In Case You Missed It: Business News Round-up

Contributed by Martin Mitchell of the Corporate Training Group.Martin Mitchel of CTG

Federal Reserve Board Chairman Ben Bernanke says the US recession is probably over, and Governor of the Bank of England Mervyn King expects a slow recovery for the UK. Banks will face limits on the total amount they pay their staff in bonuses under proposals being drawn up by the Financial Stability Board. The board’s plans will be submitted to the G20 countries in advance of their summit in Pittsburgh next week. These are but a few highlights of important market events that we’ve gathered to help you start the week well informed.

Economic Backdrop

  • Ben Bernanke stated that the US recession ‘is very likely over’ as data showed that retail sales rose last month at the fastest rate for more than three years.
  • Meanwhile, governor of the Bank of England Mervyn King predicted a ‘slow and protracted recovery’ for the UK.
  • Calculations by Goldman Sachs estimate that the European Central Bank has made up to €1bn in extra profits from crisis-related emergency lending.

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Dark Pools: Sink or Swim?

By Elizabeth Harrin (London)ladygraph

The verdict has long been out on whether dark pools of liquidity improve the investment process, but the fluctuations in the market this year have certainly seen these trading systems gaining plenty of column inches. Are dark pool investments taking market share from traditional exchanges? Or are their trades falling off, as a result of economic slowdown? I’ve read commentators who argue for both sides, but dark pools can’t be doing well and failing, can they?

Dark pools are off-exchange electronic trading venues. They are also known as ‘alternative trading systems’ and they work by allowing large blocks of shares to be traded outside of the normal exchange, and with greater ease. Dark pools have been particularly successful in partnering with hedge funds as the prices aren’t public. Cloaked in secrecy, and yet a very obvious form of liquidity, dark pool prices are only published publicly once the trade is done.

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In Case You Missed It: Business News Round-up

martin1Contributed by Martin Mitchell of the Corporate Training Group

The meeting of finance ministers of the G20 called for much bigger and better capital buffers to be held by banks. US Treasury secretary Tim Geithner declared that he is taking the first step towards unwinding policies that have propped up the US financial system. The UK’s monetary policy committee voted to keep interest rates at 0.5%. These are but a few highlights of important market events that we’ve gathered to help you start the week well informed.

Economic Backdrop

  • As expected, the meeting of finance ministers of the G20 called for much bigger and better capital buffers to be held by banks. The details to be finalised before the full G20 gathering in Pittsburgh on the 24th and 25th of September will include stricter rules about what is acceptable as a capital buffer, plus the requirement for complex institutions to develop ‘living wills’ to plan for their unwinding.
  • US Treasury secretary Tim Geithner declared that he is taking the first step towards unwinding policies that have propped up the US financial system by allowing the guarantee for the $2,500bn money market mutual fund industry to expire on schedule at the end of the month. He said it was time to move from crisis response to recovery.
  • The UK’s monetary policy committee voted to keep interest rates at 0.5%, and made no changes to its £175bn programme of quantitative easing.

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Transition Services Helping Asset Management Firms Make Advances

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By Elizabeth Harrin (London)Wall St

It’s been a long time coming, but asset management firms are finally winning back market share in the transition services arena. As banks and brokers drop out of the marketplace, asset management firms are moving back in.

The Move Away from Transition Managers

Transition services is a business area which helps institutional investors transition from one fund manager to another, switch global pension deals, rebalance their portfolios or shift into a new asset class. It always involves a lot of funds, and it’s always complicated. A year on since Lehman Brothers Holdings – a major player in transition services – collapsed, other global banks have also cut out or scaled back their transition divisions, including Citi­group, Royal Bank of Scotland Group and UBS.

