Commerzbank has been authorized by the Brazilian Central Bank to set up a subsidiary in Sao Paulo. It is now expected that business operations for the target group of small and medium-sized enterprises as well as major and capital market companies will be launched in the first quarter of 2016, according to PR Newswire.
“Even though the growth momentum in Brazil has slowed recently, the country still remains the seventh largest economy in the world and is by far the most important economy in Latin America and thus a major economic partner for Germany and Europe. Even in times of volatile markets, it is important for our Mittelstandsbank, the market leader in Germany for SMEs, to have a local presence to support our customers outside Germany,” says Bernd Laber, Divisional Board Member International of the Corporate Banking segment (“Mittelstandsbank”).
Harald Lipkau will take on the position of General Manager of Commerzbank in Brazil. A native of Brazil, he started his career in his home country and, after progressing through various positions, was most recently responsible within Commerzbank for financial institutions in Asia.
Around 1,400 German companies are currently represented in Brazil, of which approximately 900 are located in the metropolitan area of Sao Paulo. The majority of these companies are already customers of Commerzbank in Germany. It is now planned to serve their local units through the new Commerzbank subsidiary in Sao Paulo. A total of around 50 staff will be available locally for these customers.
Commerzbank plans to offer its comprehensive range of corporate and investment banking services in Brazil. Commerzbank will serve European companies operating in Brazil, and also provide support for international companies aiming to do business in Europe.
CC-BY-SA-2.0, FlickrPhoto: Esparta Palma. Investec Wealth & Investment Strengthens Research Team with Four New Appointments
Investec Wealth & Investment is pleased to announce the appointment of four new members to its research team. Dominic Barnes joins as a fixed income portfolio manager, Esther Gilbert as a fixed income analyst, while Marcus Blyth and Adrian Todd both join as fund selection specialists.
The decision to further strengthen IW&I’s research team stems from its conviction that increased market volatility over the medium term will create more challenging conditions in which to generate meaningful risk-adjusted investment returns for its clients. IW&I’s research team has, therefore, broadened its coverage to include an expanded range of sophisticated collective and fixed income instruments. The additional complexity of these products requires greater breadth and depth of resource in order to ensure they are thoroughly analysed for their suitability.
John Haynes, Head of Research at Investec Wealth & Investment, said: “I am delighted to welcome Dominic, Esther, Marcus and Adrian to the research team. They bring significant expertise in the fixed income and collectives sectors and will enhance the capabilities and performance of an already well-resourced team. Best-in-class research is an integral part of the service we offer our clients and gives Investec Wealth & Investment a significant advantage in the UK wealth management industry.”
Prior to joining IW&I, Dominic was a Director at Credit Suisse Private Bank & Wealth Management and, before this role, a Fixed Income Specialist at Merrill Lynch International. Esther joins IW&I from AXA Investment Managers, where she was a Portfolio Manager and Fixed Income Investment Analyst covering a range of securities such as global bonds, High Yield, emerging market debt and convertibles.
Marcus Blyth joins from Kleinwort Benson, where he covered collective investment schemes across all sectors. Adrian Todd joins from private bank Coutts, where he analysed third-party funds across discretionary investment portfolios globally.
Foto: juantiagues
. Los hedge funds captaron 76.000 millones hasta junio
The global hedge fund industry has seen a $76bn net inflow of assets through the first half of 2015, bringing the size of the industry to $3.22tn. The second quarter saw the greater amount of inflows from investors, with $48bn in Q2 compared to $29bn in first quarter. Single-manager hedge funds specifically saw net inflows of $52bn in Q2, three times as much as the $18bn net inflow of assets they recorded in the first quarter. CTAs, on the other hand, had a net outflow of $5bn in the second quarter, eroding the $11bn growth they had seen in Q1.
49% of multi-strategy funds saw net inflows in Q2, the highest proportion of all major hedge fund strategies. Conversely, only 29% of niche strategy funds saw net inflows, with 65% of funds in these niche strategies witnessing outflows.
