February | 2010 | World Finance

Europe’s new gas supply on track

Posted on February 18, 2010 by

Nord Stream is a pipeline that will transport natural gas from the vast gas fields of northern Russia to the EU. A project familiar to regular readers of World Finance, Nord Stream is a project of four major companies, OAO Gazprom, BASF, Wintershall AG and E.ON Ruhrgas. Once completed, Nord Stream will consist of two parallel lines that run for 1,220km on the seabed of the Baltic Sea making it Europe’s longest underwater pipeline and one of the continent’s most important infrastructure projects of recent decades.

2010 will be a pivotal year in the history of the project with construction of the first line due to commence in early Q2. Transport capacity of the first line will reach around 27.5bn cubic metres a year (bcm) with completion due in 2011. The second line will double annual capacity to around 55 bcm per year providing enough energy to meet the demand of more than 26m European households. World Finance takes a close look at the recent progress of the project as Nord Stream gets set to build a new gas supply route for Europe.

A successful end to 2009
The final few months of 2009 saw Nord Stream achieve significant success with permits for construction being awarded to the project by Denmark, Sweden, Finland, Russia and Germany. There is currently only one permit remaining – the water permit, which is issued by the Western Finland Environmental Permit Authority. The permits obtained were the result of many years of hard work invested in planning the pipeline and mean that the national authorities are satisfied that the project fulfils the stringent environmental and economic conditions of the five countries whose waters the pipeline will pass. Estonia, Latvia, Lithuania and Poland were also involved in the international consultation process setting a new benchmark for international cooperation. In fact, detailed surveys and research of the potential environmental and socioeconomic impacts of the Nord Stream pipeline started back in the 1990s. In total, Nord Stream has invested more than Ä100m into environmental impact studies to ensure that the routing of the pipeline is environmentally safe and sound.

Whilst permitting processes are time-consuming and demanding, all the permits have been granted well within schedule. The Russian and German permits were granted in the final weeks of 2009 meaning that all the basics are in place to allow for the start of construction in April 2010 according to plan. The second and final German permit granted on December 28, 2009 leaves only the second Finnish permit outstanding. The consortium has already received the Finnish EEZ permit and the permit for the 50km section of the pipeline in German territorial waters and landfall in Lubmin near Greifswald.

As far as the water permit is concerned the Western Finland Environmental Permit Authority will take into account the Uusimaa Regional Environment Centre’s evaluation of the Environmental Impact Assessment, along with the additional information provided by Nord Stream. According to the Western Finland Environmental Permit Authority, the decision for the water permit will be granted by the end of January 2010. The Munitions II permit application for the anchoring corridor will be submitted in time to ensure the permit will be received well before related activities start.

It is important to note that construction will only begin once all necessary permits have been issued. Nord Stream assumes it will receive the final outstanding permit to allow for construction to begin as planned in spring 2010. Renowned and experienced technical sub-contractors, who have already been commissioned, will continue the intensive preparation of construction activities as scheduled to enable construction to begin as planned.

Financing
Financing for the project comes from Nord Stream’s shareholders who are investing 30 percent of the Ä7.4bn (£6.7bn) required for the pipeline through equity contributions proportionate to their shares in the joint venture. The budget figure is calculated on the basis of the contracts for pipe production, logistics and pipe laying.

Some 70 percent will be financed externally by means of project financing from banks with substantial export credit agency support. Phase 1 of project financing is coming to an end – to date 27 banks have confirmed participation in the financing for about Ä3.9bn meaning that contracts should be finalised within a short time.

The timetable for the Nord Stream project is consistent with a project of this magnitude, with a Request for Proposals (RFPs) being issued to interested banks back in August 2009. It is clear from the response to Phase One funding that investors see Nord Stream as an excellent investment opportunity in spite of tough economic conditions. Indeed, there is genuine enthusiasm in the investment community about a truly pan-European project that will provide jobs and supply Europe with a reliable and secure supply of energy for many years to come.

Nord Stream will seek additional funding for Phase 2 in 2010. Yet, it is important to note that the construction contracts and the contracts with Saipem (for pipe-laying) and EUPEC (for the pipe-coating) are for both pipelines. The coating yards (covering both phases) are already built and operating and the steel order for the second pipeline (Phase Two) is planned for Q1 2010. Nord Stream foresees that the work done to develop documentation for Phase One will greatly shorten the financing process for Phase Two meaning that all the financing will be wrapped up by the end of 2010 at the latest.

Challenges ahead
The main challenges for 2010 lie in the construction phase, which will be the project’s primary focus this year. In preparation, Nord Stream has hired an experienced Deputy Director of Construction to oversee pipeline installation in close cooperation with the relevant authorities and in accordance with permitting requirements. In fact, preparations for construction began back in August when the first transshipment of pipes from Mukran to Karlskrona took place. Now the majority of the pipes needed for the first line of the pipeline are already in storage at strategically located marshalling yards.

Importantly, Saipem will start pipelaying activities in April 2010 with the Castoro Sei pipelay vessel; the Solitaire pipelay vessel will start working in September 2010. It is foreseen that the laying of the first line will be completed in 2011 – the laying of the second line is scheduled for 2011 and 2012.

Munitions clearance operations began at the end of November in Finnish waters and take the project another step closer to construction. Approximately 70 munitions in Finnish, Swedish and Russian waters were identified within the security and anchor corridors of the pipeline route. To mitigate any potential risk to the pipeline, Nord Stream together with BACTEC (a leading UK-based explosive ordnance and mine action company) and international and relevant authorities, has developed an environmental and safety management plan that establishes monitoring and mitigation measures related to munitions clearance in Finland and Sweden. In Russian waters, it will be the responsibility of the Russian navy to clear the munitions following their standard procedures for clearance. Mine clearance in the Baltic Sea is nothing new – since 1996 around 1,000 munitions have been cleared by navies of the countries bordering the sea.

Energy contribution
The prospect of additional and secure gas supplies through the Nord Stream pipeline comes at a good time for Europe. Currently, Europe is facing an acute energy shortfall as indigenous energy supplies run short and renewables are yet to be fully exploited. For example, additional gas supplies are particularly welcomed in the UK as gas reserves in the North Sea have dwindled changing the country’s status as a net producer of natural gas to become a net consumer. Significantly, the UK remains Europe’s largest gas market, a result of its heavy use of gas in electricity generation and it is estimated that the UK will need to import three quarters of its gas supply by 2015. By the time that both lines are operational in 2012 the UK will be piping gas directly from Russia for the first time. Already more than 4bcm of gas per annum has been booked for the UK market through Nord Stream equivalent to more than four percent of total UK gas demand of about 94 bcm per annum. The gas would be piped to Britain through the Netherlands and Belgium across the North Sea to a gas storage centre in Norfolk. As far as the European market is concerned natural gas delivery contracts have been signed between European and Russian companies through to the year 2035.

With all permits bar one received and crucial Phase One financing coming to a close in the next few weeks, 2010 will mark a crucial year for Nord Stream. With construction of the first line due to start in April, Nord Stream is on time and on track to supply Europe with gas from 2011.

For more information email: press@nord-stream.com; tel: Jens D Müller +41 79 295 96 08

More for less

Posted on February 18, 2010 by

Time was when more than a few executives banked their salaries and lived off their corporate expenses. Not any more – such times are long gone.

The recognition that travel and associated expenses represent most organisations’ second-largest controllable expense is driving the quest for the vast opportunities for savings that can be found through a properly defined and controlled expenses management system.

There is now an acknowledged need for comprehensive Management Information (MI) systems that can spot and highlight out-of-policy spend.

Diners Club’s Global Vision MI tool provides spend information at the highest level yet can also drill down into subsidiary, cost centre, or individual cardholder spending data, highlighting non-compliance in class of travel, size of car rented or use of non-approved hotel chains. Some businesses are now only allowing so-called ‘revenue-producing travel’.

The use of low-cost airlines rather than scheduled carriers, the pro-active seeking of lower hotel rates and stricter control of the per diem spend related to meals and other services are all being targeted as means to lower overall costs.

Many of these controls now being put into place will certainly continue going forward as they represent sound business practice. Sooner or later the economy will pick up and business will regain its health. Companies will have to get their people back out on the road to meet customers but the present demand for increased control over expenses will not diminish.

The current situation is nothing new. Since World War II there has been a rolling cycle of recessions and recoveries. When it comes to business expenses, economically-driven changes have been seen at the time of the outbreak of both Gulf Wars, in the immediate post-9/11 period, and during the SARS outbreak.

What has changed dramatically is the reaction time, which has accelerated enormously thanks to improved MI systems that can direct management to where cuts can be made and steer them towards the stricter controls that can be put into place.

It’s a vital element of succeeding in today’s ever more competitive business world. Companies have been forced to trim waste, to get more from less.

Corporate travel and procurement departments have had to reduce staff and make more efficient use of technology.

This has driven Diners Club’s increased number of joint projects with its clients, which aim to automate back office information feeds of card data into automated expense reporting tools and ERP systems.

Says Tom Edgerton: “Because of our global reach, ideas for improvement flow all the time from one country to another. What are emerging as ‘best practice’ strategies, involve such things as improved client communication, better and more highly automated customer service and new tools for the cardholder and the programme administrator. We also get very useful feedback from our client meetings and forums that help us keep on track with where we should be going with our products and the associated technology.

“For our global clients, customer service is performed at both the headquarters and subsidiary level.

“This provides the local subsidiary with local product knowledge language support while providing the same information tools that all other subsidiaries of the company can access.”

It is certain that the strong trends, towards global consolidation of spend data across international companies, will continue apace. This will put them in a stronger position when it comes to negotiating vendor agreements with major airlines, hotel chains and car rental operators.

The need for businesses to have a consistent card programme across all the countries in which they operate will narrow the field as to which global expense management companies they can work with.

Diners Club’s aim is to continually improve its products and services to ensure the client has a viable choice when considering changing from their current supplier to a different one or when planning the implementation of a new expense management programme.

