to set standards of best market practice against the backdrop of the most severe financial crisis that most people can remember.

Across The Andes, By Euroclear; A Ripping Yarn

Euroclear Bank is heralding its planned launch in June of settlement, custody and related services for cross-border Chilean domestic debt transactions. Depósito Central de Valores S.A. (DCV), the Chilean Central Securities Depository (CSD), will offer similar services involving foreign securities transactions for its clients through Euroclear Bank. A bilateral transaction-processing link between DCV and Euroclear Bank is nearing completion. At the same time, the Chilean peso will become one of 54 settlement currencies in Euroclear Bank.

Euroclear Bank says it will be the first and only international CSD to link with DCV and offer services for Chilean securities, which will be provided to Euroclear Bank clients located in more than 90 countries. The link with DCV will allow Euroclear Bank clients to settle transactions in Chilean government bonds with local Chilean financial institutions that have accounts in the Chilean CSD. All Euroclear Bank clients, except those domiciled in Chile, may deposit these Chilean securities for safekeeping with Euroclear Bank.

Texas Pensioners Cough Up Further $200m

LaSalle Investment Management confirms that it has received $200m in a second round of equity capital from the Teacher Retirement System of Texas to invest in real estate co-investment opportunities around the globe.  This commitment, it says, represents a continuation of the partnership formed between LaSalle and TRS in 2009. The discretionary co-investment fund will continue to be managed by LaSalle.

LaSalle says that with this allocation it will continue to seek out best-in-class real estate opportunities across all property types, risk profiles, capital structures, and geographies.  Specifically, it adds, the fund will invest in real estate co-investment opportunities presented to LaSalle by TRS’s real estate general partners (GPs) who specialise in such investments. 

One-Stop Guide To Compliance And Regulatory Standards

Looking for a one-stop guide to the wave of compliance and regulatory developments sweeping the financial services world? SimCorp might just have the answer with its just-published guide to global 
compliance and regulation standards

SimCorp claims to offer a unique online compilation of resources to support the global investment management industry so that more can be learnt about the various types of regulations and how they are likely to affect the sector.  

With the imposition of new and updated standards such as IFRS9, Solvency II, UCITS IV and AIFMD proceeding in Europe, along with the Dodd-Frank Act in the USA, firms must ensure they are fully prepared for regulatory changes and new mandates governing the industry, observes SimCorp.

HarbourVest Continues Media Blitz

HarbourVest Global Private Equity Limited (HVPE), a closed-end investment company listed on Euronext Amsterdam and the Specialist Fund Market of the London Stock Exchange, is continuing its media blitz. The subject of the firm’s lates press bulletin is confirmation of its audited results for the financial year ended January 31 2011 and the publication of its annual report and audited consolidated financial statements. These show that its economic net asset value (Economic NAV) rose by 18.4% over the year.

As at January 31 2011, HVPE’s Economic NAV was $849.7m, or $10.24 per share. The firm says this represents an increase of $1.59 per share over the financial year from January 31 2010 ($8.65) and a significant milestone for HVPE as Economic NAV per share exceeded its December 2007 IPO level of $10.00.

Electricity To Join High-Speed Trains In Channel Tunnel

Electricity will be joining high-speed trains in hurtling through the Channel Tunnel. Continuing the theme of infrastructure as an investment favourite, Groupe Eurotunnel and STAR Capital Partners report that they have established a joint venture to develop a new electricity interconnector between Great Britain and France.

The duo say the project will play an important role in developing European interconnector infrastructure, a 21^st century priority. It will enable the safe optimisation of electricity transmission, helping to resolve problems of supply volatility linked to offshore wind power.

The two partners say that their studies show that a twin cable 500MW Direct Current (DC) interconnector could be safely installed inside the Channel Tunnel service tunnel. The ElecLink project will increase cross-Channel capacity by 25% to 2500MW. It will be a major step towards European energy integration.

RBC Dexia In Thai Tie-Up with Aberdeen

RBC Dexia Investor Services reports from Hong Kong that it has developed and implemented a pan-Asian automated transfer agency platform specific for Aberdeen Asset Management’s Thailand fund operations. RBC Dexia adds immediately that its proprietary automated Transfer Agent platform is the only global TA platform that now meets Thailand TA requirements.

“The strength of our existing relationship with RBC Dexia was evident and with a Thai specific Transfer Agency platform now in place, RBC Dexia can provide Aberdeen with consolidated business data across the Asia Pacific region and potentially open doors around the world,” said Matthew Yong, head of investor services - Asia Pacific, Aberdeen Asset Management Asia Limited.  "Throughout the tenure of this process, RBC Dexia’s level of commitment and collaborative approach were crucial to the success of this unique project, particularly given the complexities of the Thai funds industry."

Viewpoint: Russia’s bold play... and own goal

By Eugenia Unanyants-Jackson, Senior Analyst, Governance & Sustainable Investment, F&C Investments

Russia’s pervasive corruption, weak rule of law and intensive state meddling in business once again dominated the headlines this month, as President Medvedev decried his government’s failure to create an attractive investment climate and announced bold new reforms. But these were promptly upstaged by the FSB, Russia’s security agency, as it moved to crush the country’s leading anti-corruption campaigner, whose popular whistleblowing website and blog are proving a thorn in the side of Russia’s ‘crony capitalists’.

Capital outflows prompt bold steps by Medvedev

In response to spiralling capital outflows, President Dmitry Medvedev surprised Russia watchers by announcing a number of bold moves, including:

■■            Ordering a clear timetable for privatising state holdings in Russian companies over the next three years;

■■            Increasing transparency of capital expenditure and procurement by state-controlled companies to reduce corruption and raise returns;

■■            Removing high-ranking government officials from the boards of state-controlled companies;

■■            Enhancing minority shareholder rights and access to company information through changes in law and regulatory practices;

■■            Increasing transparency of investigations into corruption allegations against government employees.

Hedging Up In April

Hedge fund assets increased by $52.3bn in April with net positive asset flows of $28.3bn.

Hedge funds see tenth consecutive month of positive returns, gaining 13.48% over this period.

Total industry assets cross $1.81 trillion for the first time since the financial crisis.

Net flows in the first four months now exceed total net flows for whole of 2010 ($93.9bn April 2011 YTD vs. $66bn in 2010).

Standard Life Passes £10bn Milestone

Standard Life Investments says its UK mutual fund range has for the first time broken through the £10bn barrier* after a record-breaking tax year-end in 2011.

During the first three months of 2011, the asset manager says, its range of UK mutual funds saw gross sales increase by 150% to £1,471m (Q1 2010: £588m) and net sales increase by over 260% to £808m (Q1 2010: £223m).

It adds that the top five grossing funds during the first quarter of 2011 were the Global Absolute Return Strategies Fund (GARS), the UK Smaller Companies Fund, the Global Index Linked Bond Fund (GILB), the MyFolio Managed III Fund and the UK Equity Unconstrained Fund. The five top grossing funds for the same period last year were GARS, GILB, the UK Equity High Income Fund, the UK Smaller Companies Fund and the Select Property Fund.

Jacqueline Kerr (pictured below), head of UK wholesale, Standard Life Investments, said:

“With total assets under management of £157 billion, Standard Life Investments is already a leading player in the institutional pension market. Our goal in recent years has been to take that expertise as an institutional fund manager and become a major force in the UK wholesale market. Breaking through the £10bn  barrier clearly shows that this ambition is well on track.”