US debt limit worries added to the negative mood on Wall Street on Monday, while the European debt crisis and contagion concerns rolled on.
The Dow fell 95 to 12,385, the Nasdaq dropped 25 to 2,765, while the S&P 500 finished 11 under at 1,305.
With just over two weeks to go before the US is expected to reach the $14.3 trillion debt ceiling, Republicans were still holding out against tax increases, but president Obama hopes that a deal that will close tax loopholes for wealthy American citizens and firms, combined with government spending cuts, can be reached.
"[O]wing to the dynamics of the political debate on the debt ceiling, there is at least a one-in-two likelihood that we could lower the long-term rating on the U.S. within the next 90 days," credit rating agency Standard & Poor's said last Thursday.
Fellow rating agency Moody's said on Monday, "Moody's considers the probability of a default on interest payments to be low but no longer to be de minimis." The agency added that if the US was to default, it "would fundamentally alter Moody's assessment of the timeliness of future payments."
Meanwhile, Friday’s European banking stress tests were seen as something of a damp squib by markets after they failed to adequately analyse the impact sovereign debt default would have on the Continent's banks.
Financials were under pressure as a result, with Bank of America, Goldman Sachs and Morgan Stanley all falling to two-year lows.
Media conglomerate News Corp was in the red ahead of a meeting in UK parliament with chairman Rupert Murdoch and his son James concerning the phone-hacking scandal first revealed on 4 July. Reports have surfaced calling for a boardroom shake-up following the closure of its UK tabloid newspaper the News of the World. Shares have dropped 17.4% over the past two weeks.
Cisco Systems, the networking and electronics firm, rose in after-hours trading after it said it would cut 6,500 workers in an effort to reduce costs, 2,100 of which who have opted for voluntary early retirement.
IBM jumped higher after the bell after second quarter sales of $26.7bn - which were 12% higher than last year - topped estimates of around $25.4bn.
After the close, gold futures were 1% higher at a record $1,605.70 per ounce.
Tuesday, July 19, 2011
Spain issues €4.45bn in debt auction
Spain's Treasury issued a total of €4.449bn in 12- and 18-month notes on Tuesday, in line with the announced target of €4.5bn.
The Treasury issued a total of €3.788bn in 12-month notes with a yield of 3.76%, compared to the previous 2.728%. The bid-to-cover ratio was 2.2, compared to the previous 2.9.
Spain also issued €661m in 18-month notes with a yield of 3.98% compared to the previous 3.299%. The bid-to-cover ratio was 5.5 compared to the previous 3.9.
"I continue to consider demand and not the yield to be the key factor behind a positive debt auction; like today's," signalled Jose Luis Martinez Campuzano, a strategist for Citi in Spain.
The Treasury issued a total of €3.788bn in 12-month notes with a yield of 3.76%, compared to the previous 2.728%. The bid-to-cover ratio was 2.2, compared to the previous 2.9.
Spain also issued €661m in 18-month notes with a yield of 3.98% compared to the previous 3.299%. The bid-to-cover ratio was 5.5 compared to the previous 3.9.
"I continue to consider demand and not the yield to be the key factor behind a positive debt auction; like today's," signalled Jose Luis Martinez Campuzano, a strategist for Citi in Spain.
European private banks to face new regulatory challenges
LONDON (SHARECAST) - Private banks in Europe sustained their tepid recovery last year, helped by a rebound in the financial markets and cost cutting activities, according to a McKinsey & Co report, but said that profitability and net inflows were “well below” pre-crisis period.
The management consultancy’s European private banking survey showed that on average, assets under management last year grew by more than 9%, of which 2% represented net new inflows.
This was a “modest improvement on 2009,” the report said, and added this may signal that customers are only slowly regaining trust and returning to the industry. The survey included comments from more than 160 banks from 26 countries, of which more than 100 are from Western Europe.
Annual net inflows growth in 2010 remained low, while profit margins improved 4 basis points, albeit 11 basis points below the high of 2005-07. Banks blamed declined trading activity resulting in lower brokerage fee, greater risk aversion and a declining proportion of ‘affluents’ in the customer mix for the reduced margins.