Funds based in North America, Europe, and Asia-Pacific all had similar asset flows in Q2, with 41-44% of funds seeing inflows, and 38-39% seeing outflows. In contrast, funds based outside these regions had net inflows in only 33% of cases, while 62% of funds had outflows.
43%of all hedge funds have seen an increase in allocation from North American investors, and 20% have seen increases from Asia-based investors. Conversely, 14% of funds with Europe-based investors saw decreases from that group, the highest of any region.
60% of hedge funds with more than $500mn in assets under management had net inflows in Q2, almost twice the proportion that saw net outflows. Only 38% of funds worth less than $100mn grew in the quarter, with net outflows experienced by 43% of funds in this group.
57% of hedge fund managers reported increased allocations from high-net-worth individuals (HNWIs) and family offices respectively during H1 2015
Amy Bensted–Head of Hedge Fund Products at Preqin comments:“Despite recent Preqin research indicating that investors are growing impatient with the returns of hedge funds, the industry has continued to accumulate assets in the first half of the year. Hedge funds now manage over $3.2tn in assets, amassing net inflows of more than $76bn in the first six months of 2015. The largest funds continue to see the highest inflows, with approximately 60% of funds with more than $500mn in assets gaining net inflows in Q2 2015.
The growth of the hedge fund sector highlights the continued need for these products by institutional investors, despite any short-term concerns around performance and fees. In light of recent equity market turbulence, the ability of hedge funds to provide consistent and non-correlated returns may prove even more valuable to investors in the second half of the year and we could see continued inflows over the rest of 2015.”
Photo: Jorge Díaz Barros / Courtesy Photo. Credit Suisse Names Jorge Diaz Barros Country Manager for Chile
Credit Suisse announces that Jorge Diaz Barros joined the bank this month as the new Head of the Chile Advisory Office and Chile Country Manager, a role in which he will partner with representatives from across our fully integrated Investment Bank and Private Bank to ensure a coordinated approach to all of our activities in the country.
Jorge Diaz Barros, who brings nearly 20 years of experience in the financial industry to his new position, joined Credit Suisse from JP Morgan Private Bank, where he worked in Miami and Santiago de Chile as a Relationship Manager and a Business Developer for UHNW clients in Latin America.
Jorge holds an MBA in International Business from Gabriela Mistral University, Business School in Chile.
With the arrival of the new Country Manager, Credit Suisse confirms its commitment to Chile, reinforcing the bank‘s growth strategy with a priority focus on the global offerings of our integrated bank in the country and across Latin America.
Photo: TrentStrohm, Flickr, Creative Commons. Bruno Colmant, New Head of Macro Research at Bank Degroof Petercam
Bruno Colmant will join the executive committee of the group that will result from the merger between Bank Degroof and Petercam, subject to regulatory approvals.
He will be appointed Head of Macro Research at Bank Degroof Petercam and will also perform some specific assignments as Group Economic Advisor.
Bruno Colmant holds a PhD in applied economics sciences and is a commercial engineer from the Solvay Business School Economics & Management (ULB). He is a member of the Académie Royale de Belgique. He holds a Master of Sciences from the Purdue University (USA) and a Master in Fiscal Sciences (ICHEC-ESSF).
Bruno Colmant began his career at Arthur Andersen, Dewaay and Sofina. He was managing director at ING (1996-2006), Cabinet head of the Belgian Finance ministry (2006-2007), CEO of the Brussels Stock Exchange, member of the management committee of NYSE Euronext and chairman and CEO of Euronext Brussels (2007- 2009) and Deputy CEO at AGEAS (2009-2011). Since 2011 he is academic advisor AGEAS and partner of the consulting firm Roland Berger.
He is a member of the Central Council for the Economy and lecturer in finance at the Vlerick Management School, UCL and at the Solvay Business School Economics & Management (ULB).
