Wikimedia CommonsFoto: BNP Paribas Paris. Foto cedida por el banco francés. BNP Paribas se declara culpable y acuerda pagar 8.900 millones de multa a EE.UU.
BNP Paribas announced a comprehensive settlement of the pending investigation relating to US dollar transactions involving parties subject to US sanctions, including agreements with the U.S. Department of Justice, U.S. Attorney’s Office for the Southern District of New York, the New York County District Attorney’s Office, the Board of Governors of the U.S. Federal Reserve System (FED), the New York State Department of Financial Services (DFS), and the US Department of the Treasury’s Office of Foreign Assets Control (OFAC), said the french bank in a statement.
The settlement includes guilty pleas entered into by BNP Paribas in relation to violations of certain US laws and regulations regarding economic sanctions against certain countries and related recordkeeping. BNP Paribas also agrees to pay a total of USD 8.97 billion (Euros 6.6 billion). Beyond what has already been provisioned, this will result in an exceptional charge of Euros 5.8 billion to be booked in the second quarter of 2014. BNP Paribas also accepts a temporary suspension of one year starting 1st January 2015 of the USD direct clearing focused mainly on the Oil & Gas Energy & Commodity Finance business line in certain locations.
BNP Paribas has worked with the US authorities to resolve these issues and the resolution of these matters was coordinated by its home regulator (Autorité de Contrôle Prudentiel et de Résolution – ACPR) with its lead regulators. BNP Paribas will maintain its licenses as part of the settlements, and expects no impact on its operational or business capabilities to serve the vast majority of its clients. During 2015, the activities of the perimeter concerned will clear US dollars through a third party bank instead of clearing through BNP Paribas New York and all necessary measures are being taken to ensure smooth transition and no material impact for the clients concerned. BNP Paribas notes that part of the Group’s USD clearing is already done today through third party banks.
Based on its estimates, BNP Paribas expects its fully loaded Basel III CET1 ratio as at 30 June 2014 to be at around 10%, consistent with the Group’s targets announced within its 2014-2016 business development plan. This estimate takes into account in particular solid underlying second quarter net results and pro rata temporis the current intention of the bank to adapt its dividend for 2014 to a level equal to that of 2013 (1.50 euros per share).
In advance of the settlement, the bank designed new robust compliance and control procedures. Many of these are already in force and are working effectively, and involve important changes to the Group’s procedures. Specifically:
A new department called Group Financial Security US, part of the Group Compliance function, will be headquartered in New York and will ensure that BNP Paribas complies globally with US regulation related to international sanctions and embargoes.
All USD flows for the entire BNP Paribas Group will be ultimately processed and controlled via the branch in New York.
As a result of BNP Paribas’ internal review, a number of managers and employees from relevant business areas have been sanctioned, a number of whom have left the Group.
Jean-Laurent Bonnafe, CEO of BNP Paribas, said: “We deeply regret the past misconduct that led to this settlement. The failures that have come to light in the course of this investigation run contrary to the principles on which BNP Paribas has always sought to operate. We have announced today a comprehensive plan to strengthen our internal controls and processes, in ongoing close coordination with the US authorities and our home regulator to ensure that we do not fall below the high standards of responsible conduct we expect from everyone associated with BNP Paribas”.
“Having this matter resolved is an important step forward for us. Apart from the impact of the fine, BNP Paribas will once again post solid results this quarter and we want to thank our clients, employees, shareholders and investors for their support throughout this difficult time”.
”The Group remains focused on implementing its 2014-2016 business development plan. We confirm our ambition to meet the targets of this plan announced in March this year. In particular, North America remains a strategic market for the Group where we plan to further develop our retail, investment solutions and corporate & investment banking franchise over the coming years”.
“BNP Paribas is a client-centric bank and we will continue to work every single day to earn the trust and respect of all our stakeholders in service of our clients and the economy”.
The inflow of liquidity continues to play a major role on the financial markets: risky assets such as equities and spread products continue to perform well, while the upward pressure on bond yields remains very slight.
Peripheral Eurozone equity and bond markets can continue to rely on the support of the central bank and consequently on persisting interest from investors.
Peripheral Eurozone bond yields substantially lower
ECB and economic data boost financial markets
Investor risk appetite has received several major boosts over the past few weeks. The announcement of fresh monetary steps by the European Central Bank was of course the main one.