Says Tom Edgerton: “We are in a state of constant evolution. The greatest challenge to us has always been in keeping up with the myriad regulatory changes that impact the services we offer. Taking on-board the suggestions of our clients, we have taken the tack of working directly with the regulators to anticipate these changes and keep ahead of them.”

The first credit card on the market – they launched in 1951 – and with more than 25 years of corporate credit card experience, Diners Club today can offer corporate payment solutions in more than 50 countries.

Adds Tom Edgerton: “We operate a Corporate Card programme that provides unmatched service from our dealings with the client’s headquarters right down to individual cardholder level.

“Our set of services is consistent across all the countries in which we operate. With more than 100,000 multinational, corporate and SME clients we offer a truly global solution.”

Big Pharma strikes again

Posted on February 18, 2010 by

After a year of disappointment, news of a massive merger in what was once regarded as a key sector to stoke investor appetite has to be welcoming news. On January 4, Swiss pharmaceutical giant Novartis agreed to take full control of eyecare company Alcon in a deal worth nearly $40bn. Novartis will spend $28.1bn on raising its stake in the company to 77 percent, up from the 25 percent stake it bought from Nestle in 2008. It then plans to spend a further $11.2bn on buying the remaining 23 percent stake it does not own.

The acquisition is expected to help Novartis diversify its business away from prescription drugs. Several large drug companies have been eyeing acquisitions in other areas of healthcare as they begin losing patent protection of their own drugs. “The addition of Alcon will strategically strengthen our healthcare portfolio and our position in eyecare, a sector with dynamic growth,” said Daniel Vasella, chairman and chief executive of Novartis. He added that the two companies would be able to combine research and development operations, potentially saving them $200m over three years.

Even with the credit crunch, the pharmaceutical sector has been one area of massive investor interest. Between 1995 and 2009 an astonishing 11,207 deals took place in the sector, worth a total value of nearly $2trn. And mergers and acquisitions remain an integral part of Big Pharma’s strategy, contributing almost two-thirds of peer-set sales growth until 2014 according to market analyst Datamonitor.

The past decade has seen a wave of major M&A activity in the sector, from the creation of AstraZeneca and GlaxoSmithKline to the merger of Pfizer and Wyeth and Merck and Schering-Plough. To quantify how much sales growth has been driven by M&A versus how much has been self-produced through organic growth, Datamonitor analysed a 20-year sales dataset comprising 14 years (1995–2008) of company reported sales and six years (2009–2014) of forecast data. According to the data, Big Pharma’s sales were $84bn in 1995 and, based on organic growth only, are forecast to increase to $195bn by 2014. Furthermore, the analyst believes that M&A activity will lift 2014 sales to $381bn. As a result, between 1995 and 2014, M&A activity is expected to account for 63 percent of absolute growth. Datamonitor also notes that the mergers may help Big Pharma maintain its share of the total prescription pharmaceutical market.

Drug drug druggy
But the performance of some pharmaceutical and biotech company stocks has been mixed at best. G Steven Burrill, CEO of Burrill & Company, a San Francisco-based merchant bank specialising in funding for life sciences companies, says that the performance of some blue-chip biotech firms weighed down the sector’s performance on the stock market. He points out, for example, that both Amgen and Genzyme saw their share values decline and finish in negative territory to close the year down 1.7 percent and 26 percent, respectively. Amgen’s shares took a hit in the final quarter after the US Federal Drugs Agency said it wanted more information on the potential osteoporosis treatment Prolia. Genzyme shares were impacted as manufacturing problems slowed sales of its drug Cerezyme used to treat Gaucher disease.

“On the plus side, several companies saw their share values increase dramatically,” added Burrill. “Leading the charge was Affymetrix whose share value almost doubled, benefiting both from an improvement in its quarterly sales performances and a general resurgence of interest in genomics and tools companies during 2009.”

“The spectre of personalised medicine is gaining traction thanks to Big Pharma adjusting their business models from discovering blockbuster drugs to developing targeted medicines. Advanced tools to uncover genetic information will be central to this new strategy,” says Burrill. “The drive to slash the cost of genomic sequencing to $1,000 has also focused attention on advances under way in next-generation sequencing, which is one of the reasons why the share values of companies such as Illumina, Life Technologies and Helicos BioSciences, who provide various sequencing tools, performed so well during the year.”

Helping pad these gains was the dramatic year-over-year share increases of companies such as Human Genome Sciences (1,370 percent), Compugen (1,000 percent), Athersys (821 percent) and Targacept (524 percent), whose share values were driven by positive clinical trials data and/or the signing of lucrative partnerships with pharmaceutical companies.

Burrill also points to corporate fundraising levels as a positive indicator for the sector in 2010. He says that despite the tough economic environment, the biotech industry in the US raised, through public and private financings and partnerships, over $55bn in 2009 – setting a new record. “Partnering was on a tear through much of the year with the industry raising almost $37bn in total deal values – a record for the industry. With $55bn raised, this will go down in history as our industry’s largest financing year, albeit during one of the most difficult financing environments ever,” says Burrill. “The message is: when companies have to raise capital, companies do, even when the cost of capital is unfavourable.”

“It also reflects the urgency that Big Pharma’s place on accessing biotech innovation as their ‘patent cliff’ gets ever closer,” says Burrill. “The number of deals inked in the year is unprecedented. What did come as a surprise to many was that they did not acquire biotech companies at the rate that was predicted,” he adds.

Pondering property owners
As a wave of patent expiries on major products approaches Big Pharma’s shores, industry observers are calling 2010 the year of the patent cliff. Companies will continue to look for partners and purchases, both big and small, to offset the looming decline in sales.

Among the drugs facing generic competition this year are Pfizer’s Alzheimer’s treatment Aricept, Merck’s hypertension medicine Cozaar, and Sanofi-Aventis’ breast cancer drug Taxotere. And by 2012, several firms will have lost protection on their most lucrative products, including Eli Lilly (Zyprexa), Bristol-Myers Squibb and Sanofi-Aventis (Plavix), and AstraZeneca (Seroquel). Most critically, Pfizer will face competition on Lipitor, the cholesterol-lowering drug that raked in nearly $13bn in 2008.

Companies are using a range of tactics to stem the pending revenue drain. Last year brought three high-profile deals meant to buttress portfolios and pipelines: Pfizer paid $68bn for Wyeth, Merck bought Schering-Plough for $41bn, and Roche forked over $47bn for the 44 percent of Genentech it did not already own.

Yet even with this latest round of merger and acquisition activity, no single firm commands more than eight percent of the global prescription drug market, notes Burrill. “That would generally indicate that we have a ways to go on consolidation,” he says. “There’s definitely a couple of large M&A events left in Big Pharma,” agrees Simon King, senior analyst at Datamonitor.

King points to two companies that sat out the merger frenzy of the past decade. Managers at Lilly and Bristol-Myers focused on smaller biotech acquisitions and swore they were not interested in bigger deals. However, they are now the smallest of the top-tier players, and King sees a potential shift in strategy going forward.

Throughout the year, big companies will continue to mine the pipelines of small biotechs to help sustain growth. In a positive twist for Big Pharma, the challenging funding environment for small firms will create some bargains.
Burrill notes that 2009 turned out to be the second-largest financing year in biotech history. Still, gloomy markets meant that small firms, unable to raise cash from stock offerings or venture capitalists, were forced to accept less favourable terms from partners or acquirers. In 2010, those harsh realities will persist. Also this year, drug companies will continue to look to emerging markets for growth, Datamonitor predicts. In addition to India and China, where many firms increased their stake in 2009, Latin America, Central and Eastern Europe, and Turkey are to be important acquisition locales for Big Pharma.

In December last year GlaxoSmithKline (GSK), the world’s leading vaccine producer, said that it plans to outpace its rivals in the race to emerging markets as revenue from traditional Western pharmaceutical markets continues to slow. Abbas Hussein, London-based GSK’s head of emerging markets, said that the company will pursue acquisitions and alliances in the region, although he cautioned that targets are scarce and prices being demanded by some businesses are unreasonable.

Hussein said that GSK is focusing on a combined pool of branded generics, vaccines and traditional patented medicines to beef up its exposure to emerging markets, which currently account for 13 percent of group sales. “I think it’s very, very reasonable to say that my ambition is that we will beat the market growth rate,” he told reporters ahead of an analyst and investor briefing.

Healthcare information group IMS Health has forecast 13 percent to 15 percent growth in pharmaceutical demand in emerging markets over the coming decade, compared with just one percent to three percent for mature markets. For example, China’s domestic vaccine production market is expected to expand quickly in the years ahead as investors look to capitalise on the nation’s healthcare reforms and enhanced public awareness about inoculations.

Analysts expect that the country’s vaccine sector will grow, up to 25 percent annually, according to a report from Zero2IPO, a Chinese venture-capital firm. In 2012, the size of the market will reach “8bn yuan”, the report says. Attracted by the growing vaccine market, “investors from home and abroad will be piling into China”, said Zheng Yufen, senior manager for healthcare at the investment banking division of Zero2IPO.

Talk of foreign investment in the country’s growing pharmaceutical industry has already spurred rallying of some companies’ share prices. For example, at the start of this year shares of China’s Sinopharm Group jumped on fund buying fuelled by hopes for more merger and acquisition deals as China’s largest pharmaceutical products distributor moves to expand its revenue base. “We have a very bullish view on the stock as the company is in one of China’s booming, high entry barrier industries. More M&A deals are expected as it grows through acquisitions,” says William Lo, analyst at Ample Finance Group. “Since it is the market leader in this low-risk distribution segment of the medical industry, we don’t expect to see any competition from rivals and that also fits the appetites of many investment funds,” Lo says.

Reforming China’s healthcare
China is the world’s largest vaccine manufacturer, and most of the companies in the sector are privately owned. The local vaccine market has enjoyed strong growth worldwide, but vaccine sales accounted for only less than one percent in the nation’s healthcare industry, according to figures from CITIC Securities. “That number is comparatively low considering China’s large population base,” said Zheng.