It’s not always the banks that are pushing investors away as they reduce their involvement in this area. There are signs that investors are also losing confidence in the bigger names, and turning to specialist or smaller firms – firms that can provide the certainty that their transition services business is a key market distinguisher. The shift in market share has also been helped by the fact that technology and trading venues that were once only available to broker/dealers are now much more widely accessible and firms choosing to put transition services at the heart of their business have the technology skills and budgets to put them on a level playing field.

That said, transition managers themselves are expensive people to have around: they have a highly skilled role, often with a broad background in finance and excellent risk management ability. They also have to be great at managing the relationships with clients and keep a lot of balls in the air at the same time. No investor wants to start a massive portfolio shift and build a relationship with someone in a firm where transitions are an ancillary part of the business and could get cut in the next round of cost-saving measures. Read more

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Happy Labor Day!

iStock_000005583781XSmall[1]We are off enjoying the last days of summer.  We’ll be back tomorrow with more great profiles of women breaking the glass ceiling and other news  from the trenches in fund management, finance, law and big business.

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In Case You Missed It: Business News Round-up

martin1Contributed by Martin Mitchell of the Corporate Training Group

The FDIC identified an increase in the number of problem banks. The Terra Firma seals its first US acquisition. Close Brothers are bidding for a private banking franchise. These are but a few highlights of important market events that we’ve gathered to help you start the week well informed.

Economic Backdrop

  • The gathering of the world’s central bankers at the Federal Reserve’s annual retreat concluded. The general conclusion was that the world’s economies are starting to recover, with most officials believing that interest rates could be maintained at ultra-low levels for a considerable time without generating excess inflation. However, the majority also thought the road to recovery is likely to be long and bumpy.
  • President Obama also announced his intention to reappoint Ben Bernanke as chairman of the Federal Reserve. The reappointment needs to be confirmed by the Senate.
  • Details of Germany’s second quarter 0.3% GDP growth figures showed that consumer spending rose 0.7%. However, the GDP in the quarter was 7.1% lower than the same period last year.
  • German businesses’ expectations have improved. The Munich-based Ifo institute business climate index has risen from 87.4 in July to 90.5 in August, its highest level since September 2008. The part of the survey that relates to expectations over the next six months rose even more quickly from 90.4 to 95 – the biggest monthly rise since the survey started in 1991.
  • Central banks grappling with ways to encourage banks to lend are keeping a close eye on Sweden. Last month the Swedish central bank (the Riksbank) became the world’s first central bank to introduce negative interest rates on bank deposits. Designed to boost lending, the Riksbank has a deposit rate of minus 0.25 per cent.

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Overcoming Madoff in Fund Management

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by Elizabeth Harrin (London)

UPI Photo/Monika Graff

UPI Photo/Monika Graff

 “We have definitely seen a deterioration in potential investors because of Mr. Madoff’s activities,” says Tonya Powell, Principal at ELP Capital, Inc, investment company which specializes in real estate-secured assets. “The biggest issue is trust, and the almost automatic assumption created by the media that all fund managers may have participated in the same kind of activities.”

Judi Snyder, Partner at JP Snyder, Inc, a boutique financial planning firm, agrees. “Previously, people blindly trusted advisors and didn’t do their own research. This blind trust led to much of the current economic and investor climate.”

Both women’s firms are using multi-pronged approaches to win back consumer confidence. “There’s a fundamental shift – clients are demanding more education,” says Snyder. “I believe, however, Wall Street doesn’t necessarily want people to be educated.” This is a problem that Snyder’s firm is tackling head-on. “We give our clients homework,” she says. “We want them to do research, become educated and ask questions. We want them to take as long as they need to be comfortable with the investment options that we recommend.”
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In Case You Missed It: Business News Round-up

martin1Contributed by Martin Mitchell of the Corporate Training Group

European private equity LBO activity shows signs of life. The Swiss government makes a 26% annualised return on the UBS bail-out. Global corporate bond issuance for 2009 is already more than $1 trillion. These are but a  few highlights  of important market events that we’ve gathered to help you start the week well informed.

