Deutsche Bank is rumoured to be considering a big equity issue:
Deutsche Bank AG has approached investment banks to assess their interest in managing a stock sale to raise as much as 9 billion euros ($11.4 billion), said three people with knowledge of the discussions.
…
Proposed rules under consideration by the Basel Committee on Banking Supervision may also lead banks to raise reserves. Germany’s 10 biggest lenders, including Deutsche Bank and Commerzbank AG, may need about 105 billion euros in fresh capital because of new regulation, the Association of German Banks estimated on Sept. 6.The lenders would need to raise that sum to reach an estimated 10 percent Tier 1 capital ratio, a key measure of financial strength, according to Dirk Jaeger, who is responsible for regulatory topics at the group.
The Swiss are hoping to grab some of the UK hedge fund business:
Swiss managers rank third in Europe, with 4 percent of the market, behind London’s 75 percent share and Sweden with 5 percent. Brevan Howard Asset Management LLP, Europe’s biggest hedge fund, and third-ranked BlueCrest Capital Management Ltd. have both opened offices in Geneva this year.
“Heavy competition between cantons has helped to keep tax rates low,” making Switzerland more appealing, Regina Anhorn, one of the study’s authors, said in a presentation in Zurich. “We have seen famous names move part of their institution to Switzerland. We may see many more to come.”
There are signs that fees charged by Swiss hedge funds fell over the past two years, from a typical 2 percent management fee and a 20 percent share of performance, according to the study. A 1 percent management fee is “increasing in popularity” together with a performance fee of 10 percent, it said.
A laudatory article about CalPERS new boss highlights the gravity of the US pension committments:
In 2000, more than half of the 50 states had the funds to cover what they owed. By 2008, that number had shrunk to four — Florida, New York, Washington and Wisconsin — as total unfunded liabilities reached a record $1 trillion, according to a February 2010 report by the Pew Center on the States that uses the latest available data.
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[CalPERS] has earned an annualized 2.88 percent return on its assets through the 10 years ended on June 30, far below the 7.75 percent it must collect every year to meet its obligations to 1.6 million beneficiaries.Calpers’s unfunded liabilities amounted to $240 billion as of 2008, leaving it with only half of the assets it needs to make its required payouts, according to a Stanford University study released in April.
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As a group, state retirement systems earned a median 3.4 percent annualized return for the 10 years ended on June 30, according to Wilshire Associates Inc., a Santa Monica, California-based investment consulting firm. That about matches the performance of U.S. Treasury bonds.
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Even if pensions do exploit the latest financial engineering and hit their 8 percent annualized return target, many will run out of money in the next 20 years, beginning with Illinois in 2018, says Joshua Rauh, an associate professor of finance at Northwestern University near Chicago. California would run dry in 2030, he says.
So who’s going to solve the problem?
Dear is an unlikely candidate to refashion Calpers’s investment approach. In contrast to past CIOs, he doesn’t have a Ph.D. in economics or experience in managing money on the Street. He’s a one-time labor official who came up through the hurly-burly of state politics in Washington.
Great move! Perhaps the Maple Leafs should start hiring non-hockey players, too!
Blair W. Keefe of Tory’s wrote a very good article titled Canada: Financial Institutions Experience Slower Activity In Capital Markets:
In April, Canadian banks provided a quantitative impact study to OSFI on the implications of the proposed changes for individual institutions. And OSFI submitted data from the study to the Basel Committee in mid-May. Although the submission is confidential, we understand that the Basel III capital rules would have a significant negative impact on the existing capital ratios of the Canadian banks; the data will be analyzed, together with the results from other jurisdictions, and the preliminary findings will be presented to the Basel Committee in July.
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However, no new offerings of innovative Tier 1 capital will be made because such instruments will not be permitted under the Basel III capital rules.9 It is uncertain how long the existing innovative Tier 1 instruments will be grandfathered when the new rules come into force. This is significant, since Canadian financial institutions currently have over C$20 billion in innovative Tier 1 instruments outstanding and they were products favoured by institutional investors.Finally, with the uncertainty over the ultimate definition of capital and the quantity of capital that will be required, OSFI has been advising institutions that any material redemption of capital instruments should be funded with new capital issuances. In that regard, the aggregate amount of innovative Tier 1 capital that is scheduled to be redeemed on June 30 or December 31 of this year is C$2.1 billion.