Ongoing healthcare reform is giving the vaccine sector a boost because the Chinese government is expected to spend 26bn yuan on improving public healthcare services before the end of 2011. According to Zero2IPO, the gross profit rate for vaccine companies on average is 70 percent. But challenges do exist. “Compared with their foreign counterparts, Chinese vaccine makers lag behind in innovation and management,” Wang said.

Nationwide, China has over 40 vaccine manufacturers. Other than state-owned companies like Shanghai-listed Tiantan Biological Products and US-listed Sinovac Biotech, many of China’s vaccine makers are private and still small in size. “Money is their biggest concern when they plan to expand,” said Zheng.

Drug companies are battling to win a large piece of the pie as they look for substitute revenue in the face of increased competition for patented drugs in the US and Western Europe. Drug sales in emerging markets are expected to double by 2015 from the current $81bn thanks to a number of factors, including a high birthrate and a swiftly increasing middle class. “By 2020 you are looking at emerging markets in size being equivalent to the US market and the major five in Europe,” says GSK’s Hussein.

In 2009, a batch of international pharmaceutical firms entered the vaccine sector through mergers and acquisitions. In late 2009, Novartis International, the world’s sixth largest pharmaceutical company said it agreed to acquire an 85 percent stake in a Zhejiang-based private vaccine producer. And last year GSK wrapped up two deals in China to establish vaccine manufacturing joint ventures with two local firms committed to researching and developing vaccines in various categories. “We have great confidence in China,” says the firm.

Increasing GSK’s reach in the region would provide a key “third leg” to its existing US and European businesses, he added. Hussein said that GSK remained alive to acquisitions and tie-ups in the region following its purchase of assets from Bristol-Myers Squibb Co., Belgium’s UCB SA, and alliances with South Africa’s Aspen Pharmacare Holdings Ltd and India’s Dr Reddy’s Laboratories Ltd.

Hussein said that alliances were a “great way to go as you are sharing the risk, and it makes good financial sense,” while acknowledging they can be more complicated than a straightforward acquisition. GSK expects operating margins in the region to remain at current levels of around 35 percent of sales. But he adds that GSK is unwilling to pay over the odds for any potential deals. “I think the pace will continue,” says Hussein. “On the other hand, I think it’s fair to say there are very scarce targets and some of the valuations of the promoters are very unreasonable.”

Predictions for 2010
G Steven Burrill, CEO of Burrill & Company, a San Francisco-based merchant bank specialising in funding for life sciences companies, outlines his thoughts on what is likely to happen in the pharmaceuticals sector over the coming year.

Biotech consolidation to continue
The large universe of small public companies and private companies looking for venture capital will still face challenges as they try to find ways to extend their runway and stretch out their remaining funds. Expect to see further consolidation in 2010 although at a slower pace that we saw in 2009.

Capital
Over $15bn will be raised by US biotechs; partnering/M&A will again trump financings and in total $35bn will be raised. The industry’s market cap will grow from its present level of $350bn to $400bn, despite significant consolidation and attrition as valuation is lost through M&As. There will be significant funding available for public companies through secondary financings and registered direct offerings, especially after they report good news.

Partnering
To deal with their impending patent cliffs, Big Pharma will continue to keep a robust pace of partnering deals. Both Big Pharma and Big Biotech will compete for companies with advanced product pipelines, as well as important land grabs of technology. There will also be new players competing for technologies – such as major medical devices, instrumentation and healthcare IT companies, and even generics companies will be acquirers. The traditional sector lines of pharma, biotech, devices, diagnostics, healthcare IT, services, and generics/biosimilars will blur as we see converging technologies (and companies) responding to new market opportunities that present themselves as we move a system focused on treating sickness to one that seeks to maintain wellness.

Mergers & Acquisitions
Big Pharma consolidation will continue as these companies position themselves for the new market realities and competitive pressures from the generics world. Pharma will also start to adapt from a vertically integrated business model to one that reflects virtual integration. Companies will build dedicated business product units with their own management structures and decision making processes.

Healthcare reform
President Obama’s State-of-the-Union address in January reported on his new healthcare reform bill. The reform would stimulate ways to move the system from one based on cost to one based on value. Providers will look for ways to reduce costs by improving healthcare delivery and rewarding behaviour that promote healthier lifestyles. But most of the impact of this healthcare reform bill will be on reforming the insurance industry and who pays for a largely dysfunctional system. Healthcare reform II will begin immediately, trying to fix what still remains as a broken system.

Business as usual or a new way forward?

Posted on February 18, 2010February 14, 2012 by itsupport

As the dust settles over the economic turmoil of 2009, across the globe, many businesses are expecting – or at least hoping − that 2010 will prove to be a turning point in their fortunes. GDP in most major markets is expected to improve following a year of weak sales, corporate layoffs, idle plant and scant investment. Productivity should follow suit as the wheels of production again begin to turn to restock depleted inventories.

Despite these expectations of a turnaround, everything is certainly not ‘gung ho’. Unlike the heady days of earlier years, when it seemed as if businesses could do little wrong − and when they did, the economy was so strong that it was remarkably forgiving − we aren’t on cruise control. Far from it. Despite the ‘green shoots’ of recovery, history shows us that, in 2010, as in previous recovery years, we will continue to see high unemployment and corporate failure rates. So, as the economic recovery gradually gains momentum, the watchword for companies – if they are to survive and plan for renewed growth – is ‘caution’.

Throughout the recession, limited, if any, access to bank financing and tighter restrictions on credit insurance confirmed that it was certainly not business as usual. A truth that soon became apparent to all those engaged in domestic and international trade was that past experience – of both markets and customers – could no longer be relied upon as an accurate indicator of the path that future trade would take. Seen in that context, the response of banks, in demanding to see more sturdy business plans from potential borrowers, and of credit insurers, in requiring the most recent financial information available before providing cover on their customers’ buyers, should be expected.

But, despite the often harsh new realities of the marketplace, the value of credit as a medium of successful trade is, if anything, greater than ever. Credit serves many purposes. It creates demand in a flagging market place; it gives suppliers the edge over competitors who offer less attractive terms; and, as buyers’ access to bank finance continues to be in short supply, it gives buyers breathing space to pay for the goods and services purchased from their suppliers.

So, while in tough economic conditions, suppliers’ initial reflex may be to withdraw credit facilities from their customers, this would be short sighted – and potentially damaging to hard earned business relationships.

Credit is vital if trade is to flourish. And provided that there is good reason to believe that payment will be received on time, offering credit should not adversely affect suppliers’ cash flow. But that means that credit must be accompanied by a heightened focus on best practice in credit management. Credit management – not credit control. They are very different. While credit control has negative connotations, credit management encourages continued sales on credit to trusted customers, and is instrumental in building and maintaining profitable business relationships. In the future it will require greater transparency – especially in terms of the latest financial information that can be provided by buyers − who are, thankfully, beginning to understand that such transparency is essential if they are to keep their supply channels open.

And credit insurance should be central to any credit management strategy. By its very nature, credit insurance imposes a discipline on credit sales, ensuring that new customers are properly vetted and existing ones continue to be monitored for changes in payment behaviour that may signal financial problems. It makes available the recovery expertise that can address those problems before they escalate. It provides the market intelligence that helps in the suppliers’ decision making process. And, in the last resort, it is the safety net that protects the supplier’s bottom line when the unexpected happens.

So how do we summarise the outlook for 2010? Business as usual? Hardly – and certainly not while the aftershocks of 2009 continue to reverberate. But that’s no reason to be pessimistic. While 2009 has been a salutary experience, it’s also brought to the surface exactly what is important to successful and profitable trade.

That’s transparency – transparency between all the parties involved: supplier, buyer, bank and credit insurer. That way, each can understand the risks and opportunities associated with each business relationship and act accordingly – and in a way that always seeks to maintain valuable relationships and avoid undesirable financial loss.

Simon Groves is a senior manager of corporate communications and marketing at Atradius Credit Insurance NV

Of olive oil and transmission fluid

Posted on February 18, 2010 by

Tucked away along the eastern mediterranean coastline, nestled at the crossroads of three continents, Syria has steadily covered ground on its ambitious development journey. Over the last decade or so, economic reforms have begun to pay dividends and the country has demonstrated that it can nurture natural growth, relying less on it’s dwindling oil revenues and more on the actual substance of an economy that was far behind on its own people’s needs.

Economic initiatives were implemented that carved out enclaves of liberalisation and created room for private sector development after decades of central planning and stagnation. In the early stages, there were very few Syrian institutional players and the majority of businesses were more casual operations than structured corporations. For the most part, families created informal structures that performed the functions of whatever business endeavour was at hand and morphed effortlessly depending on the requirements of the economic landscape.

Within such a molten framework, it is quite the challenge to both adapt to a changing legal environment as well as to understand how to best capture the opportunities presented by a country’s liberalisation process. By actively pursuing new ventures as the supporting regulatory foundations are laid, local companies facilitate the very development process such new laws aim to achieve; different sectors and industries begin to evolve and grow as they are targeted by reforms from one end and brought to life by actual brick and mortar businesses from the other.

The Khwanda Group has thrived in this respect, consistently negotiating the changing economic terrain of Syria and seeking voids to fill with investment and creativity. As the name suggests, this family-operated venture has grown to become a group of companies with diverse interests spread over differing levels of the economy.

Despite its agrarian roots of working the lands of the Syrian coast and pressing olive oil in a traditional mule-driven mortar, the Khwanda Group made its name as the exclusive distributors of Mazda automobiles in Syria under the patronage of its founder, Mehran Khwanda.

Once Investment Law number 10 was passed in the early 1990s, the one office operation transformed into a trans-national presence affecting the lives of thousands of Syrian families. The law, allowing foreign co-ownership of companies and providing tremendous tax-breaks, paved the way for the Kadmous Transport company to be formed. Today, this passenger transportation business has evolved into a cargo, freight, and money transfer service that employs over 2,500 staff.

