Swiss private bank receives top accolade

Credit Suisse has been recognized as having the "Best Private Banking Services Overall" by Euromoney magazine, a leading publication for the global banking and capital markets. This accolade, as well as the other country awards received by Credit Suisse, are based on the results of the Euromoney Private Banking Survey 2010. Commenting on the awards, Walter Berchtold, Chief Executive Officer of Private Banking at Credit Suisse, said: "We are proud to be recognized by Euromoney. Credit Suisse strives to be a trusted financial partner, helping our clients thrive by identifying, understanding and satisfying their requirements. These awards recognize the strength of our integrated banking business, our global reach and the commitment and expertise we have delivered to our clients." In addition to the global award, the Euromoney survey also recognizes Credit Suisse for having the "Best Private Banking Services Overall" in Western Europe, Guernsey, Indonesia, Russia, Singapore and Switzerland. The annual Euromoney rankings are based on a qualitative and quantitative review of the best services in private banking by markets and by areas of service. The survey also includes competitors' perceptions of the best-performing providers in defined client and product services.

Credit derivatives inventor to oversee AIG risk

American International Group has announced that Peter D. Hancock will join AIG as Executive Vice President, Finance, Risk, and Investments. In this new position, reporting to AIG President and Chief Executive Officer Robert H. Benmosche, Mr. Hancock will oversee Finance, Risk, Audit, Investments, Strategic Planning, and AIG Financial Products Corp."I am very pleased that Peter, a recognized expert in risk and finance, will be joining AIG in this important new role. Over the last several weeks, a number of well-respected, seasoned executives have voted with their feet in our team's unwavering commitment to repay taxpayers and create a real future for this great company," Mr. Benmosche said. "Peter's comprehensive experience in financial services will help accelerate our existing team's efforts toward AIG's re-emergence as a strong, independent company."Mr. Hancock has spent his entire career in financial services, including 20 years at J.P. Morgan, where he established the Global Derivatives Group, ran the Global Fixed Income Business and Global Credit Portfolio, and served as the firm's Chief Financial Officer and Chairman of its Risk Management Committee. Mr. Hancock later co-founded Integrated Finance Limited, an advisory firm specializing in strategic risk management, asset management, and innovative pension solutions. Most recently, he served as Vice Chairman of KeyCorp, responsible for Key National Banking."I look forward to joining the first class leadership team at AIG dedicated to restoring AIG to health for the benefit of all its stakeholders," Mr. Hancock said.

ASB Bank live on Calypso

Calypso Technology, a global application software provider of an integrated trading, risk and processing platform to financial institutions and corporate treasuries, today announced that ASB Bank, a leading New Zealand institution, has successfully implemented the second phase of the Calypso project to go live on its cross-asset, front-to-back treasury platform for foreign exchange, money market, interest rate derivatives, and risk, including limit management, enterprise risk, VaR and market risk.ASB was seeking a single, complete solution to support all treasury functions and to expose more treasury capability via the Bank's internal portal, FastNet. Calypso was chosen for its ability to streamline the Bank's entire financial markets trading and post-trade processing activities. The first phase of the project included end-to-end processing for forward rate agreements and futures as well as limits management. The second phase, including foreign exchange, went live in November 2009.ASB leveraged Calypso's market standard based solution, Calypso Fast-Track to accelerate the deployment of the trading, risk and operations application. Calypso Fast-Track provided ASB with a pre-configured database and associated process documentation. ASB was then able to focus more attention on their unique products and processes, interfaces and data migration rather than the mechanics of simply getting the application up and running."Choosing Calypso was a strategic decision for us", says Kerry Francis, Chief Executive of Treasury and Financial Markets. "By implementing Calypso, we now have sophisticated trading capabilities across a number of asset classes while benefiting from the efficiencies of centralized workflow."Guy Curtis, Head of Treasury and Financial Markets Operations, ASB, added, "We have increased our STP rates significantly and this achievement is testament to the strength of our partnership.""We are delighted to be working with ASB to support the Bank's treasury operations. Australia and New Zealand continue to be important areas of growth for Calypso, and we look forward to growing our presence and client base in the region," states Charles Marston, Chairman and CEO of Calypso.

Swiss bank's US wealth mgmt unit reorganizes

UBS's Wealth Management Americas division, aiming to bolster the Swiss bank's brokerage, today internally announced significant management changes on top of a substantial reorganization: It consolidated three brokerage regions into two, named a new head of private wealth management, and it also introduced the newly-created head of strategic client relationships, Registered Rep. has learned exclusively. At the same time, the UBS division--anxious to put a troubled financial past behind it as CEO Bob McCann promotes a turnaround strategy expected to be rolled out by early March--also named a new head of National Sales, as well as a new chief who will oversee the "emerging affluent section."

