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.

Davos: Banks 'wake-up to reality' on wind-down levy

Barney Frank, the chairman of the US House Financial Services Committee, today praised bankers for their backing of a global wind-down fund, branding the move as a “major recognition of reality”.
On the last full day of the World Economic Forum in Davos, Mr Frank, the Democrat congressman, lauded bankers after some of the sector’s biggest lenders, led by Deutsche Bank, revealed they would support a levy that would cover the cost of a bank’s collapse – shifting the burden from taxpayers.
Mr Frank told Reuters: “Dropping the objections to [the levy] in principle is a major recognition of reality by them.”
Earlier this month, President Obama revealed plans to charge Wall Street a $90 billion “financial crisis responsibility fee” after banks were bailed out through the $700 billion Troubled Asset Relief Program (Tarp) following the collapse of Lehman Brothers in September 2008.
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return false;Mr Obama subsequently outlined proposals to crackdown on banks, to limit the size of institutions and bar them from the most cavalier trading practices.
Today, 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.
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.
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.
}

Santander’s profits increase 30% in UK

SANTANDER, the Spanish financial giant, will reveal this week that its three British banks have seen a 30% jump in profits.
Abbey, Alliance & Leicester and Bradford & Bingley made about £1.5 billion last year, say analysts. The banks, which are being rebranded as Santander, accounted for about a fifth of the mortgages granted in Britain last year.
Santander has been one of the big winners in the credit crunch, escaping losses on American sub-prime mortgages. Full-year figures for the Spanish parent are expected to show pre-tax profits of about €11 billion (£9.5 billion).
However, analysts remain concerned that Santander will be caught up in the problems of Spain’s domestic economy. BBVA, its rival, last week revealed a 16% drop in profits after bigger-than-expected provisions on commercial property deals.
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Kvint: Scot was architect of my career

Dr Vladimir Kvint has just returned from a meeting with RMJM’s newest recruit.
As chairman of Russia and Commonwealth of Independent States business for the Edinburgh-based architecture firm, he is in a perfect position to advise Sir Fred Goodwin, the former Royal Bank of Scotland chief executive, on his new role as a special adviser.
“He is mainly a banker and I am mainly an economist, so we had a lot to speak about,” explains the economist. “He seems to be a well-educated person with great vision.”
Despite the furore surrounding Goodwin’s appointment, Kvint insists the move was the best one — for both RMJM and Sir Fred himself.
“When a person experiences new challenges, he is growing into himself,” muses Kvint, who is on a whistlestop trip to Edinburgh to lecture at the university and speak to economists about Scotland’s financial future. “That is what I’m seeing, anyway.”
Kvint, who jokes that he has “three full-time jobs” — including heading the financial strategy department at the Moscow School of Economics and being adjunct professor of business strategy at La Salle University in America — is, with Goodwin, one of four advisers to the firm behind the Scottish parliament and the Falkirk Wheel.
A renowned economist, who coined the phrase “emerging markets” and successfully predicted the downfall of the Soviet Union, Kvint claims he has a Scot to thank for his distinguished career.
While doing a spot of “unofficial” labouring work for the Soviet railway company as a teenager, trying to fund his passage to the warmer climes of the Black Sea coast, Kvint was told to hide in a train storeroom to avoid an unexpected visit from the authorities. In the room, a passenger had left behind a book on political economics, which featured heavily Adam Smith’s teachings.
Kvint, who had never heard of the concept of economics, read the book from cover to cover and was hooked.
“I fell in love with this book. At the next station, I got out and phoned my mother and told her I was going to be an economist,” he remembers.
But his mother had other plans. Descended from a long line of mining engineers — the Kvints lived in Siberia’s most northern city, Norilsk, 1,000 miles north of the Arctic Circle and home to a metals mining plant reported to be two-and-a-half times the size of Belgium — Mrs Kvint was insistent that her son finish his studies.
He did a degree in mining engineering and went on to work for the town’s Norilsk Nickel company. Encouraged by his boss, he eventually left to study economics in Moscow, then returned to Norilsk as the firm’s chief economist.
“I was lucky because I met some very nice people who told me that, for me, it would be better to do something in economics. The rest is history,” says Kvint, who has been an economics professor for 38 years, after moving to Moscow to teach at the university.
“I was always used to being the youngest one, for my subordinates to be older than me,” he laughs. “Then one day, I suddenly realised I had become the oldest, but I don’t feel it.”
As a part of a tiny group of Soviet economists, Kvint was not allowed to travel abroad, having been deemed a risk by the Soviet authorities.
“The government and KGB would not allow me to travel because they thought I would leave,” he remembers. But Austrian education authorities persisted in their requests and, in 1988, he was finally allowed to work in Vienna, sparking the beginning of a spate of foreign travel, which often took him to America.
“I started to quietly develop my forecasts, saying that the Soviet regime would come to an end, that it wasn’t sustainable.” says Kvint. “I had all possible problems with the government at that time.”
He also faced another problem, in the form of western publications afraid of angering the Soviet authorities.
“No western magazine or newspaper would publish my research,” he says. “Nobody thought what I said was true.”
He recalls a chat with Henry Kissinger, the former US secretary of state. “He said to me, ‘Vlad, you see the KGB, the Red Army and so on, they are keeping the country together.’ He would not believe me.”
The turning point came when he met Malcolm Forbes, the owner of Forbes magazine at the time. “They asked me if there was anything I had written that they could use. I told them I had an article they could publish but that 32 magazines had already turned it down.” Forbes took the risk. The article became its cover story and Kvint became a well-known name in American economics. A story in the New York Times swiftly followed.
“I said in the New York Times that, by 1992, there would be no country called the Soviet Union,” says Kvint.
He pauses. “The Soviet Union disappeared in December 1991. I am sitting here and I am no longer a Soviet economist because the Soviet Union disappeared. So everybody knows now that I was right.”
Before landing the job with RMJM last year, Kvint regarded Scotland as “the European Siberia”. “It is cold and it is northern,” he laughs. “But not as cold as Norilsk.” Kvint has views on the Scottish economy, adding his support to calls for fiscal autonomy, which he claims is necessary to allow Scotland to develop a successful economic strategy.
He has described the country as an “emerging market”, insisting that Scotland’s potential for economic improvement — especially through marketing its education system — is huge.
On his first visit to Edinburgh, Kvint asked to see Adam Smith’s grave and was surprised to find it tucked away in Edinburgh’s Canongate Kirkyard. “Scotland was always very special to me because everything I am doing in my life is because of Adam Smith,” he says. “For me, I expected it to be like Red Square in Moscow. But nobody really knew where it was.”