From that critical point of Syria’s economic history, the Khwanda Group ventured into a wide array of activities ranging from agricultural farms to phosphate mining, from private banking to restaurant management, even investing in one of Syria’s first holding companies. Importing everything from air conditions to heavy construction machinery, this company began to complement its import activities with forays into Syria’s emerging private sector. As Syria’s economy began to change, the makeup of the companies that the group managed also began to change. Where the economy and the nation’s reforms allowed the private sector to satisfy a certain demand, Mr Khwanda would oftentimes see possibilities and opportunities to positively affect both the company’s bottom line as well as the relevant stakeholders of Syria’s population.

The fundamental idea was to pursue activities that enable the business community and the people it serves to move hand in hand towards a better standard of living. Often, companies in emerging markets may lead economic growth on a macroeconomic level but do not speed up the process in which an increase in GDP eventually leads to an amelioration of a country’s lower class economic and living situation.

“Our focus is on businesses that have a development angle to them; we try to target opportunities that benefit and provide a service to the country and hopefully improve the average Syrian’s standard of living,” explains Mr Khwanda’s son, Ahmad. He offers the transportation and money transfer company as an example of this: “The margins are lower but Syria’s large lower economic class benefits. We offer our clients services that they would otherwise not be able to afford.” Kadmous Transport’s services are significantly cheaper and considerably less bureaucratic than the alternatives. Compared to formal financial institutions, transfers are made virtually instantaneously with no account setup necessary and for a fraction of the cost.

By being a low-cost leader while remaining competitive on the products and services offered, Khwanda Group has demonstrated how a company can directly affect positive change in the economy in which it operates.

Providing harvest refrigeration and low-cost automated olive oil pressing services for rural farmers are but two examples that may seem miniscule compared to other investment opportunities but do in fact make a significant difference to the clients whose livelihood is directly hinged to such affordable options.

On a larger scale, the group has made every effort to maintain its own expansion pace at the level at which the Syrian economy is mutating. With banking reforms being implemented, substantial investments in the private financial sector were made alongside investors whose aim was to establish the monetary backbone that would support Syria’s development.

The group’s dedication to development does not stop with the goal of job creation and operating within the Syrian economy. Its support extends to cultural and educational endeavours in the community as well as other charitable causes. As part of its socially responsible ethos, the Khwanda Group has supported local emerging musicians, the Syrian National Children’s Orchestra, as well as an annual Syrian Jazz Festival. The group works closely with the Syrian Trust for Development in identifying and tackling important social and cultural issues that need the support of the local community in order to progress. In the past, the group has provided the financial backing necessary for local schools to stay open in the summer time in an effort to provide additional learning opportunities for rural residents and even implemented a programme that offered the necessary materials and assistance for coastal villagers to dig their own water wells.

As firm proponents of various civil society efforts within the country, the group continuously supports organisations that aim to connect expatriates with their local counterparts. In this capacity, the group is a recurring sponsor of the British Syrian Society’s conferences and activities and has contributed positively to the message the outside world receives about Syria.

The Khwanda Group is a prime example of how one can achieve their own business objectives while extending a hand to others around them as part of an intentional effort for everyone involved to benefit and progress. Its successful participation in multiple sectors of the economy as well as its positive effect on Syria’s social and cultural landscapes are undeniable and demonstrate how local efforts can become catalysts for nationwide development. It is these initiatives that effectively take economic development reforms from regulatory theory to real-world practice and translate them into an actual positive difference in the everyday lives of the average citizen.

Shipping Awards 2010

Posted on February 18, 2010January 22, 2024 by Ashton Wenborn

Wherever their clients operate, Shipping Finance teams have the knowledge and the experience to provide definitive advice. Our winners have proven their excellence in this field, working closely with clients to provide commercial, cost-effective solutions that help to maximise returns, manage risks and adjust to cyclical peaks and troughs. They help to organise their clients’ businesses, solve day-to-day problems and settle disputes. And above all they have proven themselves equal to the multinational nature of their business and the need to take advantage of the opportunites inherent in every marketplace in which they operate.

World Finance’s editorial board are pleased to announce the winners for 2010.

Best Shipping Finance Teams

Germany
HCI Capital

Greece
Marfin Egnatia Bank

India
Bank of India

Netherlands
Credit Europe Bank

Singapore
DBS Bank

Switzerland
BNP Paribas

Turkey
Akbank

UAE
National Bank of Abu Dhabi

UK
Sumitomo Mitsui Banking Corp Europe

Global Pension Fund Awards 2010

Posted on February 18, 2010August 8, 2019 by Ashton Wenborn

The pension landscape is changing fast which makes it even more crucial to choose the right pension. The World Finance awards aim to recognise schemes that show the highest level of service to members. Our editorial board have selected country-specific corporations that have demonstrated outstanding products and services.

Pensions and their investment officers were researched and judged on their administrative skills and foresight, and their service and asset gathering. Consultants were judged on the quality of their advice and fund managers for their investment ideas and decisions. Congratulations to the winners.

Pension Fund of the Year, Austria
APK Pensionkasse

Pension Fund of the Year, Belgium
Amonis

Pension Fund of the Year, Brazil
Fundação CESP

Pension Fund of the Year, Canada
OMERS

Pension Fund of the Year, Caribbean
NCB Insurance Company Limited

Pension Fund of the Year, Chile
AFP Cuprum

Pension Fund of the Year, Colombia
Porvenir S.A.

Pension Fund of the Year, Czech Republic
AXA

Pension Fund of the Year, Denmark
Pension Danmark

Pension Fund of the Year, Finland
Varma
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Pension Fund of the Year, France
AG2R

Pension Fund of the Year, Germany
Bayerisch Apothekeversorgung

Pension Fund of the Year, Hungary
OTP Mandatory Private Pension Fund

Pension Fund of the Year, Italy
Fondazione ENPAM

Pension Fund of the Year, Mexico
Afore BBVA Bancomer

Pension Fund of the Year, Netherlands
Philips

Pension Fund of the Year, Norway
Folketrygfondet

Pension Fund of the Year, Poland
Aviva

Pension Fund of the Year, Portugal
BPI Pensoes

Pension Fund of the Year, Russia
Sberbank

Pension Fund of the Year, South Africa
ABSA

Pension Fund of the Year, Spain
Caja Madrid

Pension Fund of the Year, Sweden
Lansforsakringar

Pension Fund of the Year, Switzerland
Pensionkasse SBB

Pension Fund of the Year, UK
University Superannuation Scheme

Pension Fund of the Year, USA
Wisconsin Investment Board

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Posted in 2010, World Finance Awards

Exchanges & Brokers Awards 2010

Posted on February 18, 2010August 8, 2019 by Ashton Wenborn

The last year was one of the most difficult ever for the exchanges and brokerage industry, as lenders did their best to cope with a dramatically different landscape.

The World Finance editorial team in their research for this list examined the performance, client list and exchange activity of each platform by geographical region. Inclusion in this list is especially noteworthy given the exchange climate of 08-09. Congratulations to the winners.

Western Europe Winners

Stock Exchange of the Year:
LSE (UK)

Online Broker of the Year:
DIF Broker (Portugal)

Advisory Brokerage of the Year:
Central Markets (UK)

Discretionary Brokerage of the Year:
Charles Stanley (UK)

Corporate Broker of the Year:
Investment Bank of Greece (Greece)

Market Maker of the Year:
Barclays Capital (UK)

Small Cap Broker of the Year:
Singer Capital Markets (UK)

Products & Service Provider of the Year:
Neonet AB (Sweden)

Eastern Europe Winners

Stock Exchange of the Year:
Zagreb Stock Exchange (Croatia)

Online Broker of the Year:
X-Trade Brokers (Poland)

Advisory Brokerage of the Year:
KBC Securities N.V. (Poland)

Discretionary Brokerage of the Year:
Erste Securities Polska S.A. (Poland)

Corporate Broker of the Year:
BZ WBK Brokerage (Poland)

Market Maker of the Year:
CAPITAL PARTNERS, a.s. (Czech Republic)

Small Cap Broker of the Year:
PKO Bank Polski S.A. (Poland)

Products & Service Provider of the Year:
GLTRADE (Poland)

North America Winners

Stock Exchange of the Year:
Nasdaq (USA)

Online Broker of the Year:
TD Ameritrade (USA)

Advisory Brokerage of the Year:
First Manhattan Co. (USA)

Discretionary Brokerage of the Year:
Citi Group (USA)

Corporate Broker of the Year:
Moors & Cabot (USA)

Market Maker of the Year:
Barclays Capital (USA)

Small Cap Broker of the Year:
Ladenburg Financial Services (USA)

Products & Service Provider of the Year:
Greenline (USA)

South America Winners

Stock Exchange of the Year:
BM&F Bovespa (Brazil)

Online Broker of the Year:
PAX CVC LTDA. (Brazil)

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Advisory Brokerage of the Year:
Brascan Corretora de Titulos e Valores (Brazil)

Discretionary Brokerage of the Year:
Bes Securities (Brazil)

Corporate Broker of the Year:
Merrill Lynch (Brazil)

Market Maker of the Year:
Deutsche Bank (Brazil)

Small Cap Broker of the Year:
DIFERENCIAL CTVM S.A. (Brazil)

Products & Service Provider of the Year:
Orc Software (Brazil)

East Asia Winners

Stock Exchange of the Year:
Shanghai Stock Exchange (China)

Online Broker of the Year:
Phillip Securities Pte Ltd (Singapore)

Advisory Brokerage of the Year:
Great Wall securities Co., Ltd (China)

Discretionary Brokerage of the Year:
UBS Securities Co. Ltd (China)

Corporate Broker of the Year:
BOC International (China)

Market Maker of the Year:
China International Capital Corp (China)

Small Cap Broker of the Year:
Hainan Securities Company (China)

Products & Service Provider of the Year:
Kotka Securities (India)

Africa Winners

Stock Exchange of the Year:
Cairo Alexandria Stock Exchange (Egypt)

Online Broker of the Year:
Sigma Securities (Egypt)

Advisory Brokerage of the Year:
Credit Suisse Standard Securities Ltd

Discretionary Brokerage of the Year:
Beltone Financial (Egypt)

Corporate Broker of the Year:
Ned Bank (South Africa)

Market Maker of the Year:
Investec Securities Ltd (South Africa)

Small Cap Broker of the Year:
Barnard Jacobs Mellet Securities (Pty) Ltd (South Africa)

Products & Service Provider of the Year:
3iInfotech (South Africa)

Middle East Winners

Stock Exchange of the Year:
ADX (Abu Dhabi)

Online Broker of the Year:
Mubasher (Bahrain)

Best Execution Broker:
Al Ramz Securities (Abu Dhabi)

Discretionary Brokerage of the Year:
SHUAA Capital (Dubai)

Corporate Broker of the Year:
TAIB Securities (Bahrain)

Market Maker of the Year:
Kuwait Finance House (Kuwait)

Small Cap Broker of the Year:
Amwal Brokerage (Fujairah)

Products & Service Provider of the Year:
National Technology Group (Bahrain)

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Posted in 2010, World Finance Awards

Corporate Governance Awards 2010

Posted on February 18, 2010August 8, 2019 by Ashton Wenborn

Scandals of recent years, notably Enron, have created a more constrained corporate environment. Increasing public and stakeholder concern about the social and environmental impacts of business practices is forcing companies to come to terms with a much broader set of interests and expectations.