Foto: ChemaConcellon, Flickr, Creative Commons. Casi un tercio de las entidades de banca privada en Suiza desaparecerán del mercado en los próximos 3 años
A recent study conducted by KPMG Switzerland and the University of St. Gallen has shown that the gap between Swiss private banks is widening. While many private banks are in the process of adapting their business models to the changing environment, very few have succeeded in increasing their profitability. Only a small group of private banks have been able to pull away from the rest of the industry and make lasting improvements to their managed assets, efficiency and profitability. Meanwhile, smaller financial institutions in particular have felt increasing pressure this year.
As the study «Clarity on Performance of Swiss Private Banks – The widening gap» shows, the pressure on smaller banks in particular continued to increase this year. For many, the decision is clear: either they must leave the market or they must make fundamental changes to their business model so that they can continue to operate their business profitably and sustainably. «However, they don’t have much time left to make the necessary changes», warns Christian Hintermann, Head of Advisory Financial Services at KPMG Switzerland. «In general, many banks still appear to be undecided on which path to choose. We can expect the face of the industry to change significantly over the coming years.»
Banks must decide: Flight or fight?
According to the study, smaller financial institutions in particular have felt increasing pressure this year. They face a stark decision: either leave the market or adapt their business models. However, not much time remains to make the necessary changes. In general, many banks still haven’t decided and lack a clear strategy despite the continued decline in their development. The further decrease in the number of banks in Switzerland can be attributed to M&A transactions and – to an even greater extent – liquidations and the withdrawal of primarily Anglo-American private banks from the market. “We anticipate that around a further 30% of Swiss private banks will disappear from the market over the next three years through acquisitions and liquidations. This will reduce the number of private banks from 130 at the last count to fewer than 100″.
The study also shows a pause in mergers and acquisitions for 2015 despite driving forces remaining strong: The first seven months of this year saw a pause in M&A transactions, in contrast with 2014’s flurry of activity. This is largely due to a lack of sellers as well as potential buyers’ concerns about unforeseeable risks related to undeclared client funds and business practices that are no longer accepted. However, we expect M&A activities to regain momentum, in part thanks to the increase in settlements between banks and the US Department of Justice. The study shows that, even within the first two years of undertaking a major acquisition, banks see a significant increase in return on equity and revenue per employee.
The gap
«While private banks are attempting to adapt their business models, only a small group of very strong institutions have managed to increase their profitability», says Philipp Rickert, Head of Financial Services and Member of the Executive Committee at KPMG Switzerland, summarizing the results. He also points to the falling number of banks that still rely on undeclared legacy assets, predicting that «this concept will not survive in the medium term.»
Market drives growth in managed assets while net new money inflows remain negligible: The 7.3% growth in managed client assets last year is attributable to positive market developments and a strengthening US dollar. In contrast, net new money inflows made up a modest 0.5% of assets. There were marked differences between the various banks: those in the groups «Strong Performers» and «Turnaround Completed» achieved net inflows of 24.9 billion Swiss francs in total in 2014. Meanwhile, banks in the groups «Decline Stabilized» and «Continuing Decline” saw net outflows amounting to 17.9 billion Swiss francs. Overall, the median for managed assets among the «Strong Performers» group has increased by 146% since 2008 thanks to higher net new money inflows, inflows from mergers and acquisitions, and returns on managed assets. Consequently, the ability to grow is a critical success factor.
«Strong Performers» stay in the fast lane while the rest grapple with poor returns on equity: The private banks in the study had more to contend with than just weak growth. With a median value of 3.5%, returns on equity stayed at modest levels and saw little improvement in 2014. 80% of the private banks surveyed achieved returns of below 8% for the year. Only «Strong Performers» generated returns of above 9%, while most banks in the «Continuing Decline» group posted operating losses. Smaller financial institutions with less than 10 billion Swiss francs in managed assets are feeling the pressure in particular, with 41% of these falling into the «Continuing Decline» group. Returns on equity for the smaller banks were less than half those achieved by banks with more than 10 billion Swiss francs in managed assets.