Moody’s issues negative credit rating for UK banks

Moody’s Investors’ Service has reported that its outlook for the direction of credit conditions in the UK banking system is negative.
The credit rating agency has based this view on the likelihood of an economic downturn, which combined with high levels of consumer debt in the UK, could lead to a rise in bad debts and lower profit margins for lenders.
In addition, Moody’s expect banks to continue to be affected by the credit crisis throughout 2008.
The firm says it is unable to assess the adequacy of writedowns already taken by some of the larger UK banks, or predict what losses may occur in the future.
The report is particularly bad news for banks in the process of raising capital via rights issues.
Royal Bank of Scotland (RBS), which needs to raise £12 billion to shore up its balance sheet, saw its shares plunge to an eight year low at one point yesterday, raising doubts as to whether existing investors will engage with the fundraising.
A lack of subscribers could leave Goldman Sachs, UBS and Merrill Lynch (the investment banks that have underwritten the issue) in a difficult situation.
Amid the gloom of the report, Moody’s also states that it still considers the overall financial position of the UK banking sector to be strong.

Banks in appeal to ease infrastructure financing rules

Banks have appealed to the Reserve Bank of India (RBI) for easing norms for deals relating to lending in the infrastructure sector. The appeal is to help banks deal with the asset-liability mismatch.
The top bankers asked for a cut in savings bank rate during a pre-policy meeting with RBI Deputy Governor Subir Gokarn. The bankers expect to improve net interest margins with the cut in savings rate.
The asset-liability gap is rising as most new deposits have a shorter maturity term of around one year while the tenure for loans to infrastructure projects is of 15-20 years.
The banks had earlier requested the finance ministry to allow the issue of tax-free bonds. They have asked the RBI for an exemption for such bonds from cash reserve ratio and statutory liquidity requirements.
According to a government estimate an investment of $550 billion is required in the infrastructure sector in the five-year Plan 2007-2012. This outlines the importance of bank finance in the sector.
The government has started work on take-out financing to deal with the asset-liability gap experienced by the banks. Under the guidelines worked out by the India Infrastructure Finance Company Ltd (IIFCL) for take-out financing, an arrangement would be in place where banks would initially finance long-term projects while another funding body will buy these loans at later date.
Bankers see enough liquidity and expect stable interest rates till the end of the current fiscal while they expect the RBI to raise CRR during its policy review this month end.
Banks urged the central bank for a cut in the interest rate that they have to pay on deposits in savings bank accounts. Banks request the rate be lowered to 3 per cent from 3.5 per cent at present.
RBI has said earlier that the interest rate on savings would be calculated on a daily basis from April 2010 and according to the banks this would result in a rise in cost of around 75 basis points for them. Banks also expect the government to help on funding expenses incurred for financial inclusion. They asked the government to take care of the cost incurred to create infrastructure for financial inclusion as building capacity for expanding their reach was proving to be a burden to some banks.