World Finance has selected the corporations who despite the difficult monetary climate have continued to achieve excellent levels of good governance; opting out of minimal disclosure and instead serving the best interests of their investors. Congratulations to the winners.

Best Corporate Governance in Austria
Telekom Austria

Best Corporate Governance in Bahrain
Mumtalakat Investments

Best Corporate Governance in Belgium
Solvay SA

Best Corporate Governance in Brazil
TOTVS S.A.

Best Corporate Governance in Canada
Nexen Incorporated

Best Corporate Governance in Colombia
ISA Colombia

Best Corporate Governance in Denmark
Danske Bank

Best Corporate Governance in Egypt
Mobinil

Best Corporate Governance in Estonia
AS Tallink Grupp

Best Corporate Governance in Finland
Rautaruukki Oyj

Best Corporate Governance in France
Credit Agricole

Best Corporate Governance in Germany
Bayer

Best Corporate Governance in Greece
OTE S.A.

Best Corporate Governance in Hungary
Magyar Telekom

Best Corporate Governance in India
Kotak Mahindra Bank

Best Corporate Governance in Italy
Atlantia S.p.A.

Best Corporate Governance in Mexico
Walmart de Mexico

Best Corporate Governance in Netherlands
Royal Phillips Electronics

Best Corporate Governance in Norway
Norsk Hydro

Best Corporate Governance in Portugal
Jeronimo Martins SGPS S.A

Best Corporate Governance in Qatar
Qtel

Best Corporate Governance in Russia
Rosneft Oil Company JSC

Best Corporate Governance in South Africa
Sappi Limited

Best Corporate Governance in Spain
Acciona SA

Best Corporate Governance in Sweden
Electrolux AB

Best Corporate Governance in Switzerland
Roche Pharmaceuticals

Best Corporate Governance in Thailand
Siam Cement Group

Best Corporate Governance in Turkey
Turkcell

Best Corporate Governance in UAE
Abu Dhabi Commercial Bank

Best Corporate Governance in UK
Vodafone PLC

Best Corporate Governance in USA
FedEx Corporation

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Posted in 2010, World Finance Awards

Fixing the framework

Posted on February 17, 2010 by

The financial crisis has deeply affected the modus operandi of all the main players in the markets and raised new questions for policy makers and regulators. These questions regard, on the one hand, how to handle the crisis itself, and on the other hand, how to remove the structural imbalances, both at macro and micro economic level, which played a crucial role in the creation and the development of the crisis.

Today, there is broad agreement that weaknesses in corporate governance contributed greatly to the depth of the financial crisis and that dealing with such weaknesses is a key element of an effective response. They may not have caused or triggered the crisis but the lack of good corporate governance allowed practices to develop to a point when they were no longer sustainable. Had companies applied better corporate governance standards and had regulators been more vigilant in terms of implementation and enforcement of existing standards, some of the failures could probably have been avoided. From this perspective it was logical and important that the OECD, as the multilateral standard setter in corporate governance, already at an early stage started to focus on the financial crisis. The OECD Principles of Corporate Governance, first adopted in 1999 and revised in 2004, is for good reason one of the Financial Stability Board’s twelve key standards for sound financial systems. As such, they serve as the basis for various country assessments, including the so called Reports on Standards and Codes (ROSC).

The main thrust of the OECD’s proposals is summarised in the report Corporate Governance and the Financial Crisis – Key Findings and Main Messages, which is expected to serve as a reference for further initiatives by international organisations and national regulators worldwide. The report is based on an in-depth analysis of how key corporate governance provisions in several financial companies failed to be effective when they faced unexpected external pressures and strong conflict of interests.

The analysis underlines that while many of the corporate governance failures were specifically connected to financial companies that were under most stress, many of the structural weaknesses are common to large and complex listed companies. The post-2000 market and macroeconomic environment demanded the most of banks in terms of robust corporate governance arrangements. In a rapidly changing economic landscape, new profit and growth opportunities raised new challenges to boards in designing and managing risk appetite and incentive/remuneration mechanisms. In this context, shareholders, both in widely and closely held companies, were able to exercise stronger pressure for short-term results often neglecting their monitoring functions. These issues are common to many non-financial companies even if not to the same degree.

A pivotal conclusion in the report is that the problem is not necessarily a shortage of laws, regulations and voluntary standards; the problem may not even be a misunderstanding of what should be achieved by these regulations. Rather, the problem is often one of incomplete or ineffective implementation of what was and still can be considered a fairly solid corporate governance institutional framework; sometimes deliberately but often not, there is a lack of understanding about what regulation actually works and what doesn’t. As a consequence, the OECD has made it a priority to encourage and support more effective implementation.

The first pillar of the OECD strategic response for a better implementation of the corporate governance principles is the development of a systematic peer review process aimed at examining on a systematic basis how and to what extent the outcomes advocated by the Principles are being realised in a jurisdiction being reviewed. The analysis will also try to identify, at an early stage, key market practices and policy developments that may undermine the quality of corporate governance. The peer review will involve progressively all OECD member countries and will be open to the most important non member countries, such as the so called Brics countries (Brazil, Russia, India, China, South Africa) , which have already developed strong relationships with the OECD in corporate governance.

The second pillar of the OECD current activity is the identification of a set of specific recommendations for a better implementation of the OECD Principles in the areas where corporate governance failures proved to be more relevant in the financial crisis.

At the top of the list is the governance of remuneration, which failed to align the structure of incentive systems of the management with a sustainable process of value creation for all the stakeholders. The OECD recommendations will support a more effective and forward looking incentive system design, which should encourage long term performance and ex post accountability.

At the same time, it is important to consider the risks in transplanting corporate governance reforms designed to address systemic risks in the financial markets to the corporate sector generally. Therefore, the possible introduction of legal limits on remuneration, such as caps and selective fiscal measures, should be limited in time and scope. In the non financial sector, the autonomy of individual companies in the design of incentive systems should not be constrained, so as to avoid unhealthy homogeneity in pay practices and disincentives to develop innovative pay structures.

Rather than imposing specific principles for the design of remuneration systems, the OECD recommendations are aimed to guarantee that remuneration be established through a sound governance process that involves the risk managers and explicitly recognises the impact on overall risk taking. Boards should first set the strategic goals of the company and its associated risk appetite. They are then in a position to establish a compensation system that meets a small number of performance metrics based on these goals. An explicit governance process needs to be established that will also define the role and duties of compensation consultants who are increasingly important.

The process, remuneration structure and performance goals should be made transparent through some form of remuneration report. There also needs to be a possibility for shareholders to express their views about remuneration policy.

Together with the peer review process, the objective is to contribute to the joint efforts by international organisations to strengthen the quality of the corporate governance framework and improve implementation.

Marcello Bianchi is Chairman of the OECD Corporate Governance Committee. Corporate Governance and the Financial Crisis – Key Findings and Main Message, can be downloaded from http://www.oecd.org/dataoecd/3/10/43056196.pdf

Posted in News0 Comments

The world according to TARP

Posted on February 17, 2010 by

As a student of Economics 101 at Columbia University, President Obama would have learned how even good outcomes in economic policy usually produce unwelcome side-effects. Herbert Hoover, one of Obama’s predecessors, once remarked: “Please find me a one-armed economist so we will not always hear, ‘On the other hand…’”

The shock success of TARP – the much-maligned, $700bn bank bail-out programme – has provided the president with a refresher course in Economics 101. The Troubled Asset Relief Programme is working out so much better than anybody dared to predict that its success has triggered a squabble on Capitol Hill about how to spend the proceeds and whether it should be extended. On the one hand TARP looks likely to cost roughly half of the original estimate; on the other Main Street America hates TARP because it’s seen as a cripplingly expensive exercise in saving the bonus boys of Wall Street.

But first, those profits. Just before christmas, the US Treasury revealed that Wells Fargo and Citigroup will repay a further $45bn between them, bringing total repayments so far to $164bn. At the current rate of recovery, the government is banking on receiving up to $175bn from rescued firms by the end of 2010, and that’s $175bn more than was expected in the dark days of October 2008 when the failure of Lehman Bros precipitated the rout.

With the money flowing nicely and endorsing his faith in TARP, Treasury Secretary Tim Geithner has formally extended the programme until October 2010 on the argument that financial instability still represents “an immediate and substantial threat to the economy”.

Most economists like Paul Krugman, a Nobel Prize-winner and a fearless critic of government policy, believe that’s true. “We have what is really an ongoing economic emergency,” Krugman said recently. “The level of unemployment we have got is doing enormous damage. So, I think the president is justified in reaching for whatever mechanism he can.”

Stop TARP?
But you can’t win in economics. Despite the fact that TARP has worked far better than anybody dared to predict – “[it was] instrumental in avoiding a global financial meltdown, a far worse scenario than we have today, at much lower cost than was originally expected,” agreed a Congressional panel in December, the Republicans and some Democrats want it stopped and all further proceeds pumped into America’s mounting deficit. They fear the deficit will undermine the greenback and lead to its demise as the world’s reserve currency.