Significant differences in efficiency within bank clusters
Increased operating efficiency and economies of scale have a positive effect on returns. Last year, «Strong Performers» achieved revenues of 585,000 Swiss francs per full-time employee, with this figure only reaching 357,000 Swiss francs for banks in the «Continuing Decline» group. The «Strong Performers» had just under 15 full-time employees per billion Swiss francs of managed client assets, with other banks had almost twice as many at 26 full-time employees. The «Strong Performers» appear to owe their success to their stronger focus on core markets, their increased operating efficiency thanks to outsourcing and economies of scale, and their strong growth rates.
A new CEO does not improve financial results
More than one third of the private banks in the study have replaced their CEO at least twice in the last nine years. In many cases, this has done nothing to improve their financial position in the two years after the changeover. Therefore, there is little to suggest that private banks can improve their results only by making changes to the upper echelons of management. Financial institutions that had kept the same CEO for the last nine years or only changed CEO once achieved higher returns on equity than banks that changed CEO two or more times.
CC-BY-SA-2.0, FlickrFoto: Yi Yuan Ma. China: ¿Estallido de la burbuja o exceso de pánico?
China’s slowdown has been going on for five years now. After the extensive stimulus measures that kept China safe during the U.S. credit crisis of 2008 (and that benefitted the whole world), a growth decline was simply inevitable, points out Maarten-Jan Bakkum, Senior Strategist, Emerging Market Equities at NN Investment Partners. “Policy makers and economists agreed that China should rebalance its economy, with less dependence on investment and export growth and greater importance for consumer spending. In this process, overall growth would decline, but that would obviously be fine if growth would be more balanced and sustainable.”
It soon became clear that Chinese policy makers were only marginally interested in rebalancing the economy in the short term. The credit-driven investment model, in which the primacy for the most important economic decisions lies with the government, remained intact. The sectors with the largest excess capacity were rarely addressed, as local governments had major economic interests in those sectors. Overcapacity became even more significant in industries like steel and aluminum, and in parts of the housing market as well. “It gradually became clear that the economy only became more dependent on credit. So the most urgent measure – reducing the debt level in the economy – came to nothing. Since the massive stimulus package in 2008, the debt ratio has increased by 85 percentage points. This is unprecedented anywhere in the world, and leads to a significant risk of a credit crunch,” reminds Bakkum.
With the recent correction on the Shanghai stock exchange and the mini-devaluation of the renminbi, NN Investment Partners has clear that the confidence in the Chinese government is declining significantly, leading to stronger outflows and further increasing economic problems. “For the first time in decades, people begin to realise that the government in Beijing no longer has complete control over the economy. The capital flight is very difficult to stop.
Over the past sixteen months, China has faced outflows of about 700 billion euros. The authorities have clearly been overtaken by developments. Their monetary stimulus has not been enough to offset capital outflows. This makes an economic recovery increasingly unlikely, which in turn leads to more capital flight and makes further rate cuts necessary. In this process, the renminbi needs to depreciate further. But this would have undesirable effects on the financial system, as companies have accumulated a foreign debt of roughly 3 trillion US dollars during the years of renminbi appreciation,” explains the senior strategist.
“For a long time, investors considered a sharp slowdown in growth to be the biggest risk in China. In recent months, the focus has slowly shifted to a systemic crisis. This creates great uncertainty in the financial markets. And it’s not just affecting emerging markets. Finally, the realisation begins to dawn that there is a real risk of a Chinese credit crisis” concludes Bakkum.
Within internationally invested portfolios, currency fluctuations can have a significant impact on overall risk and return. Investors seeking purer exposure to the underlying investments of any international market can potentially reduce risk with a currency-hedged investment. Deutsche X-trackers currency-hedged, international equity ETFs offer investors a variety of potential investment solutions from broad core international holdings to targeted investments in specific countries. The ETFs seek currency-neutral market-cap exposure to designated international markets.
“As a European-based bank, we have been able to leverage our local insight to offer the most comprehensive suite of currency-hedged international equity ETFs in the US,” said Fiona Bassett, Head of Passive in the Americas. “We will continue to strategically expand our suite, providing strategies that meet the demands of investors.”