Looking forward, the director of McKinsey’s European private banking practice Frédéric Vandenberghe said, “One of the industry’s key challenges will be increased and changing regulation: demands for greater transparency, the possible pressure on so-called retrocession commissions within some types of mandates, and other regulatory changes will require private banks to further strengthen their advisory processes and will create additional downward pressure on margins.”
Furthermore, the survey confirmed growing appetite for advisory mandates, with assets managed in this way increasing slightly more than the rise in private banking assets under management as a whole.
The management consultancy’s European private banking survey showed that on average, assets under management last year grew by more than 9%, of which 2% represented net new inflows.
This was a “modest improvement on 2009,” the report said, and added this may signal that customers are only slowly regaining trust and returning to the industry. The survey included comments from more than 160 banks from 26 countries, of which more than 100 are from Western Europe.
Annual net inflows growth in 2010 remained low, while profit margins improved 4 basis points, albeit 11 basis points below the high of 2005-07. Banks blamed declined trading activity resulting in lower brokerage fee, greater risk aversion and a declining proportion of ‘affluents’ in the customer mix for the reduced margins.
Looking forward, the director of McKinsey’s European private banking practice Frédéric Vandenberghe said, “One of the industry’s key challenges will be increased and changing regulation: demands for greater transparency, the possible pressure on so-called retrocession commissions within some types of mandates, and other regulatory changes will require private banks to further strengthen their advisory processes and will create additional downward pressure on margins.”
Furthermore, the survey confirmed growing appetite for advisory mandates, with assets managed in this way increasing slightly more than the rise in private banking assets under management as a whole.
Monday, June 6, 2011
Thursday, June 2, 2011
GTI Asseses World Bank Openness in a Transparency Scorecard
A new Transparency Scorecard, published on January 7, 2007, assesses World Bank Openness and evaluates recent changes and advances in transparency policies at the international financial institutions.
The Transparency Scorecard utilizes the standards set out in the recently launched GTI Charter to investigate the overall “openness” the World Bank Group, or the World Bank, the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). While the scorecard acknowledges how far the Bank Group has come over the past 15 years, it examines the remaining gaps and persistent problems that exist between the institutions policy and the international transparency and accountability standards.
The Charter outlines nine transparency principles. Each principle is founded on the basic right of individuals and groups to request and
access information from all public bodies. Furthermore, the Charter and the Scorecard present the access and circulation of information as the responsibility of the international financial institutions (IFIs) to uphold.
The Scorecard examined the disclosure standards of the Bank Group against the criteria laid out in the Charter. First, it examines the
types of information the WBG makes publicly available and whether or not this information provides access to decision-making mechanisms. In this vein, essential criteria such as giving advance notice, disclosing draft information, and opening meetings to the public have been
evaluated to ensure that the intended beneficiaries of development funds can influence how funds are used and then monitor whether these
funds are meeting development objectives.
It was found that while the WBG allows for the routine disclosure of a number of documents and basic information about each branch of the
institution – a notable exception is the lack of public access to WBG contact information -- access to budgetary information at IFC and MIGA
is missing. Most World Bank and IFC institutional policies, strategies and guidelines can be found on their websites. Less information is
available about the institutions’ operations at the country and investment level. Generally, there is limited information disclosed
regarding projects under implementation at the Bank, IFC and MIGA and some upstream country analyses conducted by the World Bank are kept confidential.
Second, the Scorecard examines the WBG’s disclosure systems in order to determine whether the systems (a) uphold the presumption of information disclosure; (b) establish process guarantees for information requests; and (c) allow for an appeals process in the case of requests that have been unreasonably denied.
For example, the Scorecard found, while the policies of the Bank, IFC and MIGA each state a presumption in favor of disclosure, typically
known as a principle of maximum disclosure, this principle is not implemented in practice. Instead, the policies are, in effect, publication schemes which provide a list of information that will be disclosed, while all other information is kept confidential. In this way, the scope of the disclosure policies is limited.