And yet, a little over a year ago, TARP was the only thing standing between a rock and a financial meltdown. Let’s backtrack a little.

In September, with the storm clouds looming, then Treasury Secretary Hank Paulson went to Congress to ask for $700bn and carte blanche to spend it. They were days of panic and the general assumption was that the money would be used to buy the toxic assets that triggered the crisis, however worthless they may prove to be.
The situation was certainly dire, with giant insurer AIG and the biggest banks fighting for their lives. However Congress baulked at giving Paulson unprecedented departures from normal legislative practice and a much-modified, legislatively compliant TARP was approved on October 3, 2008.

By then however, the meltdown was spreading rapidly across the US and beyond its borders. Britain had announced an emergency recapitalisation programme for some of its own banks and most major European countries were following suit. Events were moving at breakneck speed. With recapitalisation clearly the favoured form of rescue, Paulson now opted for the same route. Thus on October 14, TARP became the instrument for capital injections into banks, unlimited deposit insurance, and guarantees of new senior debt.

However, as Simon Johnson, former chief economist at the IMF, wrote recently in the New York Times, nobody outside the Bush administration could understand why the treasury didn’t just take over troubled banks, which was normal practice and exactly what Britain and other countries were doing. As the administration “studiously avoided” absorbing large banks, notes Johnson, “there was a great deal of confusion in financial markets about what exactly was the Bush/Paulson policy that lay behind various ad hoc deals.”

To many, it looked like Wall Street was getting an unconditional bail-out. Still, most economists agree with Johnson that “TARP was an essential element in restoring confidence.”

Stress tests
By early 2009 however, the new Obama administration had hastily refined how TARP worked. Under new secretary Tim Geithner, the treasury deployed a small army of forensic supervisors to run stress tests on the biggest banks to determine their ultimate solvency. By and large, those tests established which firms were under-capitalised and which needed to buy in capital. The results were better than expected and confidence turned a corner.

Since then, freakishly low interest rates have done the rest. With the big banks’ cost of money at levels that would make a usurer’s eyes water, they can hardly not trade their way out of the abyss.

And now? Thanks to dividends, interest, early repayments and the sale of warrants (the government’s own investments in the firms) to the investing public, the present and remarkable situation is that Uncle Sam won’t lose the $350bn on TARP that it feared.

Nobody expected this to happen. In the first few months of the Obama administration, most economists and commentators could not see how half of Wall Street could escape nationalisation. Indeed some thought it might be a good thing – the first step before the markets could stabilise and recover.

TARP’s critics
However the situation is not nearly as pretty in other areas of the great bail-out. According to the latest data, Treasury is losing a bundle – over $30bn at last count – on its lifeline to AIG and roughly the same amount on Chrysler and General Motors.

And TARP still has its critics, like the government accountability watchdog that delivered a scathing report in December, alleging that TARP’s opacity had helped damage “the credibility of the programme and of the government itself, and the anger, cynicism, and distrust created must be chalked up as one of the substantial, albeit unnecessary, costs of TARP.”

Although the language smacks of the publicity-seeking in which government agencies sometimes indulge, the report does have a good point. Instead of every one of the hundreds of benefactors from TARP funds providing chapter and verse on how they use the money, only three have had to do so and they are the biggest benefactors by far – AIG, Citigroup and Bank of America.

The critics also blame the bail-out programme for, in effect, not yet saving America. Elizabeth Warren, chairwoman of the Congressional panel, warns about what many are calling “the world according to TARP” – a play on the award-winning novel by John Irvine, that there’s a long way to go yet: “Unemployment and foreclosures continue to plague the economy. The stability of the financial system remains uncertain.”

Nobody can argue with that. A quick perusal of the Federal Deposit Insurance Corporation’s latest list of failed banks tells the story. Some 130 of them closed in 2009 alone, 16 of them in December. That’s nearly four times as many as in 2008 and a whole thirty-three times more than in 2007. None at all put up the shutters in 2006 and 2005.

While most of the failures were relatively small institutions and their assets were quietly bought up by bigger brethren, there’s nothing like a round of banking bankruptcies to sow alarm into the populace. Americans have keen memories of the thirties when so many Main Street institutions collapsed that, as Federal Reserve chairman Ben Bernanke occasionally reminds people, many kept their savings in coffee cans buried in the back garden.

However TARP was designed to avert a catastrophe and, as Krugman explains, it’s done that: “In the face of the greatest economic catastrophe since the Great Depression, it’s much riskier to do too little than it is to do too much.”

The main thing is that those banks deemed “too big to fail” such as Citibank, which will shortly emerge from TARP, are through the worst and can with reasonable certainty be described as now unlikely to fail.

At the same time, the administration has decided that some salaries are too big to pay. The US treasury has appointed a “special master” who dictates in explicit terms remuneration policy to the TARP-supported titans of Wall Street. There’s one set of rules for the 25 highest-remunerated executives and another for the next 75. It’s all covered in 20-page sets of instructions, agreed and signed by the CEO, that define maximum cash salaries, bonus clawbacks, total compensation levels, please-explain provisions for any exceptions. As humiliating this may be for the bosses of some of the world’s biggest banks, it’s the inevitable price for using public money to stay afloat.

The overall result is that average salaries on Wall Street have taken a hit. For instance, nobody outside the top 25 at AIG can earn more than $500,000 a year in cash. At Bank of America, total direct compensation must be precisely 62 percent below that of 2008. And under pain of the treasury’s public wrath, let alone that of Congress, the shortfall cannot be made up in sham bonuses.

Doom loop
The $175bn question is where TARP goes from here. There’s still work to do at the banks, as the Congressional panel points out. “Our largest banks remain undercapitalised, given the likely trajectory of the United States and global economy. This is a serious impediment to a sustained rebound in the real economy.” Just one of these impediments is a dearth of credit to SMEs, something the Obama administration is trying to fix through a series of tax incentives, shorter loan pipelines and other measures.

Just as importantly, TARP’s gold-plated government guarantees might just tempt the big banks off the straight and narrow and into what is now described as the “doom loop”. As Johnson shrewdly observes: “Even more problematic is the underlying incentive to take risk in the financial sector. With downside risk limited by generous government guarantees of various kinds, the head of financial stability at the Bank of England bluntly characterises our repeated boom-bailout-bust cycle as a “doom loop”.

And although the horror of a total financial calamity is behind us – the same horror that confronted president Roosevelt when he took office in 1934, the full catastrophe of household finances is still emerging. As the Congressional report notes, home foreclosures are still rising, the availability of credit (“lifeblood of the economy”) is low and, as we’ve seen, banks are still failing.

Tempting surplus
Expect a war of words in early 2010 about what to do with TARP’s surplus. Can they be diverted to Main Street in the form of a fiscal stimulus for job creation? White House press secretary Robert Gibbs, clearly reflecting the view in the Oval Office, certainly thinks so. As he said just before Christmas, “the message to Main Street will be your economic vitality is just as important as anybody that lives or works or breathes on Wall Street.”

However there’s legal debate about whether this is possible under the original legislation which, TARP-watchers point out, mentions job creation only twice. Moreover both of those references are made in the context of the need to stabilise the nation’s financial system rather than as a separate goal, however worthy. The administration’s chief economic adviser Lawrence Summers promised Congress that any measures taken under TARP “will reflect the Act’s original purpose of preventing systemic consequences in the financial and housing markets” and there was no intention of “using any funds to implement an industrial policy.”

The Republicans criticise the Democrat president for using TARP “as a slush fund” for any kind of economy-boosting programme. For example, they opposed the inclusion of AIG and the struggling automakers GM and Chrysler in the programme. As senior Republican John Boehner sums up the attitude of the GOP: “Taxpayers have had enough of open-ended bailouts that have left them stuck with trillions of dollars in new debt. TARP should be shut down by the end of the 2009. It’s time to get the government out of the bail-out business.”

However as President Obama has pointed out many times, it was the Republicans who landed the government in the bail-out business. Meantime the fact that TARP will cost $350bn less than feared is convincing proof that this particular bail-out has been cleverly managed.

Posted in Special reportsTagged Special Reports0 Comments

The Greek incentive

Posted on February 17, 2010February 9, 2012 by itsupport

Recently named Best Foreign Investment Practice, Greece by World Finance, Papapolitis & Papapolitis is a firm that represents major financial institutions and multinational corporations, which invest in various sectors of the Greek market. The firm today is at the forefront of the legal market in major foreign direct investment transactions in Greece.

Papapolitis & Papapolitis has experienced the development of corporations and projects in Greece, from the early days of penetrating the market, up to today where these corporations owned by foreign investors play a major role in their respective industries within the Greek market. As such Papapolitis & Papapolitis can offer a key insight into the sometimes difficult, but highly rewarding venture of investing within the Greek market.

The Greek market has experienced an increase of FDI after 2004. For example, net inflows reached Ä4.275bn in 2006, up from Ä487m in 2005. The economy expanded at an average annual rate of four percent from 2004-2007 and 3.2 percent during 2008, one of the highest rates in the Euro zone, where growth was 1.2 percent. After the global economic crisis the European Commission, in its economic forecast report of spring 2009, estimates that Greece’s growth rate will be 0.1 percent for 2010, above the EU 27 rates.

Lately there has been very bad publicity concerning Greece’s financial situation, mainly due to its large deficit. Needless to say that other major countries in the EU, as well as major non-EU countries, suffer from almost the same problem.

The Greek government has already decided to take very strict economic and financial measures as well as to apply major structural reforms in its fiscal policies, which will help immensely in Greece’s economic recovery.
In 2010 great opportunities for foreign investment will be created since the Greek government has stated that major state owned entities will be privatised (i.e. Public Utilities, Banks, Airports, Energy Companies etc.).

One of the major difficulties that foreign investors face when investing in the Greek market is at the time of entering into the market. The main issue has to do with navigating through Greek bureaucracy and dealing with public authorities. It might prove to be a lengthy procedure and during this time a legal advisor that possesses the local know-how and expertise, but at the same time has a key understanding of a foreign investor’s corporate goals and needs is definitely needed. A winning blend would include attorneys who have actually worked in major financial centres of the world, but also have the necessary skills and knowledge of the way in which the Greek market operates. These types of attorneys are found within the Papapolitis & Papapolitis foreign investment practice and pride themselves that they can deliver the most excellent service to foreign investors.