U.S. general: Mobility hinders getting aid to Haitians

Tune in to CNN on Friday night for a special edition of "AC360" to see the strength of Haiti's survivors, the hope of the people and how individual acts of heroism are helping to rescue a nation. "CNN Heroes: Saving Haiti," CNN Friday at 11 p.m. ET
Miami, Florida (CNN) -- Not all of the earthquake-traumatized Haitians are receiving the aid they need, a U.S. general said Thursday, partly because displaced residents are moving from place to place.
"We're still not up to meeting the needs of the Haitian people as far as the amount of supplies that are there. And so, there have been some instances, isolated, where we've been out to give distribution to citizens, there hasn't always been enough food," said Air Force Gen. Douglas Fraser, head of the Miami-based U.S. Southern Command.
He added: "We haven't anticipated the demand, I guess, at each site as we've gone out because the Haitians have -- have migrated around, if you will, from distribution site to distribution site, so we're finding pockets that we haven't been able to get in to."
He said the distribution is inconsistent, however, because there are areas where fresh fruit and plenty of food are available.
"The need keeps moving around a little bit," Fraser said. "That's an evolving issue."
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United Nations
Another problem has been damage to the south pier of the port in Port-au-Prince, which is reducing the number of containers that can be unloaded there, Fraser said. The pier was damaged by new tremors on Wednesday.
The U.N. World Food Programme will expand its distribution points in Port-au-Prince from 12 to 15 on Friday, the general said.
There are hundreds of camps for displaced persons in the capital and surrounding areas following the devastating January 12 earthquake. Fraser said from 800,000 to about 1 million Haitians have lost their homes.
He said there was tremendous support from the international community, and "the relief efforts improve every day." One of the most popular items distributed recently is hand-cranked radios.
Fraser gave the report on the relief effort to Pentagon reporters via teleconference.
He said one of the most pressing needs was a place for patients in recovery, and that problem was being worked on.
Girl, 16, rescued in Haiti
When was asked how much the U.S. military effort was costing, he said he didn't know.
"I don't have an accurate assessment of the cost, primarily because it involves many parts of the Department of Defense," he said. He added President Obama and Secretary of Defense Robert Gates have said they will fund whatever he says is needed.
However, there appeared to be a somewhat different message Wednesday from Pentagon spokesman Geoff Morrell. When he was asked how much the Haiti operation was costing, he seemed to indicate that cost is now becoming a factor.
"You know, I think we're still working that. But I mean, you know, we've got 24 ships out there. You've got 15,000 personnel. You've got flights. This is a -- this is a very expensive operation.
"We have committed enormous capabilities towards this mission, and the meter is running. And so I don't know that we've gotten arms quite yet around how much, but -- you know, probably hundreds of millions of dollars."
As the general was making his comments, the Senate Foreign Relations Committee was discussing the enormity of the task of rebuilding Port-au-Prince, given the devastation.
"You have to have so many parts to coordinate," said Sen. John Kerry, D-Massachusetts, who chairs the committee. "And you've got to come in there with a new city planning concept. You've got to have a vision for what you want this place to look like.
"I don't see any entity at this point or movement ... that suggests to me the global community is coming together around that organizational effort the way that it ought to," Kerry said.
Paul Farmer, the United Nations deputy special envoy for Haiti, testified that he agreed.
"This task is so massive that we need the 'international A-Team' working on this case," Farmer said.
Kerry said he believed the project could be pulled together to empower Haitians, and "we're going to press this concept."

