Thursday 5th March 2015
NEWS TICKER – THURSDAY, MARCH 5TH 2015: Following a recent Morningstar Analyst Ratings meeting, Morningstar has moved the Henderson Horizon Japanese Equity fund and the Henderson Japan Capital Growth fund to a Morningstar Analyst Rating™ of Neutral. Both funds were previously Under Review due to a change in the lead portfolio manager. Prior to being placed Under Review, both funds were rated Bronze. The funds were solely managed by Michael Wood-Martin, who took over in 2005. However, in October 2014 Henderson decided to adopt a team-based approach. They are now run by the Japanese Equities team consisting of four investment professionals, including William Garnett, Michael Wood-Martin, Jeremy Hall, and Yun-Young Lee. Given this change to the investment process, Morningstar says it has less clarity around the likely shape of the portfolios and little evidence that the strategy can be implemented effectively. Morningstar believes a Neutral rating is appropriate at the current time —Moody's Investors Service has today republished a number of asset-backed securities (ABS) and residential mortgage-backed securities (RMBS) rating methodology reports. The updated ABS and RMBS methodology reports consolidate the secondary rating methodology "Revising default/loss assumptions over the life of an EMEA ABS/RMBS transaction" and which the agency will now retire; for RMBS specifically sees updates to the surveillance section; and for Consumer Loan-Backed ABS specifically a new appendix describing how Moody's will tailor its approach to rating consumer loans for marketplace lending loans. The republications do not represent a change in methodology and will not result in any rating changes —BATS Chi-X Europe reports a 23.7% market share, with average notional value traded at €12.3bn up substantially from €8.9bn in February 2014. Market share rose in 14 of the 15 markets the firm covers. Its trade reporting facility, BXTR, had its second-most successful month ever with more than €369.3bn reported in total during the month; an average of €18.5bn each trading day. In total, BATS Chi-X systems touched €616.1bn of trades in February—The Straits Times Index (STI) ended -20.26 points lower or -0.59% to 3395.27, taking the year-to-date performance to +0.90%. The FTSE ST Mid Cap Index declined -0.18% while the FTSE ST Small Cap Index declined -0.17%. The top active stocks were SingTel (-1.20%), DBS (+0.05%), Keppel Land (-0.44%), OCBC Bank (-0.48%) and Global Logistic (unchanged). The outperforming sectors today were represented by the FTSE ST Utilities Index (+1.66%). The two biggest stocks of the FTSE ST Utilities Index are United Envirotech (unchanged) and Hyflux (+0.58%). The underperforming sector was the FTSE ST Consumer Goods Index, which declined -1.31% with Wilmar International’s share price declining -0.61% and Thai Beverage’s share price declining -2.06%.The three most active Exchange Traded Funds (ETFs) by value today were the IS MSCI India (-1.22%), SPDR Gold Shares (-0.31%), DBXT MSCI Thailand TRN ETF (-0.38%). The three most active Real Estate Investment Trusts (REITs) by value were CapitaMall Trust (+0.94%), Ascendas REIT (+2.02%), CapitaCom Trust (+0.28%).The most active index warrants by value today were HSI25000MBeCW150429 (-14.16%), HSI24200MBePW150429 (+10.53%), HSI23800MBePW150330 (+16.92%)—Commerz Real and RFR Holding have signed an agreement to purchase the real estate Atlas Plaza in Miami/Florida for its open-ended real estate fund hausInvest. The retail trade complex, located in the burgeoning Design District and in part on two storeys, comprises two existing buildings and a new construction, scheduled to be completed by May 2015. Upon the completion of the building work the leasable area will total approximately 1,600 square metres. The total investment volume for the acquisition and extension of “Atlas Plaza” amounts to around 68 million US dollars (approximately €60m)—Malaysia’s corporate sukuk sales will rebound from the worst start to a year since 2010 as a recovery in oil prices spurs issuance before the US raises interest rates, according to investment bank CIMB. Islamic bond offerings to date are down MYR9.7bn on a year on year basis. Kuala Lumpur-based AmInvestment Bank Bhd predicts sales could surpass last year’s MYR62bn as more projects come on stream under the government’s 10-year development programme. A 34% rally in Brent crude from January’s six-year low will shore up the country’s finances after Fitch Ratings warned the loss of revenue for oil-exporting Malaysia puts its credit ranking at risk. The average yield on AAA rated Malaysian corporate securities has dropped to a three-month low, cutting costs for issuers involved in Prime Minister Datuk Seri Najib Razak’s $444bn spending drive and those seeking to refinance debt—Bahrain’s BIBF has announced the launch of the region’s first Islamic Finance and Muslim Lifestyle Convergence Training programme, developed as part of the Waqf Fund’s initiatives to enhance Islamic Finance training in the region, in partnership with New York-based DinarStandard, at a press conference yesterday. The burgeoning Halal food and Muslim Lifestyle sectors is estimated to be worth $2trn in 2013, and is expected to reach $2.47trn by 2018, based on the State of the Global Islamic Economy 2014 report, produced by Thomson Reuters in collaboration with DinarStandard. This represents a huge opportunity for Islamic Finance, which has been for the most part, untapped—Kames Capital is to lower the annual management charge on the Kames Investment Grade Global Bond Fund following a review of the fund’s positioning in the European markets. The move will see the AMC on the Kames Investment Grade Global Bond Fund B share class fall to 0.65% from its current rate of 0.80%, while for the A share class the charge will drop to 1.15% from 1.30%. The changes will take effect from the 1st April 2015. As part of the review, Kames will also be changing the benchmark of the fund to the Barclays Global Aggregate Corporate Index from the Lipper Global Bond Global Corporate Median. The changes are intended to bring the fund into line with its peer group particularly in Continental Europe. Whilet there will be no change to the investment process of the fund, there will be a slight change to the fund’s duration. In order to maintain its index-neutral duration, the Fund will now be aligned to the Barclays Global Aggregate Corporate Index which has a duration of around 6.4 years. This compares to the existing Lipper peer group which has an estimated duration of 5 years.