Offering the broadest suite of currency-hedged ETFs in the US, Deutsche’s X-trackers US platform has experienced breakthrough success. With assets totaling USD 20 billion as of August 7, 2015, the Deutsche X-trackers platform has increased by approximately 365% since year end, and continues to be among the fastest growing exchange-traded fund (ETF) franchises in the US.
Earlier this month, the Deutsche’s X-trackers US platform improved its market share position to a top-10 ETF provider in the US. The firm’s global exchange traded products platform is now the world’s fifth largest, with approximately USD 76.9 billion in assets under management as of June 30, 2015.
Photo: Any Fuchok. Latin American Corporates Under Pressure: Downgrades Outpaced Upgrades by a Ratio of 3.5x
Fitch Ratings expects operating cash flows of Latin America credits to remain under stress during 2015. Governments have increased taxes on consumers and corporates in response to falling revenues. External conditions also remain weak, especially for oil, copper and iron ore.
‘Fitch foresees another tough 12 months for Latin American corporates and that the ratio of downgrades to upgrades will not reach a level of parity until the second half of 2016,’ said Joe Bormann, Managing Director at Fitch. ‘During the first seven months of 2015, downgrades for Latin American corporate issuers outpaced upgrades by a ratio of 3.5x; this compares with a downgrade ratio of 2.4x in 2014; 1.6x excluding Argentina.’
Refinancing risk is elevated for small, high-yield corporates rated ‘B+’ or lower that have issued bonds of less than US$ 400 million. Positively, exposure to this risk is light in 2015 and 2016. Posadas (Mexican hotel chain owner of Fiesta Americana) was the only high-yield issuer with a bond due in 2015, and it repaid its bond in January. Arendal (Mexican company specialized in the construction of pipelines and industrial plants, US$ 80 million), Ceagro (Brazilian commodities trading company, US$ 100 million) and Marfrig (Brazilian food processing company, US$ 375 million) are the ‘B’ rated issuers with non-benchmark-sized bonds maturing in 2016.
While there was only US$ 6 billion of Latin America debt amortization during 2015, this figure rises to US$ 14.2 billion in 2016 and to US$ 27.6 billion in 2017. High-yield issuers’ debt accounts for US$ 4.8 billion of the 2016 debt and US$ 14.1 billion for 2017. During 2017, nine issuers in the speculative ‘B’ and lower categories face US$ 11 billion of debt maturities. About US$ 9.2 billion of this is PDVSA debt, which is subject to high repayment risk.
Photo: Philippe Put. Loomis Sayles Joins UN’s Responsible Investment Initiative
Loomis, Sayles & Company, a subsidiary of Natixis GAM, announced that it is a signatory to the United Nations-supported Principles for Responsible Investment (PRI) Initiative. The PRI is recognized as the leading global network for investors who are committed to integrating environmental, social and governance (ESG) considerations into their investment practices and ownership policies.
As a signatory to the PRI, Loomis Sayles volunteers to work towards a sustainable global financial system by adopting the PRI’s six aspirational Principles for Responsible Investment, which includes incorporating ESG issues into investment analysis and decision-making processes; including ESG issues into ownership policies and practices; and reporting activities and progress towards implementing the six Principles.
“In 2013, Loomis Sayles senior management resolved to establish company-wide integration of ESG considerations into every team’s investment process. We did this independently and proactively, in order to ensure our business practices reflect the environmental, social and governance values that we, as an organization, believe are essential to creating a viable and enduring global financial system,” said Kevin Charleston, Chief Executive Officer.
Loomis Sayles adopted a set of guidelines and principles that articulate the interaction of its principal goal of providing superior investment results for its clients, as well as the satisfaction of its fiduciary duty under ERISA, and the use of easily accessible high quality inputs on ESG matters by its investment professionals. These inputs are meant to be used by the investment professionals in the benefit and risk analyses that inform their investment recommendations and decisions.
“We are delighted to welcome Loomis Sayles to the PRI,” said PRI managing director, Fiona Reynolds. “By putting ESG matters at the heart of their business, they have already demonstrated their commitment to responsible investment. Joining the PRI further underscores that commitment.”