Big Challenges as Haiti Prepares to Reopen Schools

Port-AU-PRINCE, Haiti — More than two weeks after the earthquake that devastated much of this country’s southern half, the capital remains a city of teetering walls, dangling electrical wires and precariously balanced heaps of jagged cinder block and wrought iron, all rattled daily by aftershocks. Bulldozers and excavators are few and far between. Even as tent cities here swell, aid groups say an estimated 10 percent of the city’s residents (a number that may be vastly understated) are camping in yards and streets next to their homes, marking off what they hope is a safe distance in case the structures fall in the next aftershock. Others trek by daily to see if their houses are still standing and wonder if they will ever be able to move back in.
“It’s dangerous, but what can we do?” Orpha Brinach, 38, said after a night on a mattress in a narrow street lined by damaged homes. “We can’t go to the tent cities because robbers will steal everything we have.”
Along the ravaged main commercial strip, vendors hawk goods as people claw their way into demolished stores in the shadow of wobbly buildings that appear ready to crumble at any moment. Low-flying military helicopters cruise overhead, spreading fear on the ground that the jarring rotors will give wounded buildings’ their final blow.
Government education officials and aid officials said Thursday that they hoped schools would begin reopening Monday, but it was unclear how many schools would be able to open — or how many students would be able to return.
John Henry Telemaque, assistant coordinator for education for President René Préval’s emergency disaster committee, said that perhaps up to 97 percent of the city’s schools — built to withstand hurricanes, not earthquakes — had been destroyed, and that the dead within were still being counted.
At the National Laboratory for Buildings and Public Works in Delmas, Raymond Hygin, assistant director of public works for engineering, pulled out a two-inch-thick stack of inspection documents for the 112 standing buildings that had been checked and ordered demolished. The number actually taken down: zero. “When we will begin to demolish, we couldn’t tell you,” he said. “First we have to continue our evaluation.”
The agency has six inspection teams and is working with outside groups, including a French-based nonprofit organization called Emergency Architects, to bring in more.
Mr. Hygin said the priorities were government buildings and structures that presented immediate hazards. Homes, he said, would have to wait. Structural engineers from the United States and other countries have already been evaluating government buildings and hospitals.
Mr. Hygin’s inspectors began work on Monday, delayed, he said, because many of them lost family members or their own homes in the earthquake.
In Delmas, the top two floors of a pastel yellow apartment building collapsed onto the two lower floors, crushing them, and now lean precariously over a busy road. A spray-painted sign reads “À démolir” (“demolish”), with the agency’s initials and a large X circled in red. In another part of the city, Pont Morin, cracks gape on a nine-story telecommunications building in a residential neighborhood that bears no sign of having been inspected.
With damage stretching into every section of the city, the task for inspectors seems endless. But Mr. Hygin set a target of three months. “It is optimistic, yes,” he said. “But we will try.”
The International Medical Corps, a California-based nonprofit organization that is running the general hospital here, said it had not seen injuries related to new collapses. But a spokesman for the organization said a team from another group, the Brooklyn-based Bedford-Stuyvesant Volunteer Ambulance Corps, reported recovering the bodies of four people on Tuesday — some of them children — who were crushed in the collapse of a four-story building after an aftershock.
“It was a pretty dramatic story, because the rescuers could hear kids crying and banging,” said the spokesman, Tyler Marshall. “They apparently died during the attempt to remove the rubble.”
The capital’s electrical system is also a work in progress. Col. Rick Kaiser of the United States Army commands an engineering brigade for the military’s Joint Task Force Haiti, which has been helping restore vital infrastructure. He told reporters this week that restoration of power could still be a few weeks away.
The slow clearing of rubble, meanwhile, is setting off a new round of mourning for many families and the appearance of bodies on the street. This week, men working to clear debris from a hardware store found the body of a young child, missing a leg and an arm and wearing only green shorts, by a nearby telephone pole. The men said they did not know where the body came from. One started crying, a rare release in a city grimly stoic about the overwhelming loss of life.
But on Wednesday, there were more tears. As government and aid workers cleared rubble from the collapsed Ministry of Education, the building’s caretaker was found. The work ID in his pocket said Benjamin Sius. Family members who came to collect the body wailed on the street outside. A sister, Elsia Sius, said he supported the whole family and paid for school for her three children.
“I’ve lost my brother,” Ms. Sius mourned. “I have nothing left.”
Rescued Girl Stable
PORT-AU-PRINCE, Haiti (AP) — A 16-year-old girl pulled from the rubble more than two weeks after a deadly earthquake was in stable condition on Thursday, able to eat yogurt and mashed vegetables. Doctors said her survival was medically inexplicable.
The girl, Darlene Etienne, was rescued a day earlier from a collapsed home and was being treated on the French Navy hospital ship Sirocco, anchored off Port-au-Prince. Her doctor, Evelyne Lambert, said she had a 90 percent chance of survival.
She may have had some access to water from a bathroom of the wrecked house, and rescuers said she mumbled something about having a little Coca-Cola with her in the rubble.
Ruth Fremson contributed reporting from Port-au-Prince, and Jack Healy from New York.