Although expectations had been very high since May, the package of measures announced on 6 June proved to be even more comprehensive than anticipated. It demonstrated once more that ECB President Draghi is highly capable of managing market expectations. The positive confidence effect which resulted from the ECB’s actions was perhaps the most significant factor in the market’s response; more liquidity and a further decrease in the risk of a Eurozone break-up boosted equity and bond markets in the peripheral Eurozone countries in particular. These peripheral countries can continue to rely on the support of the central bank and consequently on persisting interest from investors.
Moreover, stronger evidence emerged that the slowdown in economic growth in the first quarter was probably a temporary dip. Global economic activity (measured by the global PMI) was up sharply in May, while economic figures in the US, Japan, China and the Eurozone were also positive.
Added to the fact that investor positions in specific asset classes are significantly less concentrated than they were at the start of this year and that the mood among investors is less euphoric, and we see sufficient arguments to retain our diversified risk-on positioning. This translates into significant overweights in equities and real estate and slight overweights in spread products and commodities.
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Wikimedia CommonsFoto: Atoma. Henderson Strengthens North American Business With Acquisition of Geneva Capital Management
Henderson Global Investorshas entered into an agreement to acquire the entire issued share capital of Geneva Capital Management. Founded in 1987, Geneva has assets under management of US$6.3bn (As at 31 May 2014) in Mid- and Small-Cap US growth equities.
An important strategic milestone in the development of Henderson’s North American business
Geneva will add US equity investment capabilities and extend US institutional client base
Initial consideration of US$130m; deferred consideration linked to revenue retention of up to US$45m; and growth-related earn-out of up to US$25m
Expected to be underlying earnings accretive in the first full year post acquisition.
North American business update
Henderson’s North American business continues to grow rapidly, doubling its AUM since 2011
In May 2014, the US Mutual fund range reached US$10bn for the first time, with net inflows of US$1.4bn in the year to date
A US based institution awarded a significant new mandate to the Henderson Global Equity team in May 2014
Having joined in 2013, the US high yield team has achieved 2nd percentile investment performance in its first full year of operation. Investment grade expertise has been added to the team to expand Henderson’s US and global credit platform
The acquisition of Geneva will enable Henderson to continue to build its North American business.
Acquisition of Geneva Capital Management
Accelerates delivery of Henderson’s strategy to grow and globalize its business
– Post acquisition, the North American business will have approximately US$18.3bnof AUM, representing nearly 15% of the Group on a pro forma basis
Geneva’s investment expertise in US growth equities fills an important capability gap for Henderson
– Geneva has a long track record in managing Mid- and Small-Cap growth equities, underpinned by a disciplined and consistent investment process
– The addition of Geneva will double Henderson’s number of US-based investment professionals
The acquisition will transform Henderson’s North American presence, bringing proven institutional distribution capabilities to complement Henderson’s successful retail franchise
– The acquisition will quadruple Henderson’s US institutional AUM
– It will create a well-balanced client base, split broadly equally between retail and institutional
Geneva’s principals have signed long-term employment contracts and have agreed to reinvest at least 30% of net sale proceeds into Geneva products
There is a strong cultural fit between the two firms and Geneva principals will become valued members of Henderson’s equity and North American management teams
Over time, the transaction creates opportunities to build new products with US content (e.g. Global Small-Cap and US All-Cap); launch new US equity retail products; and market Henderson capabilities more actively to US institutions.
This transaction is expected to close on 1 October 2014, subject to customary consents.
Wikimedia CommonsJames Swanson, Chief Investment Strategist at MFS. Tenets of Investing For The Long Run
James Swanson, Chief Investment Strategist at MFS Investment Management, highlights a few of the rules of thumb that he relies on to help him determine where we are in the business cycle and which markets are too rich, too cheap or fairly valued. Read his blog at this link or click on the video.
Monica Defend, responsable de Análisis de Asignación de Activos Global en Pioneer Investments. Sin más subidas de tipos en Brasil y con una política monetaria demasiado laxa en México
In the last Pioneer Investments’ EM Update about Central Banks & Monetary Policies, Head of Global Asset Allocation Research at Pioneer Investments, Monica Defend, shares her view on Emerging Markets monetary policies.
In Asia, and regarding to China, she considers that the implementation of fiscal reform is proceeding as ten local governments will be allowed to issue bonds with full responsibility of repayment. “Even though the economic slowdown would suggest a stronger monetary easing, in the ongoing process of liberating interest rates and increasing efficiency in credit allocation, monetary policy must remain prudent to prevent a return to the old model of allocation and growth. The latest reserve requirement ratio cut for some qualified banks supports this attitude of the People’s Bank of China”.
