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Kostya Golovan

Regulators clash over 'shadow banking' behind ETFs - Citywire - 0 views

www.citywire.co.uk/...a589740

shared by Kostya Golovan on 17 May 12 - No Cached
  • Regulators are in direct conflict over how exchange traded funds (ETFs) take in ‘short-term money’ and promise instant liquidity, but can invest in long-term and less liquid assets.
  • offering immediate liquidity but are potentially raising short-term money to fund longer-term investments.
  • This concern began when regulators started worrying about money market funds…it's just deposit taking but called something different. It's taking short-term money but investing in longer-term securities.
  • ...6 more annotations...
  • the macro regulators think this liquidity transformation, as a type of ‘shadow banking’, needs regulation.
  • whole point of these vehicles is shorter-term liquidity and that investors should have more immediate access to money.
  • Ucits rules do stipulate funds must invest in liquid assets.
  • However, Gleeson and other industry experts pointed out that
  • A manager will be sanctioned if they use assets that do not have liquidity.
  • Shadow banking is positive. The danger is we regulate to the point this becomes unprofitable
  • Kostya Golovan on 18 May 12
     
    This article looks at how exchange traded funds (ETFs) take short term cash, very liquid capital, and use the funds to make long term investments. It is all well and good until the fact that ETFs are marketed as vehicles offering immediate liquidity is considered. The liquidity of ETFs is dependent on the underlying assets in which the money is invested. Therefore, regulations might be set forward ensuring that ETFs invest only in liquid assets.
Kostya Golovan

RBC in the running for Bank of America wealth units - The Globe and Mail - 0 views

www.theglobeandmail.com/...page1

shared by Kostya Golovan on 17 May 12 - No Cached
  • | NATHAN DENETTE/THE CANADIAN PRESS
    Enlarge this image

    RBC in the running for Bank of America wealth units

    TARA PERKINS AND REUTERS

    Globe and Mail Update
    Published
    Last updated
    0 comments

    Canada’s largest bank, Royal Bank of Canada (RY-T

  • Canada’s largest bank, Royal Bank of Canada (RY-T51.90-1.13-2.13%), is among the financial institutions looking to pick up parts of Bank of America’s wealth management business
  • In 2010 it paid $1.6-billion for U.K.-based Blue Bay Asset Management.
  • ...11 more annotations...
  • Aside from Europe, executives have recently said that RBC has also been looking to buy operations in Asia. The assets that Bank of America is looking to sell include businesses in both those regions, as well as the Middle East and Latin America.
  • they require less capital to back them up.
  • ING Group sold its private banking assets in Europe and Asia in 2010 to Julius Baer and Singapore’s Oversea-Chinese Banking Corp, respectively, for a total of about $1.9-billion.
  • The units manage about $90-billion of an estimated $2-trillion that the wealth division oversees at the second-largest U.S. bank by total assets.
  • Consolidation in the wealth management industry has been a major theme in the banking sector since the 2008 financial crisis
  • Bank of America is selling because it is shrinking the company
  • Bank of America has lagged peers in recovering from the financial crisis, largely because of huge losses and lawsuits tied to its 2008 acquisition of subprime mortgage lender Countrywide Financial.
  • Canada’s largest bank, which will release second-quarter results on May 24, has been growing its wealth management business and made acquisitions that included British fund manager BlueBay Asset Management for $1.5-billion about two years ago.
  • RBC, which has said it wants to expand its wealth operations organically and with small- and medium-sized acquisitions
  • companies generally prefer to sell the entire group in one go
  • My view is that they are going to sell it as a whole and therefore the number of banks that actually can do it will be more limited
  • Kostya Golovan on 18 May 12
     
    RBC, Canada's largest bank, has for years been looking to expand its global wealth management outreach and is now eager to pick up part of Bank of America's wealth management operation which is going on sale. The prospects of such an en devour are great given the predicted growth in number of millionaires in Asia. RBC has for years been interested in such an expansion and is now very interested in acquiring the wealth unit of Bank of America
kevinan108

Why We Regulate - NYTimes.com - 0 views

www.nytimes.com/...krugman-why-we-regulate.html

banking America JP Morgan derivatives PaulKrugman

shared by kevinan108 on 18 May 12 - No Cached
  • He has, however, been fond of giving Gatewood-like speeches about how he and his colleagues know what they’re doing, and don’t need the government looking over their shoulders.
  • So there’s a large heap of poetic justice — and a major policy lesson — in JPMorgan’s shock announcement that it somehow managed to lose $2 billion in a failed bit of financial wheeling-dealing.
  • In the 1930s, after the mother of all banking panics, we arrived at a workable solution, involving both guarantees and oversight.
  • ...4 more annotations...
  • It probably won’t last; I expect Wall Street to be back to its usual arrogance within weeks if not days.
  • As far as we can tell, it used the market for derivatives — complex financial instruments — to make a huge bet on the safety of corporate debt, something like the bets that the insurer A.I.G. made on housing debt a few years ago.
  • This system gave us half a century of relative financial stability. Eventually, however, the lessons of history were forgotten.
  • No loopholes, no exemptions, no exceptions, no compromise, no ambiguous language. Until Congress reinstates it, moral hazard governs and the losers will be the Americans taxpayers. History will keep repeating itself unless politics and money are taken out of the equation.
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