Economic Backdrop

  • Ben Bernanke reinforced hopes that the global economy is on the mend. Speaking at an annual Federal Reserve conference, he said,”‘after contracting sharply over the past year, economic activity appears to be levelling out both in the US and abroad, and the prospects for a return to growth in the near term appear good.”
  • US office prices rose in the second quarter for the first time since 2007. A report from Moody’s showed a 4.1% increase in office prices, however industrial, retail and apartment building continued to suffer with the overall index falling 1%.
  • Minutes released from the last meeting of the Bank of England’s monetary policy committee revealed that the Governor of the Bank had wanted to increase the money injected into the UK economy via ‘quantitative easing’ by £75bn. However, the committee voted for a smaller £50bn injection.
  • The UK’s Office for National Statistics published inflation figures for July. The main measure of inflation, the consumer price index was at 1.8% in July, unchanged from June. Average forecasts had been for a sharp fall to 1.5%. The retail price index that includes mortgage rates was at minus 1.4% in July. In the foreign exchange market sterling jumped in anticipation that the Bank of England’s monetary policy committee will lift interest rates earlier than previously thought.
  • Following last week’s positive news of Germany and France coming out of recession with growth in the second quarter, Japan reported its second quarter’s GDP up by 0.9%. However, the Japanese GDP was well below average forecasts.
  • Iceland’s parliament is close to approving the repayment of nearly €4bn lost by British and Dutch investors in failed Icelandic banks.
  • Just over 9 months after their banking crisis, Iceland is also experiencing a baby boom, with deliveries up 3.5% so far this year. One commentator thinks many Icelanders have ‘sought solace in love and sex.’

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Women on Corporate Boards: The New Economic Stimulus

Woman Holding Dollar Bill with Jumper Cablesby Liz O’Donnell (Boston)

Since Catalyst first published the report “The Bottom Line: Connecting Corporate Performance and Gender Diversity” in 2004 showing a positive connection between women in top management positions and an organization’s bottom line, a number of financial institutions, law firms and Fortune 500 companies have introduced some kind of gender diversity program. However, when you look at how few women there are in the top spots today, and then you contemplate the magnitude of the financial crisis we have witnessed, it begs the question: what if there was greater diversity on the boards and management teams of our financial institutions and major corporations?

“Would we have avoided this [economic crisis]? No. [But] I do believe it would have been different,” says Jacki Zehner, a founding partner of private wealth management firm Circle Financial Group and a former partner at Goldman Sachs. ”

While we can’t change the past, we can re-examine how businesses operate going forward.  As Shyama Venkateswar, Ph.D., Director of Research & Programs for the National Council for Research on Women, says of Wall Street, “It is so full of opportunities.”

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In Case You Missed It: Business News Round-up

martin1Contributed by Martin Mitchell of the Corporate Training Group

Bernie Madoff’s right-hand man pleads guilty. Publicis beats Microsoft out on a bid to acquire Razorfish. Guidelines on bankers’ pay issued by UK and German regulators.  These are but a  few highlights  of important market events that we’ve gathered to help you start the week well informed .

Economic Backdrop

  • Business sector confidence is surging in Europe, with the UK and Italy leading way according to the latest KPMG business outlook survey. A separate survey on the ‘BRIC’ countries of Brazil, Russia, India and China has also seen a strong rise in optimism, particularly in Brazil.
  • To underline the KPMG survey’s findings, the two biggest economies in Europe, Germany and France reported growth in the second quarter. After the economies had seen four consecutive quarters of negative growth, the second quarter of 2009 saw GDP grow in both by 0.3%. Elsewhere in Europe the second quarter saw the UK’s GDP shrink by 0.8%, the Dutch by 0.9% and Austria and Belgium by 0.4%. Like Germany and France, Greece and Portugal both grew 0.3%.
  • To complete the Eurozone quarterly figures, Spain reported its GDP shrinking by 1% in the second quarter, slightly worse than expected.

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