RBI withdraws short-term forex borrowings by NBFCs, HFCs

The Reserve Bank of India has withdrawn another stimulus measure as it scrapped the facility of short-term foreign currency borrowings for non-banking finance companies and housing finance companies. The facility stands withdrawn with immediate effect.
Explaining the move the Central bank said, "The decision has been taken after a review of the prevailing macroeconomic conditions and improvements in the domestic credit and liquidity conditions."
The central bank had decided to allow non-banking finance companies which do not take deposits to raise short-term foreign currency loans for refinancing their short-term liabilities on October 31, 2008 and housing finance companies on November 17, 2008.
The loans however could not exceed 50 per cent of the net owned funds or US $ 10 million, whichever was higher. These loans could be for a maximum period of three years and their cost was not to exceed a maximum of 200 basis points above London Inter Bank Offered Rate
RBI had to take the step to help bring more liquidity in the market as NBFCs were facing a severe cash crunch in September-October 2008 due to the global financial crisis.
In its policy review in October 2009 the central bank started withdrawing expansionary measures which were taken when the global crisis hit India's economy and affected liquidity in the country. However at the time the RBI did not change its key policy rates.
RBI withdrew a special repurchase facility for bank and another similar facility for non-bank financial companies, mutual funds and housing finance companies. A foreign exchange swap facility for banks was also withdrawn.
RBI also cut an export credit refinance facility to 15 per cent from 50 per cent in October 2009. In policy review on January 29, RBI raised cash reserve ratio by 75 basis points to control excess liquidity and handle inflation.

Shares beat property in profits race

House prices have nearly quadrupled in real terms over the past half century, with the strongest growth seen in the past decade, says a study published by Halifax last week.
However, shares have performed even better than property if dividends are included, which will have implications for millions of people relying on their homes to fund their retirement.
In 1959, the average house cost £2,507 (about £43,000 in today’s money), compared with £162,085 in 2009 — a rise of 273% after inflation or an average annual real return of 2.7%, according to Halifax.
By contrast, shares have returned 1,180% after inflation over the past 50 years, giving an average annual real return of 5.2%, according to Barclays Capital. It has been monitoring the performance of shares, gilts and cash for 110 years and will release its 2010 Equity Gilt Study next month.
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These figures include dividends. Without them, shares are up only 86%, or 1.2% a year, according to Halifax, underlining the importance of reinvesting dividend income.
The Halifax study also shows that housing has been extremely volatile, with the strong returns of the past 10 years giving homeowners an inflated impression of what property can achieve.
Average annual returns were about 3% in the 1960s and 1970s, when prices rose by 36% and 34% respectively. They then shot up to 4.9% a year during the 1980s, or by 61% overall.
Recession took its toll in the next decade, however, with prices dropping by an average 2.4% (or a total decline of 22%), before surging 62% between 1999 and 2009, or an average of 5% a year.
Halifax said it does not expect prices to rise significantly in the near future.
Suren Thiru, housing economist at Lloyds Banking Group, which owns Halifax, said: “The prospects for the market this year will depend on how the UK economy evolves and whether there is a significant increase in the supply of properties for sale. Overall, our current view is that house prices will be flat during 2010.”
We look at the relative merits of property versus shares.
The outlook
While property prices surged between 1999 and 2009, it was a lost decade for shares. The FTSE 100 hit 6,930 on December 30, 1999, and has failed to regain that level, closing at 5,413 at the end of 2009 and 5,303 on Friday.
The FTSE All-Share fell by an average of 4.4% a year over the decade, after inflation, or a drop of 1.2% including dividends, according to Halifax.
After such an unusually poor performance — shares generally have a 92% chance of beating cash over 10 years, according to Barclays — many experts think the tide could turn over the next decade.
Jason Butler at Bloomsbury Financial Planning said: “Equities have a much higher expected return and higher probability of achieving it over the long term [more than 20 years] than residential property because shares reflect growth in the overall economy through profits generated by business, whereas property reflects only part of the economy.”
The difficulty of downsizing
The poor outlook for property will worry those who, perhaps disillusioned with pensions and stock markets, have been hoping that their homes would provide the capital needed to support them in old age.
This year is the 65th anniversary of the end of the second world war, and the first of the baby boomers are on the verge of taking retirement.
Many have done extremely well from their properties and believed they would downsize to produce a retirement fund. Many may now find it hard to sell those properties if they prove to be too expensive for the next generation.
According to calculations from Standard Life, the insurer, downsizing from the average semi-detached home in early 2008, valued at £343,058, to the average bungalow, valued at £118,260, would have released a fund of £224,798. This, after allowing for the cost of moving house, would buy an annuity income of about £100 a week, or £5,200 a year.
Today, the average semi is worth only £279,016, while the average bungalow has risen in price (largely because of demand from people downsizing) and is now £185,506.
This would give a fund of only £93,510, which would buy annuity income of just £68 a week or £3,536 a year — £1,664 a year less than two years ago.
Annuity rates are unlikely to rise for the foreseeable future as people are expected to live much longer in retirement.
Mark Dampier at Hargreaves Lansdown, the adviser, said: “We’ve got the baby boomers about to retire who expect to start selling their properties to generate a pension. But who is going to afford to buy all these expensive houses?”
Andrew Tully at Standard Life, added: “Property can be a valuable part of any portfolio but relying on downsizing your home is unlikely to generate the income you expect. You need to consider diversifying your investments and maxi-mising tax-efficient options such as Isas.”
The benefit of owning shares and bonds is that they are very easy to sell — a house can take months or years to get rid of.
Butler said: “Compared with liquid equities, property is easy to get into but harder to get out of, expensive to maintain and at the mercy of tenants paying rent. If you have time on your hands, great, but if not go for equities.”
It is also easy to make stock market volatility work in your favour by drip-feeding your savings into the market — more affordable for people on a monthly salary — because of what is known as “pound-cost averaging”.
For example, you want to invest £100 a month into shares. In month one, you buy 100 shares costing £1 each. In month two, the share price has halved to 50p, so your £100 buys 200 shares. In month three, the price returns to £1 a share. You now have 300 shares for the price of 200.
The benefits of a balanced portfolio
Shares may have many benefits but countless investors will still prefer property.
“Residential property is tangible and equities are not,” said Butler. “For those investors who have a low tolerance to losing control, property is probably always going to be an option.” Make sure you have a balanced portfolio of shares, bonds and cash, though.
Dampier recommended Artemis Strategic Assets, which is run by William Littlewood; Jupiter Absolute Return, run by Philip Gibbs; and Neil Woodford’s Income funds at Invesco.