Nevertheless, efforts and reforms are taking place to diminish these hurdles and for bureaucracy issues to be resolved.

One of the most noteworthy reforms in investing in Greece is the newly established Invest in Greece agency the official Investment Promotion Agency of Greece that promotes and facilitates private investment. The agency is set to identify market opportunities and provides investors with general assistance, analysis, advice, and aftercare support free of charge.

Greece’s investment incentives on offer are among the most competitive in the European Union.
The structural framework for investment support in Greece revolves around three institutional pillars:
1) the Investment Incentives Law
2) the National Strategic Reference Framework 2007-’13
3) Public Private Partnerships (PPP)

Namely:

1) cash grants that can reach up to 60 percent, covering part of the expenses of the investment project by the Greek State;

2) leasing subsidies that can reach up to 60 percent, that cover part of the payable installments by the Geek State relating to a lease that has been entered into for the use of new mechanical or other equipment; or

3) wage subsidies that can reach up to 60 percent, provided for employment created by the investment; or

4) tax benefit that can reach up to 60 percent, that allows income tax exemption on non-distributed gains. This benefit is effective upon completion of the investment for the first ten years of operation and is created through a tax-exempt reserve.

The above investment incentives are applicable to energy, tourism, industry, advanced technologies and innovation projects and cover a wide area of business activities.

Finally, the new “Fast Track” law developed by the Ministry of Economy and Finance that accelerates the licensing procedure for investments in Greece is applicable in energy, tourism, industry, advanced technologies and innovation projects and is available to large scale investments that their total value exceeds Ä200m or investments exceeding Ä75m, provided that the investment creates 200 new jobs.

Under the “Fast Track” law Invest in Greece can act as a one-stop-shop for investors that undertakes all procedures and licensing required for investments that meet the criteria of the law.

All of the above endeavours and reforms do offer a foreign investor great incentives in order to invest in the Greek market and those investors who have established businesses in Greece have experienced great profits posted.

For example, in the real-estate and gaming sector foreign clients of Papapolitis & Papapolitis have developed one of the largest hotel casinos in Europe that is also one of the most profitable hotel casinos worldwide.

Other areas where foreign investors have acted with tremendous success within the Greek market is the Renewable Energy Sources (‘RES’) industry, where Greece has the prospect of becoming one of the major European countries that produces energy from renewable sources. The incentives offered by the Greek State for these types of projects, as well as the new laws that are coming to place expediting the licensing procedures make the Greek RES market to be extremely lucrative to foreign investors. Papapolitis & Papapolitis represents foreign multinational companies that invest in the Greek RES market and have experienced immense success.

In addition, the Greek banking sector has remained stable through 2009 and tests conducted jointly by the Bank of Greece and the IMF suggest the “Greek banking sector has enough buffers to weather the expected slowdown of the economy”.

Papapolitis & Papapolitis suggests that investing in Greece is surely a venture that pays off and from experience those who have made such an investment have found themselves in a great position with their corporations posting profits throughout the years.

The financial crisis that Greece is experiencing at the moment has led the Greek government to make changes that in the long run will have a positive impact on the market. The market will open and new major opportunities that will speed up the privatisation process will be created. The bureaucratic legal framework that has deterred foreign investors from entering the market up until now will also be simplified.

Greece needs FDI and the Greek government has fully understood this parameter. We are now witnessing an attempt from the government to eliminate every obstacle that could delay or hinder any foreign investment.
The new efforts and reforms made by the Greek government offer hope that Greece will become even more competitive within the global market and that foreign investors will find themselves in an even more comfortable position when investing in the Greek market.

Papapolitis & Papapolitis considers that in this year many foreign investors will be encouraged to invest in the Greek market, due to the combination of new major opportunities and the new framework that is offered by the government’s reforms.

Nicholas Papapolitis is a Senior Associate at Papapolitis & Papapolitis. For more information www.papapolitislawfirm.com; www.investingreece.gov.gr

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Embracing market opportunities

Posted on February 17, 2010 by

As a global supplier of transaction services, Neonet’s mission is to simplify global trading, enabling their clients to capitalise on increased trade fragmentation and new technical opportunities. Based in Sweden, the company was established in 1996, with growing operations also conducted across the UK, Italy and Germany, as well as the US.

The company is also one of the pioneers in Direct Market Access (DMA) and transaction services for efficient global trading. DMA is renowned for offering lower transaction costs, lessening the possibility of error or execution irregularities, and being extremely fast and fluid, thus allowing traders to take advantage of very short-lived market opportunities.

“Our trading environment is profoundly different,” explains CEO Simon Nathanson. “It is the excellent combination of execution services and trading technology that makes us so unique.

“For instance, we have developed, in-house, a technology platform that is tenacious and robust enough to be sold as a stand-alone product. Additionally, we have a very skilled set of trading desks that can handle the most advanced of execution programmes, around the clock and around the globe. We own and control our whole infrastructure – from the customer’s front-end, to the exchanges and back; this is something that gives us tremendous flexibility in adapting to the new demands continuously posed by our clients.

“More and more clients are looking for increased liquidity and it is very difficult to get that if you can’t get a consolidated overview of trading in today’s fragmented market. People trading on traditional markets, such as the London Stock Exchange, only see 60 percent of what is available, because 40 percent of the FTSE 100 is traded on other venues. Thus, market participants miss out on a lot of prices.

“Thankfully, Neonet provides the solution as, through our market connections and sophisticated technology, our clients gain an easily accessible and comprehensive solution for trading in exchanges and alternative marketplaces worldwide.”

Neonet achieves this by providing access to the most liquid marketplaces, in addition to by supplying technical solutions that enhance the efficiency of global trading. Neonet XG, the company’s progressive trading technology service, has a strong position, with the trading platform facilitating Best Execution regardless of the marketplace. This software offers clients a full suite of high-performance technology products to ease trading on the world’s leading exchanges and execution venues.

Shifting markets
New marketplaces, combined with changing trading patterns, ever-faster technological progress and market harmonisation, are shifting the underlying conditions for players in financial markets. According to Mr Nathanson, the financial landscape is undergoing substantial change, and clients potentially have a lot to gain from this.

“Traditional exchanges have lost their monopoly following challenges from new, more agile players; banks and broker-dealers (including Neonet) are two of the players driving this development forward.

“Thanks to its combination of trading and software services, Neonet has secured its solid position within this new financial landscape. The greater fragmentation of stock exchange trading is creating new business opportunities for us. In a complex landscape, with many more marketplaces, it becomes increasingly difficult for investors to ensure that they always gain the optimum price for each trade in stocks available on many markets. This is where Neonet comes in, by simplifying global trading and meeting the challenges that fragmentation entails for our clients.”

By integrating exchanges and marketplaces in a uniform manner, the Neonet system facilitates cross-border trading and contributes to high user-friendliness. The company is cutting-edge because it has built a package that makes life easier for its professional clients.

“Neonet offers an overview of European trading and guarantees that transactions are completed promptly, with Best Execution in shares traded on many markets. Our clients are given the potential to rapidly and readily access the most liquid marketplaces. We offer more exposure to our clients, so they get better results, and witness better performance.”

Simply put, Best Execution signifies that Neonet, as a market player, ensure that their clients receive prompt management of their transactions and the best trades in shares that are available across a number of markets. Thus, by offering superior transparency and aggregate liquidity, Neonet promotes increased competition among European marketplaces.

Asked whether all players can offer Best Execution, Mr Nathanson’s answer was a definitive ‘no’.

“The ability to deliver Best Execution requires infrastructure for high-speed technical connections, commercial agreements with many marketplaces and advanced software to identify the best trade. This, in particular, is a core feature of Neonet’s client offering, and an area in which we really are at the forefront of developments.

“Our Consolidated European Order Book creates an overview of liquidity from all marketplaces and the new generation Smart Order Routing technology ensures Best Execution. This means that we send client orders to the best marketplaces for each trade, irrespective of whether that is a traditional stock exchange, an alternative marketplace or a combination of both. Our clients favour our well-developed infrastructure, since we compare prices among more marketplaces than many other players.

“Furthermore, our technology – in itself – is very cutting-edge. Our clients can easily exploit opportunities offered by it, while simultaneously avoiding costly investments in infrastructure and technology.”

But despite all the positive progress, Mr Nathanson admits that Neonet has been affected by the global recession and that some of its clients have been less active in the market.

However what we see now is a good inflow of clients, confirming the considerable interest in our systems and services.

“I think people are coming out of the recession and being honest with themselves with regards to their comfort level, as well as the day-to-day volatility that different investments have. But that is natural, and to be expected.”

There is no doubt that, in a time of growing fragmentation, the ability to quickly connect with new marketplaces is a decisive factor in reaching global liquidity. Neonet is a leading supplier of connections to new alternative markets, as well as traditional stock exchanges. It is also a question of having the required technology to allow you to achieve this.

In fact, Neonet has long-since positioned itself to be able to capitalise on the comprehensive changes occurring in financial markets, while also being involved in driving its development.

“We are really dedicated to leading the way into the new financial landscape. Let’s take dark liquidity as an example; as part of the development of Europe’s market structure, we are seeing an increase in dark pools – electronic marketplaces providing institutional investors with the opportunity to execute major transactions, or to trade in illiquid securities with reduced market impact. We continuously add new markets and develop solutions that simplify access to lit and dark liquidity. In total, Neonet offers trading in seven dark pools, and also launched a sophisticated algorithm that sweeps the dark pools for non-displayed liquidity.”

The company’s evolution has not gone without reward, with Neonet listed on the NASDAQ OMX Nordic Exchange in Stockholm and with clients in regions all over the world.

“Having successfully tackled the Nordic and European markets over the last couple of years, we are now starting to invest our efforts in Asia,” continues Mr Nathanson. “We are very proud of everything that we achieved, as well as the fact that people have had to up their game in competition.

