IFR International - 28.07.2018

People

&Markets

„ IN BRIEF
Fannie gives Libor replacement

SOFR a boost

FANNIE MAEûLASTûWEEKûSAIDûITûPRICEDûTHEûlRST
EVERûmOATING
RATEûSENIORûUNSECUREDûDEBTû
USINGûTHEûNEWLYûCREATEDû3ECUREDû/VERNIGHTû
&INANCINGû2ATEû3/&2 ûASûAûBENCHMARK
4HEû53BNûTHREE
PARTûTRADE ûBECAUSEûOFûITSû
SIZEûANDûEXECUTION ûISûEXPECTEDûTOûGIVEûSERIOUSû
IMPETUSûTOûTHEûONGOINGûRACEûTOûREPLACEû,IBOR û
WHICHûISûEXPECTEDûTOûCEASEûTOûEXISTûFROMû
3/&2ûHASûONLYûBEENûQUOTEDûSINCEû!PRILû ûBUTûITû
ISûBEINGûTOUTEDûBYû53ûREGULATORSûASûTHEûBESTû
ALTERNATIVEûTOûREPLACEû,IBOR ûWHICHûISûBEINGû
TERMINATEDûAFTERûBEINGûLINKEDûTOûAûSTRINGûOFûTRADERû
MANIPULATIONûSCANDALSûINûTHEûBANKINGûINDUSTRY
%ARLIER û53û&EDERALû2ESERVEû'OVERNORû
2ANDALû1UARLESûTOLDûAûCONFERENCEûINû.EWû
9ORKûTHATûDAILYûTRANSACTIONSûUNDERLYINGû3/&2û
FUTURESû
ûATûOVERû53BNû
ûWEREûALREADYû
MOREûTHANûTHOSEûUNDERPINNINGû,IBOR
4HEûBENCHMARKûHASûSTILLûNOTûBECOMEû
MAINSTREAMûYETûFORûCASHûPRODUCTS ûBUTûINû
RECENTûWEEKSûTHEû&EDSûPROMOTIONSûANDû
STATISTICSûDEPICTINGûITSûLIQUIDITYûAREûSTARTINGû
TOûINCREASEûITSûUSE
#HICAGOû-ERCANTILEû%XCHANGEûINTRODUCEDû
THREE
MONTHûANDûONE
MONTHû3/&2ûFUTURES û
WHILEûCLEARINGHOUSEû,#(ûTHISûMONTHûSAIDûITû
HADûCLEAREDûTHEûlRSTûDOLLARûINTERESTûRATEû
SWAPSûREFERENCINGû3/&2
#REDITû3UISSE û'OLDMANû3ACHSûANDû*0û
-ORGANûWEREûAMONGûTHEûlRSTûPARTICIPANTSûTOû
CLEARûSWAPSûUSINGûTHEûRATE ûITûSAID

TERM STRUCTURE
/Nû4HURSDAYû&ANNIEû-AE ûWHICHûISûPARTûOFûTHEû
&EDSû!LTERNATIVEû2EFERENCEû2ATESûCOMMITTEEû

THATûBACKEDû3/&2ûGAVEûTHEû,IBORûREPLACEMENTû

PROCESSûANOTHERûBOOSTûBYûRAISINGû53BNûSELLINGû

SIXûûANDû

MONTHûUNSECUREDûNOTES

&ANNIEûPRICEDû53BNûINûSIX

MONTHûDEBTû

ATû3/&2ûPLUSûBPûTHEû53BNû

MONTHû

NOTESûATû3/&2ûPLUSûBPûANDû53BNû

MONTHûNOTESûATûPLUSûBP

Barclays CapitalûNomura SecuritiesInternational

ANDûTD Securities USAûWEREûTHEûLEADûMANAGERSû

FORûTHEûTRADE

h7ITHûTHISûMILESTONEûOURûOBJECTIVEûISûTOû

ACCELERATEûTHEûDEVELOPMENTûOFûTHEû3/&2ûMARKETû

ANDûWEûENCOURAGEûOTHERûISSUERSûINûTHEûDEBTû

MARKETSûTOûFOLLOWvûSAIDû.ADINEû"ATESûSENIORû

VICEûPRESIDENTûANDû4REASURERûATû&ANNIEû-AE

&ANNIEû-AESûBONDSûRECEIVEDûBROADûINTERESTû

FROMûSIXûCATEGORIESûOFûINVESTORSû

ûASSETû

MANAGERSûFUNDSûCORPORATIONSûSTATEûANDûLOCALû

GOVERNMENTSûCOMMERCIALûBANKSûANDû

INSURANCEûCOMPANIESû

ûDEMONSTRATINGûGROWINGû

DEPTHûOFûAPPETITEûFORûTHEûNEWûBENCHMARK

4HOUGHû3/&2ûISûNEWûITSûSIMILARITYûTOû

mOATERSûPEGGEDûTOûTHEû&EDûFUNDSûRATEûISûSAIDû

TOûHAVEûHELPEDûENSUREûBROADûINTEREST

&ANNIEû-AEûALSOûRECEIVEDûNOTABLEûINTERESTû

FROMû!SIANûACCOUNTS

4RADINGûINûTHESEûSECURITIESûISûASûSUCHû

EXPECTEDûTOûBRINGûMOREûFOCUSûTOû3/&2

BASEDû

PRODUCTSûANDûHELPûINûITSûACCEPTANCE

#ORPORATEûBONDSûAREûSTILLûUSINGû,IBORûASûAû

BENCHMARKûFORûTHEIRûmOATING

RATEûNOTESûBUTû

THATûCOULDûCHANGEûINûTIMEûONCEûAûTERMû

STRUCTUREûWASûESTABLISHEDûFORû3/&2ûSAIDûONEû

ANALYST

Shankar Ramakrishnan

SHACKLES STAY ON

STANDARD CHARTERED has had its deferred

prosecution agreement with US authorities

extended for a third time because its compliance is

still not at the necessary standard. The DPA began

in 2012 and was due to expire on July 28, but the

bank said it has been extended to December 31. An

independent compliance monitor has also been

extended until the end of the year.