20-20: Ackermann looks to a new future

Thursday, 15 December 2011
20-20: Ackermann looks to a new future The internal structure of Deutsche Bank’s DNA “completely changed under chief executive Josef Ackermann,” says Konrad Becker, an analyst at private bank Merck Finck & Co. Ackermann not only extended the bank’s geographical reach and products but it also became much more client facing. He also introduced a more Anglo-American corporate governance framework with a clear hierarchy. This was revolutionary at the time. By Lynn Strongin Dodds. http://www.ftseglobalmarkets.com/

The internal structure of Deutsche Bank’s DNA “completely changed under chief executive Josef Ackermann,” says Konrad Becker, an analyst at private bank Merck Finck & Co. Ackermann not only extended the bank’s geographical reach and products but it also became much more client facing. He also introduced a more Anglo-American corporate governance framework with a clear hierarchy. This was revolutionary at the time. By Lynn Strongin Dodds.

The past few weeks have tested Deutsche Bank’s chief executive officer (CEO) Josef Ackermann. He unexpectedly withdrew his candidacy to become chairman of the supervisory board and police raided the bank’s Frankfurt offices and legal department. While headline grabbing, these glitches are not expected to diminish his legacy of transforming the one-time commercial bank into a global banking powerhouse and steering it through the market tumult of the last five years.

Historically, German corporate law shunned the idea of an American-style chief executive and an Anglo Saxon board where executives take responsibility for their own business lines. The preferred model was a Vorstand, a statutory managing board that promoted collective responsibility. Ackermann struck a compromise, although at the time it was considered groundbreaking. He became CEO, shrank the Vortsand and created a 12-man group executive committee, which he chaired. The new structure gave the Vorstand a strategy-making role, while the group executive committee, on which Vorstand members also sit, run the bank’s day-to-day operations.



He also severed long-held industrial ties, raising $5.3bn in the process, including the sale of a €1.6bn stake in Munich Re. He eliminated 14,470 jobs (18% of the workforce) and cut costs by one-third by closing retail branches and outsourcing management of the bank’s computer systems and real estate, and built out the bank’s US business. The Bankers Trust $10bn acquisition in 1999 was key in this regard. Although the purchase was not done on his watch (Rolf Breuer was chairman at the time), it provided a launch pad for Ackermann’s global investment banking ambitions.

“In the middle of the last decade, UBS was very profitable and it was the bank that Deutsche measured itself against, but then the financial crisis happened,” says Becker.  Deutsche Bank weathered the storm but did not escape unscathed. Ackermann often claims that the bank did not need a government injection  of capital, but critics note that in fact the bank (along with others) received the equivalent of a back-door bailout from American taxpayers when the US government intervened to prevent the insurer American International Group from collapsing.

Moreover, the bank faces litigation in the US tied to residential mortgages and in Germany regarding the mis-selling of complex financial products to municipalities. Separately, Ackermann himself is also embroiled in legal wranglings involving a former client, the late Leo Kirsch, and in early November 2011 prosecutors raided the bank’s offices looking for evidence of attempts to mislead the court.

Overall though, Ackermann has won plaudits for the way he has navigated the bank through extremely choppy waters over the past three years. Not everyone has been as happy. “The market capitalisation has more than halved since Ackermann and this has left a bitter taste in shareholder’s mouths,” says Michael Rohr, an analyst at Sylvia Quandt Research GmbH in Frankfurt, with the caveat:  “This has more to do with market conditions. Ackermann has had a strategic vision to transition the bank into a more stable business and has done a very good job with its risk management.”

Recent strategy involves a retreat from the investment banking business which contributes roughly 70% of the group’s total pre-tax profit and a return to commercial banking, retail and private banking. Strategic acquisitions are also on the agenda, among them Deutsche Postbank and Sal Oppenheim, Germany’s largest private bank. The bank is now expected to divest its asset management division— except for its profitable DWS retail franchise in Europe and Asia. A sale could raise $4.5bn which would improve the bank’s capital position in light of impending regulation.

The strategy is widely regarded as being driven by CEO-in-waiting Anshu Jain who, together with Jürgen Fitschen, will run the bank starting next May. Even so, Ackermann was not supposed to take a back seat in 2012; but now it looks as if he will retire. He was likely caught out by German law, which holds that  a chief executive of a listed company may not become its chairman without a two-year cooling-off period, unless 25% of shareholders endorse the move. In a fickle move of fate, Ackermann may not have received the support he anticipated and was put in an untenable position. Paul Achleitner, currently chief financial officer of insurer Allianz, is now mooted as the next chairman.

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