‘We have made it so that our clients can exploit opportunities offered by the new markets, while simultaneously avoiding costly investments in infrastructure and technology. Because we help to seek out the best price for our clients, we know that we are promoting increased competition among European marketplaces, and that can only be a good thing. We’re very glad to be a central element of progress within this revolutionary and cutting-edge financial future.”

Posted in NewsTagged Foreign Exchange0 Comments

Facing the futures market

Posted on February 17, 2010 by

Esignal, long known for its reliable, comprehensive data offering, puts the information crucial to negotiating the futures market together with the tools that make the data come to life. Reliable, fast, streaming, real-time futures, stock, options and forex prices come from the world’s markets, including approximately 150 North and South American, European, African and Asian exchanges.

eSignal’s charting and analytics can satisfy every level of technical analyst. Hundreds of studies, plus easily manipulated drawing tools and familiar charting formats, including marketprofile and Point and Figure, are available.

eSignal also provides a scripting language, eSignal Formula Script (EFS), which allows users to create their own studies. The Formula Wizard, a special Bar Replay function and back testing assist in creating studies and verifying the viability of a market strategy.

To assist with back testing, eSignal is constantly adding historial data to the individual exchanges / services it offers through its datafeed, currently providing as much as three years of extended intraday futures data.

Tools for the market
eSignal has many futures-focused tools. Forward and Yield Curves, for example, are a window type used by futures traders and broad market analysts to look at comparative data across multiple contracts.

The Quoteboard displays quotes in a grid-like fashion and a metre that points to the variation in price throughout the day, showing the current price’s “temperature” as it relates to the day’s high and low.

The software’s spread engine capability for complex spreads and ratios allows control of the decimal placement of the spread, including the display of the resulting symbol in some non-standard formats, such as treasuries and grains.

eSignal users get a view of, not just volume, not just the buying and selling, but a close-up on the activity that really moves the market with market depth information. eSignal provides a breadth of market depth from the NASDAQ, NYSE, CME, CBOT and on forex rates, as well as Canadian depth from the TSX, Euro-next Cash BBO 10 and UK Equity Market Service Level II from the LSE.

The market profile feature functions as an eye on time and price opportunities. It organises information in a manner that makes it possible to see which price areas the market is accepting and rejecting.

Weather maps, especially useful in the commodities market, come in multiple packages, covering areas all over the globe, including US Agriculture, US Energy, Europe Energy and the World Coffee Crop.

eSignal also offers US and international continuous contracts with an intuitive symbol format and spreads in the Quote, Chart and Quoteboard windows, with the ability to make your own symbol-combining multiples.

An all-in-one platform
With the reliable, global data, charting, drawing tools and technical analysis alone, users are already ahead of the game. Add to that from eSignal’s full complement of premium services, and chances of finding profitable opportunities increase.

eSignal’s market scanners search the market’s myriad possibilities for opportunities that suit users’ individual parameters. Its real-time news comes from the best in the industry, including Dow Jones and Hightower.
And, eSignal offers a choice of third party applications and premium add-on studies that are compatible, and often integrated with, the software, as well as integration with the trade execution platforms of many respected futures brokers.

This award-winning software meets the needs of the individual, as well as the professional trader. With its comprehensive data, analytics, back testing and market access, it provides an all-in-one desktop solution for designing and implementing effective strategies for today’s futures market.

For further information tel: 800-723-8260; ww.eSignal.com

Posted in NewsTagged Foreign Exchange0 Comments

Safeguarding competitiveness

Posted on February 17, 2010 by

With advanced technological infrastructures, including the ever-growing network of branches, Marfin Popular Bank Group is equipped with officers assisting the group’s vision to become one of the largest and most successful banking organisations in Southeast Europe. Marfin Egnatia Bank (MEB) is part of Marfin Popular Bank Group, which also owns the second largest bank in Cyprus. Marfin Popular Bank Group provides a spectrum of banking services through 527 branches located in Cyprus, Greece, the UK, Guernsey, Australia, Malta, and in South East Europe (Russia, Romania, Ukraine, Estonia and Serbia). MEB operates 188 branches in Greece.

MEB itself is committed to providing constant support to its clientele, applying innovative and flexible methods, to fulfill any requirements; the strategy followed ensures a fast, reliable, integrated and immediate service for the full satisfaction of all customers, leaving none wanting.

The goal is simple and straightforward; to establish a leading position in the Greek banking industry and deliver strong shareholder value creation reflected on sustained ROEs above 25 percent. MEB aims to expand its overall market share from approximately five percent currently, to seven percent over the next three years through leveraging up the bank’s rapidly expanding infrastructure, further penetrating retail lending and capitalising on the bank’s strengths in key product areas. MEB generates a sustainable competitive advantage through introducing a relevant differentiation from the competition; its key characteristics describe it as people-centric, demand driver; truly a citizens brand.

The Greek shipping industry
The evolution of Greek society and culture has been intricately linked with the sea, an event traceable through the ages in a multitude of forms whether it is within the realms of mythology or actual historical fact. It is precisely this bond which keeps the notion of shipping a tradition, for which a soft spot exists in the Greek psyche. In reality, understanding this connection is not only feasible through a romanticised view of the past, but can be put into numerical facts; for the past two years, shipping has been the most significant contributor to the Greek economy, surpassing the tourism sector and bringing in more than $26bn each year in foreign currency.

Currently the third largest fleet worldwide, provides an invaluable source to tap into, and MEB is perfectly positioned to dive in and access the shipping community through Marfin Investment Group’s stake in the Attica Group.

Products on offer
MEB has a dedicated shipping division to cater specifically for this type of client; on offer one finds a broad range of products aiming to cover its clients’ short as well as long term products. The former is mainly offered for purposes of working capital requirements in a form of overdraft facilities.

Long term needs are offered in large part to cater for financing a vessel acquisition, or a construction of a newbuilding unit. The norm for the duration is around two to 15 years; however this varies on a case-by-case basis, as the main determining factors are the type, age and employment of any vessel in question, in conjunction with the prevailing market conditions at the time. New building finance occupies a large chunk of this type of loan, as the Greek clientele is an eager member of the sales and purchases market. The trick is to strike the correct balance, keeping all parties satisfied, particularly when considering that the owner of the hull under construction needs to participate with own equity.

Bridge financing is also available; its purpose is to assist customers with their special medium term working capital needs, usually spanning between three and 12 months, such as repairs or conversions of vessels. Furthermore, MEB offers letters of guarantee of all types, which may have a set date of expiration, or if required and prudent be open-ended.

If this list of products doesn’t have you tantalising for the services provided, structured finance is also found on the menu. MEB’s shipping division caters for more structured forms of finance, including advisory M&A, sale and lease back agreements, more commonly referred to as bareboat structures, financing of salvages as well as the financing of reverse merger acquisitions. To top it all off, in true professional style, MEB maintains a dedicated shipping branch in Piraeus, which includes a private banking department. In translation, the Piraeus branch is essentially a fully accommodating shipping hub, catering for your every desire, whether it is related to the industry or on a private level.

It would be a mistake to assume that the variety and expedience of all that the shipping division has to offer could be attained without the right people in the right places. The bank personnel posses an excellent understanding of the shipping industry, including its quirks, peculiarities and trends putting them in the best position to adopt forward analytical and synthetic thinking patterns, in order to anticipate and accommodate specific client needs; a view of their track record provides quick confirmation to this fact with an aggregate experience exceeding 250 years. The generation of fresh ideas and alternative solutions, particularly when considering this specific industry, is not so much a desirable quality as a necessity; this ability combined with familiarisation with other departments and their products, is a key distinguishing factor in attaining their desired results.

International reach
MEB itself is characterised by its strongly entrepreneurial and internationally oriented management team; adding the synergies realised following the three way merger to the concoction, provides a powerful recipe for success, in terms of resources as well as knowledge including everyday know-how. The entire client-centric approach presented, is founded on the key element of differentiation, a strategy based on four pillars namely product offering, service provided, capacity and a deep understanding of clients needs.

Customisation of the products on offer, tailored to fit each case specifically is high on the list of priorities, both for the benefit of the client, i.e. getting a personalised service, as well as for the interests of the bank, ensuring a smooth repayment of any facility provided. If these were not enough, MEB’s shipping division stays one step ahead of its clients, ensuring flexibility as well as the capacity to cover non-shipping investment needs, applying cross-benefit techniques that enhance the experience for all involved.

The phrase “time is money” is expressive of the fast pace maintained by all industries and markets. A key distinguishing factor for MEB is the ability to provide quick and accurate responses to their client’s request, whilst still maintaining and allowing the opportunity for any client requiring advisory services.

Power of tradition
This bank has intentionally kept a low profile in the shipping finance market, utilising client relationships as the main basis for the shipping divisions marketing. In today’s world of gimmicks, bells and whistles, one might be surprised to find out that the majority of shipping finance business is directly originated through sales and credit officers, proving the bank’s strong track record in the business via establishing long term loyal client relationships; a methodology which certainly follows in line with the more traditional nature of the industry as a whole. The notion that this way of promoting still holds the ability to not only keep any business afloat, but further push a financial institution forward, particularly when considering the hurdles presented by the ongoing crisis, both in terms of growth and client base, is a testament to the broad range of high quality product range and offered services MEB has the ability to provide.

At present, the shipping department boasts a large clientele list, including significant names not only in the Greek but in the worldwide shipping community, catering for more than 130 vessels. Between 2006 and 2007 alone, the total portfolio increased a staggering 82.7 percent, whilst at the same time presenting improved quality in all aspects, including higher profitability, younger tonnage, lower LTV ratio and a more selective customer base. Today’s total portfolio totals more than $1.5bn, a figure which is exclusive of any commitments and newbuildings, implying a much larger true value.

Dimitris Gialouris, Shipping Manager says what makes MEB’s Shipping Division stand out is “the ability to provide a comprehensive range of financial products to the shipping industry together with the capacity to provide alternative financing solutions through flexible and in many cases tailor-made structured financing products to allow for the provision of added value and higher customer satisfaction”.

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