IFR Magazine – June 08, 2019

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VIVEK PATHAK AT WORLD BANK UNIT IFC, P20

BPCE talks spark Natixis

FICC changes

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Christopher Spink

FinnCap hires two to expand debt advisory

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Steve Slater

HIKE DELAYED

The European Central Bank pushed back the

timing of its first post-crisis interest rate hike again

last week and said it would continue paying banks

for lending in its latest effort to revive a slowing

eurozone economy.

ECB President Mario Draghi said policymakers

had addressed the ECB’s readiness to act in case of

“adverse contingency” and several had raised the

possibility in Thursday’s discussion of further interest

rate cuts or restarting asset purchases. The moves

come as a trade war between the US and China

overshadows the global economy and especially

export-oriented eurozone countries such as Germany.

Responding to rapidly deteriorating inflation

expectations, the ECB pledged to keep its interest

rates at their current, record-low level at least

through the first half of 2020, instead of the end

of this year as it had said only in March.

The ECB also said it will let banks borrow

from it at rates just 10bp above its minus 0.4%

deposit rate provided they beat the ECB’s lending

benchmarks in a new targeted longer-term

refinancing operation, or TLTRO.

FIVE FINED

Five banks were fined a combined SFr90m

(US$91m) by Switzerland’s competition body

for colluding to rig FX rates. It added to €1.07bn

(US$1.2bn) in penalties handed out last month by

the EU, which took fines for banks for FX misconduct

to more than US$11bn in the past five years.

BARCLAYS, CITIGROUP, JP MORGAN and ROYAL

BANK OF SCOTLAND were all punished by the Swiss

authority. It said it found “several anti-competitive

arrangements between banks in foreign exchange

spot trading”. Japan’s MITSUBISHI UFJ FINANCIAL

GROUP was also fined for its part in the scam,

which involved traders coordinating their activities

through internet chatrooms.

The Swiss regulator fined Barclays SFr27m,

Citigroup SFr28.5m, JP Morgan SFr9.5m, MUFG

SFr1.5m and RBS SFr22.5m.

UBS was not punished because it revealed the

cartels to the competition authorities first, while an

investigation is still under way into Credit Suisse.

INDIAN PRESSURE

ICICI BANK and AXIS BANK came under pressure

in the US dollar bond market last week after

Fitch cut the two Indian banks’ credit ratings to

non-investment grade because of asset quality

concerns. The rating agency downgraded the

banks’ long-term issuer ratings by one notch to

BB+ from BBB–.

The downgrade reflected a challenging

operating environment, poor asset quality and

weak core capital for both banks, Fitch said.

Analysts are maintaining a cautious position on

the banks’ dollar bonds.

„^ IN BRIEF