It was a very good day with high volume on the Canadian preferred share market, with PerpetualDiscounts gaining 56bp and FixedResets winning 13bp. MFC issues were again prominent in the volume highlights.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.6786 % | 2,054.6 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.6786 % | 3,112.4 |
| Floater | 2.95 % | 3.49 % | 63,995 | 18.46 | 3 | 0.6786 % | 2,218.4 |
| OpRet | 4.87 % | 1.31 % | 93,226 | 0.22 | 9 | 0.1884 % | 2,365.8 |
| SplitShare | 5.96 % | -36.90 % | 69,384 | 0.09 | 2 | 0.1646 % | 2,363.2 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1884 % | 2,163.3 |
| Perpetual-Premium | 5.72 % | 5.48 % | 131,993 | 5.38 | 14 | 0.3239 % | 1,980.1 |
| Perpetual-Discount | 5.63 % | 5.72 % | 188,892 | 14.27 | 63 | 0.5633 % | 1,931.2 |
| FixedReset | 5.25 % | 3.08 % | 269,674 | 3.33 | 47 | 0.1319 % | 2,264.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| NA.PR.N | FixedReset | -1.12 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-09-14 Maturity Price : 25.00 Evaluated at bid price : 26.50 Bid-YTW : 3.32 % |
| CM.PR.H | Perpetual-Discount | 1.01 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-09-09 Maturity Price : 21.75 Evaluated at bid price : 22.06 Bid-YTW : 5.50 % |
| IAG.PR.C | FixedReset | 1.04 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-30 Maturity Price : 25.00 Evaluated at bid price : 27.29 Bid-YTW : 3.24 % |
| BNS.PR.L | Perpetual-Discount | 1.04 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-09-09 Maturity Price : 21.40 Evaluated at bid price : 21.40 Bid-YTW : 5.33 % |
| PWF.PR.F | Perpetual-Discount | 1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-09-09 Maturity Price : 22.50 Evaluated at bid price : 22.76 Bid-YTW : 5.84 % |
| BAM.PR.R | FixedReset | 1.13 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2016-07-30 Maturity Price : 25.00 Evaluated at bid price : 26.94 Bid-YTW : 4.09 % |
| BAM.PR.B | Floater | 1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-09-09 Maturity Price : 15.21 Evaluated at bid price : 15.21 Bid-YTW : 3.49 % |
| RY.PR.H | Perpetual-Premium | 1.18 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-23 Maturity Price : 25.00 Evaluated at bid price : 25.80 Bid-YTW : 5.17 % |
| BAM.PR.K | Floater | 1.27 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-09-09 Maturity Price : 15.20 Evaluated at bid price : 15.20 Bid-YTW : 3.49 % |
| CM.PR.I | Perpetual-Discount | 1.35 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-09-09 Maturity Price : 21.41 Evaluated at bid price : 21.70 Bid-YTW : 5.47 % |
| BNS.PR.M | Perpetual-Discount | 1.42 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-09-09 Maturity Price : 21.39 Evaluated at bid price : 21.39 Bid-YTW : 5.34 % |
| ELF.PR.F | Perpetual-Discount | 1.67 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-09-09 Maturity Price : 21.92 Evaluated at bid price : 21.92 Bid-YTW : 6.16 % |
| HSB.PR.C | Perpetual-Discount | 2.39 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-09-09 Maturity Price : 23.31 Evaluated at bid price : 23.55 Bid-YTW : 5.51 % |
| TD.PR.S | FixedReset | 2.97 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-08-30 Maturity Price : 25.00 Evaluated at bid price : 27.39 Bid-YTW : 1.77 % |
| ELF.PR.G | Perpetual-Discount | 3.08 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-09-09 Maturity Price : 20.05 Evaluated at bid price : 20.05 Bid-YTW : 6.03 % |
| HSB.PR.D | Perpetual-Discount | 3.23 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-09-09 Maturity Price : 23.11 Evaluated at bid price : 23.33 Bid-YTW : 5.45 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| MFC.PR.C | Perpetual-Discount | 72,059 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-09-09 Maturity Price : 18.38 Evaluated at bid price : 18.38 Bid-YTW : 6.16 % |
| TD.PR.G | FixedReset | 69,250 | TD crossed two blocks of 25,000 each, both at 28.00. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-30 Maturity Price : 25.00 Evaluated at bid price : 27.97 Bid-YTW : 3.08 % |
| BNS.PR.Y | FixedReset | 67,365 | RBC crossed 38,800 at 25.15. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-09-09 Maturity Price : 25.13 Evaluated at bid price : 25.18 Bid-YTW : 3.26 % |
| MFC.PR.A | OpRet | 65,854 | YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2015-12-18 Maturity Price : 25.00 Evaluated at bid price : 24.99 Bid-YTW : 4.11 % |
| RY.PR.X | FixedReset | 61,250 | rBC crossed 50,000 at 28.07. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-09-23 Maturity Price : 25.00 Evaluated at bid price : 28.00 Bid-YTW : 3.17 % |
| TRP.PR.A | FixedReset | 60,517 | rbC crossed blocks of 15,200 and 25,000, both at 26.10. YTW SCENARIO Maturity Type : Call Maturity Date : 2015-01-30 Maturity Price : 25.00 Evaluated at bid price : 26.05 Bid-YTW : 3.52 % |
| There were 61 other index-included issues trading in excess of 10,000 shares. | |||