In India, in early June, the Reserve Bank of India (RBI) kept policy rates on hold at 8% and eased the access to liquidity (via the statutory liquidity ratio reduction and a special term repo facility). “In our opinion, the RBI’s tone has been more dovish than in April, with the aim of supporting the next actions of the new government. The well-known inflation risks to the upside are broadly balanced by the possibility of stronger government action on food”.
In Europe, some interest rate cuts could arrive in countries like Hungary. “It is clear that a certain degree of “imported” (from Eurozone) weak price dynamics, plus stable commodity prices are favoring this weak trend. The distance between the central bank’s inflation rate forecast (0.7% in Q2 2014, rising to 3% to the end of 2015) and actual data prompted a 10 basis point (bp) rate cut on May 27. The central bank also stated that “…however, achieving price stability in the medium term, points in the direction of monetary easing” and is an important piece of information for making monetary policy choices. If forecasted inflation remains similar, it is possible that a further cut will arrive soon”.
Similar in Poland: “In its statement after the last meeting (June 3), the National Bank of Poland acknowledged that April inflation is not only widely below the medium-term target (2.5%) but also below the forecasts formulated in March. The bank maintained its forward guidance of unchanged rates until at least Q3. But as in Hungary, the central bank suggested that the next inflation report round of forecasts will be key to determining the possible evolution of rates”.
Defend doesn’t see more hikes in Brazil’s rates. As the market expectated, the central bank left the benchmark Selic interest rate unchanged on May 28 at 11%, pausing a hiking cycle initiated in April 2013. The announcement reinforced the idea that the central bank’s monetary policy committee members (COPOM) are comfortable with the current rate levels, given that inflation has subsided. “Assessing the evolution of the macroeconomic scenario and the perspectives for inflation, the COPOM decided, unanimously, at this moment, to keep the Selic rate at 11.00%.” The growth slowdown is increasingly worrying economic authorities and, it is now likely that Brazil’s central bank reaction function will give greater weight to growth dynamics.
In Mexico, the police could be too loose. “The Bank of Mexico (Banxico) cut the overnight rate from 3.5% to 3% on June 6, surprising us and the market. In its statement, Banxico mentioned that this one-off rate cut was motivated by the notably weaker-than-expected economic performance in the first quarter and by the downside risks to growth that remain on the horizon. The current central bank outlook is for moderating inflation and annual growth, which implies considerable acceleration in the coming quarters. We believe that the current monetary policy stance might be too loose in a framework of a closing output gap and inflation, which is well-behaved yet above the target (especially considering the delay at which monetary policy works)”.
Allfunds Bank UK has recruited former Morningstar OBSR researcher Chetan Modi as a senior fund analyst. The move by AFB represents not only a further investment into Allfunds UK operations but also a refocusing of the investment research capability in London, particularly in light of the changing UK market following RDR.
Modi has been at Morningstar OBSR since 2006 where he has been developing his role as Fund Analyst covering US, UK and Global Emerging Markets Equity funds. He has also been active in promoting the business to advisor groups and advising consulting on client model portfolios. Modi now joins Mark Hinton, Anais Gfeller, and Will Jackson who were recruited over the past 24 months from Kleinwort Benson, Lombard Odier and Last Word Media respectively. He also joins Manuel Yutaro Rubio who transferred from Madrid office. Their recruitment brings the AFB Investment Research Team worldwide up to 14, with 5 researchers in London and a further 9 in Madrid.
A year ago, Allfunds recruited Stephen Mohan from Cofunds to lead and expand its UK operations. Since that time Mohan has built a senior sales and development team to promote AFB’s funds administration capability in the UK and the firm recently announced its first major new client in BWCI, the Guernsey based actuarial consultancy.
Now Mohan’s attention is turning to Allfunds global research capability which has traditionally been focused on Madrid, providing research, as part of its funds administration offering, to AFB clients worldwide. With increasing emphasis in the UK on funds research in the post RDR world Mohan is now looking to refocus AFB’s efforts on providing a superior research service to clients in the UK.
In parallel, the demand for AFB UK based fund research has also grown because Mohan has significantly increased the number of British fund management groups on the Allfunds platform, adding more funds to an already world beating funds list of over 40,000 funds worldwide.
Stephen Mohan said, “Funds research is playing an increasingly important role in our offer in the UK particularly given the increasing desire by wealth managers to seek out the best funds for their clients. I’m therefore delighted that we have been able to bring in Chetan to join our investment research team in London, to provide what we believe is market leading capability to our wealth management clients.”
