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In yet another tough year for credit derivatives businesses, as balance-sheet costs soared and banks retrenched, a handful of houses were able to stay the course. For adapting its business to the new regulatory regime while identifying innovative sources of revenue, Credit Suisse is IFR’s Credit Derivatives House of the Year.
Bullish commodity expectations were dashed as first-quarter exuberance faded fast. A stable model combining derivatives and financing with physical capabilities led to market share gains for one bank, as the integration of a broking business proved to be a game-changer. Societe Generale is IFR’s Commodity Derivatives House of the Year.
After bowing to regulatory pressure to cut back in fixed income, UBS opted to revive its scarred equity derivatives franchise, creating a stable, content-driven, returns-focused operation around its expansive wealth management arm. For defying the odds to achieve its global ambitions while increasing its share in core markets, UBS is IFR’s Equity Derivatives House of the Year.
Investment banks have had to tear up decades-old strategies and rethink their purpose since the financial crisis. Their leaders tell IFR about the shape they are in now, what they think will happen next, and what the industry will look like after all the upheaval.
As a watershed year for global derivatives reform, 2014 saw one of the most ambitious strands of the Dodd-Frank Act finally come to life. Large swathes of the US$691trn over-the-counter swaps market were pulled out of the OTC shadows and into the bright lights of regulated exchanges.
Fines for previous misdemeanours reached all-time highs in 2014 as regulators became more assertive in extracting large settlements that, while eye-popping, wouldn’t break the banks. But with the last of the big scandals reaching a close, banks are hoping the era of penalties may be behind them.
Equities sales and trading is yet another area of European banking in the midst of upheaval. Regulators want banks to be more open with the way they price equity services, including research.
Holdout investors in recent years have done better than those that accepted the terms of sovereign debt restructurings. That has prompted renewed efforts to change the system, level the playing field and bind in defiant creditors. But can the reforms actually work?
Investors in banks could be forgiven for longing for simpler times. On established metrics banks look incredibly cheap. But a host of new rules around capital requirements and resolving failing banks, not to mention a host of untested debt structures, have left investors attempting to evaluate an unpredictable new world.
Japanese retail investors have tended to leap on the opportunity to buy foreign equity in public offerings without listing, yet relatively few IPOs end up including such a tranche. As investors from the country gear up to invest more abroad, Tokyo could become a more frequent stop for IPO roadshows.
All for one and one for all – that seemed to be Alibaba’s motto when it came time for the internet giant’s record-setting IPO. Levelling the playing field turned out to be good business for all concerned in the US$25bn deal.
The curious governance structure of Alibaba, the Chinese internet retailer, has focused attention on dual-class shares and how stock exchanges around the world should view corporate efforts to keep control at the top.
They may not quite be all the rage just yet, but Green bonds are an increasingly popular funding option for borrowers keen to do, or at least be seen to do, the right thing. They’re great PR and (usually) good finance. But do they actually help to make the world more green?