A Reconciliation Plan in Afghanistan

KABUL — The Afghan government is set to unveil an ambitious, far-reaching plan to persuade the Taliban’s foot soldiers to abandon their fight and to offer an opening for the movement’s leaders to return to politics in the country they once ruled. The new program, which President Hamid Karzai will outline Thursday at a conference in London, seeks to avoid the problems that dogged earlier, more piecemeal approaches. This time it will be a comprehensive plan, operating at the district, provincial and national levels, according to his advisers, who describe it as “bottom-up and top-down.”
“We see this program as the main pillar for bringing peace to Afghanistan,” said Shaida Mohammed Abdali, the deputy national security adviser.
“There’s an ideological motive for an insurgency like this, and the trouble will not be resolved unless you reach out to the leadership; they are the food of the foot soldiers and where they are getting ideological and political incentives. If we only concentrate on the foot soldiers it will not be a sustainable program.”
The Karzai government envisions a two-track program and wants Western and other countries whose representatives will be attending the London conference to agree to back both of them.
One track is reintegration of fighters — to entice the Taliban’s rank-and-file fighters to lay down their weapons and rejoin Afghan society. The core of that is a vast jobs program and an amnesty for the estimated 20,000 to 30,000 fighters in Afghanistan’s villages and mountain redoubts.
The other track is reconciliation, a far more diplomatically charged and complex endeavor whose goal is to bring Taliban leaders, most of them now in Pakistan, back to Afghanistan and allow them to play a political role, if they are willing to abide by the Afghan Constitution.
Such an agreement, if it can be forged, would involve negotiations with Pakistan, which has sheltered the Taliban leaders, and with the United States and its Western allies, who have lost more than 1,600 service members fighting the Taliban.
It also means winning the help of Saudi Arabia, which has ties to Pakistan and the United States and was one of a handful of countries that recognized the Taliban government and so is trusted by the movement’s leaders.
Mr. Abdali, the deputy national security adviser, and Massoom Stanakzai, a special adviser to President Hamid Karzai on reconciliation and reintegration, said that the government has learned from its past mistakes and that this time around it will design a much more comprehensive program. “We have to provide them with a package — jobs, protection,” said Mr. Stanakzai. “They have legitimate concerns.”
In exchange, both rank-and-file Taliban fighters and leaders would have to pledge to renounce violence, separate completely and permanently from Al Qaeda, and accept the Afghan Constitution.
Whether the effort will be successful depends on a host of factors far larger than the program itself, including its implementation at the village level and the geopolitics that will determine whether a deal can be struck with the Taliban leadership.

Stimulus is now $75 billion more expensive

NEW YORK (CNNMoney.com) -- The Congressional Budget Office hiked its forecast Tuesday for how much the stimulus bill will add to the nation's deficit, raising its estimate by $75 billion to $862 billion.
The American Recovery and Reinvestment Act, passed in February 2009, was initially believed to have a price tag of $787 billion. With the glaring exception of skyrocketing unemployment compensation costs, the CBO said the Recovery Act's effects on government spending and revenues have closely followed its initial estimate for 2009 and 2010.

Banks drag on stocks

NEW YORK (CNNMoney.com) -- Stocks struggled Tuesday as a late-session selloff in the financial sector cut into an earlier rally that had been sparked by Apple's record quarterly results and a stronger reading on consumer confidence.
After the close, Yahoo (YHOO, Fortune 500) reported a quarterly profit, reversing a year-ago loss, as the online advertising market showed some signs of life. The company also reported weaker quarterly revenue that topped estimates. Shares gained about 2.3% in after-hours trading.

Loyds TSB sells Abbey Life and increases profit

Lloyds TSB, the UK’s fifth-largest bank, has recorded a 13% increase in retail banking profit in the first-half of 2007.
Costs during the period increased by a very satisfactory 6%, given that 4% of the increase was incurred through the refunding of overdraft charges.
At a group level, pre-tax profits increased by 15%, to £2.01 billion, and revenues increased 8%, to £6.6 billion.
The bank expects the remainder of 2007 to produce similar growth and has also revealed that its spending for the year so far in refunding fees for unauthorised overdrafts amounts to £36 million.
This compares favourably with the HSBC figure of £115 million for the same period, particularly as Lloyds has the larger UK retail customer base.
Lloyds’ customers may not be as impressed with the figure as its shareholders, as the bank has been accused of taking a harsher approach than some of its competitors when settling claims for unreasonable charges.
The bank has also sold Abbey Life, its closed life insurance business, for £977m. Abbey Life manages around £12 billion of assets held in approximately 1.2 million policies.
The business has been acquired by Deutsche Bank and Lloyds will make an estimated £290 million profit when the transaction is completed later this year.