Photo: Mattbuck. Compass Group Appoints Ivan Ramil as its New Institutional Clients’ Director in Mexico
As was confirmed by the firm itself to Funds Society, Compass Group in Mexico has appointed Ivan Ramil as the new director for the group’s Institutional Clients in Mexico. Ramil replaced Luis Palacio, who after nearly six years in that position has joined BNP Paribas Investment Partners as commercial director, also in Mexico.
Prior to assuming his new post, Ramil worked during the past three years as Compass Group’s Strategy Director for Mexico. Ramil has extensive knowledge of international strategies and the institutional investors industry in Mexico. Before joining Compass Group, he was senior financial advisor for Corporate Banking at IXE Financial Group, and prior to that worked for over four years at Motion International Corporation.
Ramil has a degree in International Relations from the Universidad Iberoamericana in Mexico City, and has diplomas in Corporate Finance and in Economics and International Trade from the Chamber of Commerce and Industry in Madrid. He is currently a candidate for the Cross Continent MBA from the Fuqua School of Business at Duke University in North Carolina (USA).
Ramón Hache, Head of Business Development for Latin America at Permal Group. Photo: Linkedin.. Ramón Hache Joins Permal as Head of Business Development for Latin America
According to information available to Funds Society through sources familiar with the appointment, Ramón Hache has joined Permal Group’s ranks in order to develop the firm’s business in Latin America. He will report to Shane Clifford, Head of Business Development for the Americas. Funds Society also contacted Permal directly, but the firm declined to comment on news of the appointment.
With over 16 years’ industry experience, Hache comes from Barclays Wealth, where he was managing director. He previously worked for over a decade at Deutsche Bank Private Wealth Management, serving U.S. and Latin American HNWI.
Permal is a global alternative asset manager offering investment solutions through funds and customized portfolios. Founded in 1973 and with over 23 billion dollars under management globally, the group is defined as “product engineers.” From a “top-down” perspective, the firm focuses on the selection of managers, asset allocation, risk management and alternative investments.
Wikimedia CommonsPhoto: Lotus Head. Sura AM Goes Shopping in Uruguay, and Acquires Two New Companies
Grupo Sura, a South American Investment Group, has recently acquired Disgely and Jobely, two Uruguyan companies, through its investment subsidiary, Sura Asset Management; this operation will allow the group to expand its market within the insurance and securities intermediation sectors, as has been unanimously pointed out by local media.
For their part, Sura representatives in Uruguay confirmed the group’s participation in two companies, without mentioning the companies’ names, to Funds Society, “as a first step in developing new lines of business in a country where the company has extensive experience in other markets such as life insurance and savings distribution, and securities brokerage, thus complementing the range of products and services available for Sura’s clients in Uruguay.”
The company added that the corresponding authorizations must be processed before the appropriate regulators in each case.
In a recent interview with the Colombian newspaper “El Tiempo”, Andrés Castro, Sura Asset Management’s president, pointed out that Sura’s goal is to become a leading asset provider in Latin America.
Erik Halvorssen has just joined the CGIS team in Miami; the group includes a broker- dealer (CGIS Securities LLC) and a registered investment advisor (CGIS Advisors LLC). From its offices at 990 Biscayne Boulevard in Miami, CGIS provides brokerage and financial advisory services to a select group of domestic and international clients.
As senior vice president, Halvorssen will work alongside CGIS’ CEO, Riggin Dapena, whom he met at Bank of America during the period from 2005 to 2008 when Dapena was at the helm of the International Private Banking and brokerage business during the bank’s exit from these lines of business.
CGIS, which is held primarily by the group belonging to Chilean businessman Alvaro Saieh, began operating as a broker dealer in Miami three years ago.
Halvorssen, who to date was the director of the U.S. multifamily office Lowenhaupt Global Advisors in Miami, told Funds Society that leaving Lowenhaupt was a very conscious decision and was a natural progression which will greatly benefit his clients in terms of access to products, and specialized consulting and costs. Halvorssen guarantees that CGIS Advisors has a better understanding of international clients, which “will surely benefit my clients.”
Halvorssen will also rely on the Chilean group’s analysis team. “In Miami, we have a trading desk with six active brokers who are very familiar with the international client’s sensitivity.”
Before joining Lowenhaupt Global Advisors, this financial professional with 17 years’ industry experience, worked as a sales manager in private banking at Bank of America and Banco Santander, and founded his own firm, Pax Advisors, also in Miami.