Finally, the Scorecard considers how the right to information is being protected, by evaluating the rules for protecting whistleblowers, the
requirements for regular review of transparency standards, and the procedures in place for the active promotion of openness– through
corporate incentive programs along with dissemination and translation strategies. Although the Bank Group has some positive features of its
whistleblower policy including appropriate burden of proof standards and relief for whistleblowers, there are still several important shortcomings. For instance, the scope of the policy is limited to staff (the WBG’s numerous consultants are not covered); there is no truly
independent forum for adjudication; and there is no record of the institution’s actions to correct and prevent future wrongdoings exposed
through whistleblower disclosure.
Also, it is not clear if and when the WBG conducts staff trainings on the disclosure policy and there is no information on how proper
implementation of openness principles and rules form part of the staff incentive or evaluation procedures. Furthermore, it is unclear whether
sanctions exist for the purposeful violation of the disclosure policy. Finally, while a records management system exist at each arm of the
WBG, only the IFC has clearly indicated that it will track and report on the disclosure of and requests for information.
DETAILS
Published 7th January 2007 by Bank Information Center
A new Transparency Scorecard, published on January 7, 2007, assesses World Bank Openness and evaluates recent changes and advances in transparency policies at the international financial institutions.
The Transparency Scorecard utilizes the standards set out in the recently launched GTI Charter to investigate the overall “openness” the World Bank Group, or the World Bank, the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). While the scorecard acknowledges how far the Bank Group has come over the past 15 years, it examines the remaining gaps and persistent problems that exist between the institutions policy and the international transparency and accountability standards.
The Charter outlines nine transparency principles. Each principle is founded on the basic right of individuals and groups to request and
access information from all public bodies. Furthermore, the Charter and the Scorecard present the access and circulation of information as the responsibility of the international financial institutions (IFIs) to uphold.
The Scorecard examined the disclosure standards of the Bank Group against the criteria laid out in the Charter. First, it examines the
types of information the WBG makes publicly available and whether or not this information provides access to decision-making mechanisms. In this vein, essential criteria such as giving advance notice, disclosing draft information, and opening meetings to the public have been
evaluated to ensure that the intended beneficiaries of development funds can influence how funds are used and then monitor whether these
funds are meeting development objectives.
It was found that while the WBG allows for the routine disclosure of a number of documents and basic information about each branch of the
institution – a notable exception is the lack of public access to WBG contact information -- access to budgetary information at IFC and MIGA
is missing. Most World Bank and IFC institutional policies, strategies and guidelines can be found on their websites. Less information is
available about the institutions’ operations at the country and investment level. Generally, there is limited information disclosed
regarding projects under implementation at the Bank, IFC and MIGA and some upstream country analyses conducted by the World Bank are kept confidential.
Second, the Scorecard examines the WBG’s disclosure systems in order to determine whether the systems (a) uphold the presumption of information disclosure; (b) establish process guarantees for information requests; and (c) allow for an appeals process in the case of requests that have been unreasonably denied.
For example, the Scorecard found, while the policies of the Bank, IFC and MIGA each state a presumption in favor of disclosure, typically
known as a principle of maximum disclosure, this principle is not implemented in practice. Instead, the policies are, in effect, publication schemes which provide a list of information that will be disclosed, while all other information is kept confidential. In this way, the scope of the disclosure policies is limited.
Finally, the Scorecard considers how the right to information is being protected, by evaluating the rules for protecting whistleblowers, the
requirements for regular review of transparency standards, and the procedures in place for the active promotion of openness– through
corporate incentive programs along with dissemination and translation strategies. Although the Bank Group has some positive features of its
whistleblower policy including appropriate burden of proof standards and relief for whistleblowers, there are still several important shortcomings. For instance, the scope of the policy is limited to staff (the WBG’s numerous consultants are not covered); there is no truly
independent forum for adjudication; and there is no record of the institution’s actions to correct and prevent future wrongdoings exposed
through whistleblower disclosure.
Also, it is not clear if and when the WBG conducts staff trainings on the disclosure policy and there is no information on how proper
implementation of openness principles and rules form part of the staff incentive or evaluation procedures. Furthermore, it is unclear whether
sanctions exist for the purposeful violation of the disclosure policy. Finally, while a records management system exist at each arm of the
WBG, only the IFC has clearly indicated that it will track and report on the disclosure of and requests for information.
DETAILS
Published 7th January 2007 by Bank Information Center
Monday, May 30, 2011
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