“The agreement acknowledges that the group has

taken a number of steps and made significant progress

toward compliance with the requirements of the DPA

and enhancing its sanctions compliance programme,

but that the programme has not yet reached the

standard required by the DPA,” the bank said on Friday.

StanChart was fined US$667m in 2012 by US

authorities for breaking sanctions on Iran, Libya

and other countries between 2001 to 2007. The

settlement included DPAs with the DoJ and the

New York County District Attorney’s Office. The

DPAs were last extended in November, because the

bank had not improved compliance standards to

the satisfaction of US authorities.

Extra scrutiny from a DPA and having monitors

installed can require a bank to have scores more

compliance staff and add several hundred million

dollars of annual costs, banking sources have

previously told IFR. Rival HSBC also had a lengthy

DPA with the Department of Justice, but that

expired in December.

EXPENSIVE CRASH

An IT failure at Britain’s TSB has cost BANCO SABADELL

more than €200m (US$233m), pushing the Spanish

bank to a quarterly loss, with its effects to be felt

for the rest of the year. A botched migration of TSB

computer systems in April saw thousands of users

locked out of their accounts and a surge in attacks by

fraudsters, prompting a regulatory investigation and

criticism of its chief executive.

Sabadell, which bought TSB in 2015, booked

an extraordinary charge of €203m for the outage,

including compensation for cases of alleged

fraud during the migration and €92.4m for future

customer claims. Sabadell had estimated the cost

at around £70m last month. It said the latest cost

figure did not include any provisions for potential

fines that TSB could be hit with.

FIVE FINED

The European Securities and Markets Authority fined

five Nordic banks €2.48m for issuing credit ratings

without authorisation from the regulator. ESMA said

DANSKE BANK, NORDEA, SEB, SVENSKA HANDELSBANKEN

and SWEDBANK were each fined €495,000.

The banks had issued credit reports to clients that

provided opinions on different entities and underlying

financial instruments, which ESMA found met the

definition of a credit rating under the Credit Rating

Agencies Regulation.

JP Morgan bolsters A-share

research with five hires

JP MORGANûHASûHIREDûlVEû#HINA

FOCUSEDûRESEARCHû

ANALYSTSûINû(ONGû+ONGûASûTHEû53ûINVESTMENTû

BANKûCONTINUESûTOûADDûTOûITSû!

SHAREûCOVERAGE

Billy Feng HASûJOINEDûFROMû5"3û3ECURITIESûTHEû

SECURITIESûJOINTûVENTUREûPARTLYûOWNEDûBYû5"3ûASû

SENIORû#HINAûTECHNOLOGYûANALYSTû(EûPREVIOUSLYû

WORKEDûATû#,3!ûANDû4HOMSONû2EUTERS

Patrick Xu HASûJOINEDûFROMû.OMURAûASû

SENIORû#HINAûINDUSTRIALûANALYSTû(Eû

PREVIOUSLYûWORKEDûATû"ARCLAYSûANDû$"3

*0û-ORGANûHASûALSOûADDEDûHan Fu FROMû

RIVALû-ORGANû3TANLEYûASû#HINAûBASICûMATERIALû

ANALYSTû(EûPREVIOUSLYûWORKEDûATûINVESTMENTû

lRMû-ANDALAYû#APITALû'ROUP

-EANWHILEûQian Yao HASûJOINEDûASû

#HINAûCONSUMERûANALYSTûFROMû(UATAIû

&INANCIALûANDûLei Mu ISûDUEûTOûJOINûINû

!UGUSTûFROMû3INOPECû#ORPûASû#HINAû

ENERGYûANALYST

4HEûHIRINGSûCOMEûASûSEVERALûINTERNATIONALû

BANKSûHAVEûBEENûBOLSTERINGûTHEIRû!

SHAREû

RESEARCHûCOVERAGEûFOLLOWINGûTHEûDECISIONû

LASTûYEARûBYû53ûINDEXûPROVIDERû-3#)ûTOûADDû

#HINESEûMAINLANDûSTOCKSûINûITSûBENCHMARKû

EMERGINGûMARKETSûINDEX

,ASTûYEARû*AMESû3ULLIVANû*0û-ORGANSû

HEADûOFûEQUITYûRESEARCHûFORû!SIAûEX

*APANû

TOLDû2EUTERSûTHEûBANKûHADûINCREASEDûITSû

'REATERû#HINAûCOVERAGEûBYûûINûûANDû

HADûAûhFAIRLYûAGGRESSIVEûINVESTMENTûPLANvûINû

PLACEûFORûTHEûFOLLOWINGûTWOûYEARS

Thomas Blott