Brewin Dolphin hires NI and Scotland charities head

Private client investment manager Brewin Dolphin has announced the appointment of Lynne Lamont as head of Charities in Scotland and Northern Ireland.
She joins the firm from Newton Investment Management, where she spent more than a decade as a fund manager and played a key role in building up a business that handled more than £250m for Scottish charities.
Lamont will be based in the firm’s Edinburgh office, where she will run the charity business and provide expert support to seven other offices across Scotland and Northern Ireland.
She has expressed her delight at joining the firm, and stated her intention to inject new ideas and thinking to help the firm continue its high quality bespoke service.
Regional Director of Scotland and Northern Ireland Henry Algeo has warmly welcomed Lamont’s appointment and praised her high calibre of knowledge and expertise

Social forum promotes Ethical Investment Week

The UK Social Investment Forum (UKSIF), a membership network for sustainable and responsible financial services, is launching a new website aimed at increasing participation in the UK’s first National Ethical Investment Week (NEIW).
The event, which will be held between 18th and 24th May this year, marks the first occasion on which the financial services industry and grassroots organisations will come together to encourage people to consider the benefits of ethical investment.
The website is aimed at bodies such as community groups and non-governmental organisations and will include a range of information, including advice on awareness raising and providing support to local financial advisers.
Penny Shepherd, chief executive of UKSIF, says: “Behaving in ways that can help benefit the environment or society is becoming increasingly mainstream. Choosing a green and ethical investment can be another way of acting responsibly but many people are still not aware of this option.”
She adds: “The support of local champions will be critical in making the first NEIW a success so we have made it as easy as possible for them to do that, with our new website and Guide for Participants.”
Henderson Global Investors is sponsoring the NEIW event and George Latham, the firm’s head of SRI Investment, is hopeful that: “National Ethical Investment Week will provide the foundation for investors and their advisers to gain a greater understanding of the case for ethical investinga

Barclays defers bonus payments

Barclays is to defer paying 2009 bonuses to directors and senior staff for up to three years, the BBC has reported.
The bank is still calculating last year’s bonus pot, which it says will be paid mostly in shares between now and the end of 2013.
According to the BBC, the scheme will be adopted as formal policy and staff will be advised of the details in the next few weeks; final bonus figures are expected in March.
At the height of the financial crisis in October of 2008, Barclays chose to raise money from Middle Eastern investors rather than opt for a government bail out.
The move left the group more leeway on its remuneration policy than the rescued RBS and Lloyds Banking Group.
However, Barclays did benefit from Treasury guarantees put in place at the time to prevent the collapse of the UK financial system.
In related news, last week saw a surprise development in the row over bankers’ bonuses and their link to the high levels of risk taking that led to the credit crisis.
President Barak Obama effectively declared war on Wall Street, saying that he intends to curb the riskier activities of US banks, such as the proprietary trading that makes billions of dollars for investment banks and result in huge bonuses for traders.
Barclays’ share price, along with that of RBS, fell sharply on the announcement.

Nationwide raises rates for Fixed Rate Bonds

Nationwide Building Society has announced that it is increasing the rates available on a number of its Fixed Rate Bonds and e-Bonds, offering guaranteed interest rates for savers.
The products benefiting from the rate increases include the three year Fixed Rate Bond and e-Bond which offer 4.7% gross p.a./AER fixed for balances exceeding £25,000.
Customers will also be able to take up a two year Fixed Rate Bond and e-Bond paying 4.1% gross p.a./AER for balances over £25,000 and a similar bond for 18 months paying 3.5% for balances over £10,000.
Head of savings Andy Hutchinson has said that the firm is hoping to encourage people who made New Year resolutions to save more and stick to their intended plans.
Hutchinson added that the rate increases came after the Nationwide Saving Index revealed that a quarter of all people are saving no money at all.
Recently, the building society has also changed rates for its loans, offering FlexAccount customers 7.6% APR typical for loans of between £7,500 and £14,999 over afive year period.
Using such a loan to repay credit card bills can help consumers cut costs as interest payments are reduced, saving money.