Davos: Bankers unite to make their voices heard on pay

Global investment banking chiefs were organising an industry-wide fightback against immense public hostility over remuneration last night.
A group of influential bankers, led by Josef Ackermann, the Deutsche Bank chief, are expected to present politicians with their plans to limit bankers’ compensation this morning in Davos on the last full day of the World Economic Forum. The group’s proposals on pay will come as part of a co-ordinated industry response to widespread attempts by politicians to impose new regulations on the sector.
Banking chiefs have discussed the possibility of an industry-wide cap on remuneration. It is understood that Mr Ackermann floated that possibility at a meeting with other top bankers on Thursday, although one source said that the appetite for such a deal was limited. While a number of senior bankers say privately that they would like an absolute cap on pay of about $5 million (£3 million), they argue it will get done only through the G20.
City sources said last night that the group of bankers were more likely to support proposals in line with the G20’s recommendations on pay, which would force banks to pay a greater proportion of bonuses in shares, defer payouts for longer and include a claw-back mechanism to enable banks to ensure there were no rewards for failure.
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Alistair Darling, the Chancellor, yesterday urged the Basel Committee, which is developing new international banking standards, to speed up its efforts amid growing concern that the timetable for tougher new capital and liquidity rules was slipping. “Basel II [the old discredited bank regime] took ten years. We haven’t got ten years. We haven’t got two years,” he said.
The Chancellor said that any delay might reduce the appetite for the reforms that were needed: “The danger is we’ll lose our collective memory,” he said, adding that yesterday’s meeting with bankers had been constructive. Their attitude had been more co-operative than a few months ago.
The United States is expected to issue more details next week of President Obama’s plan to prevent banks conducting proprietary trading and to limit their size, ahead of the G7 finance ministers’ meeting in Canada.
Philipp Hildebrand, chairman of the Swiss central bank, said that the new rules had to be agreed “as quickly as possible” but the need for speed had to be balanced with the need to get the rules right. He added that there should be “long time lags for implementation” to prevent the banks’ need to build up capital from constraining credit.
Mr Hildebrand and Hector Sants, chief executive of the Financial Services Authority, attacked the banks for resisting fundamental regulatory reform, which they said was essential to restore public trust in the market system. Mr Sants said that it was not clear whether a majority of the industry had grasped the fact that radical reform was necessary: “If they get it, it’s not obvious.”
Mr Hildebrand said that the banking industry had to persuade the public that it had “changed its spots” and had to work with regulators. “We are jointly in a very serious fight to preserve a market-based financial system,” he told a Credit Suisse lunch at Davos.
Both regulators welcomed Mr Obama’s proposals last week to crack down on risk-taking by US banks, which they said could be incorporated into the global reforms being driven by the G20 group of leading countries.
Laura Tyson, a member of Mr Obama’s Economic Recovery Advisory Board, agreed with critics of the proposals. She admitted that there were insufficient details and said “a lot of people took them as a slap in the face of global co-ordination”.
The proposals were formulated by Paul Volcker, the former Federal Reserve chief who is chairman of the Economic Recovery Advisory Board. Ms Tyson said that she had not taken any part in the discussions.