International Financing Review September 8 2018 23People
&Markets
n IN BRIEF
SOFR gets another lift
from TP ICAP
Interdealer broker TP ICAP became the latest
firm to support the newly created secured
overnight financing rate (SOFR) by launching
two distinct and differentiated data feeds for
derivatives linked to the benchmark.
The products, coming through its data
and analytics division, were sourced from TP
ICAP’s broking businesses – Tullett Prebon
and ICAP – using their separate liquidity
pools, the company said last week.
The two feeds will enable smaller firms,
which may not have the analytical/modelling
firepower of early entrants, to start trading these
derivatives. They provide a comprehensive view
of the SOFR-linked derivatives markets to
support enhanced trading, risk management
and analytics, TP ICAP said.
Both offerings include indicative curves,
delivered in real-time or end-of-day, for basis
swaps (SOFR vs three-month Libor, SOFR vs
dollar Fed Funds Compounded) and fixed vs
SOFR.
Eric Sinclair, CEO of TP ICAP’s data and
analytics division, said that since Tullett
Prebon executed the first SOFR versus Fed
Funds basis swap in July, the broking
businesses had seen an uptick in volumes.
“In an OTC marketplace, the more variety
and depth that an institution can have using
trade data, the more accurate their pricing
and modelling becomes,” Sinclair said.GROWING SUPPORT
Support is growing for a benchmark that
has only been quoted since April 3 and ismoving towards wider acceptance as a
replacement for Libor.
Libor is being terminated by 2021 after
being linked to a string of trader manipulation
scandals in the banking industry.
Last month BARCLAYS priced a US$525m
three-month asset-backed commercial paper
via its conduit Sheffield Receivables Corp -
the first CP by a bank to use the benchmark.
It was followed days later by US insurer
METLIFE, which priced a US$1bn two-year
SOFR-linked FRN. The MetLife trade was the
first non-agency or non-supranational bond
deal to use SOFR.
The overnight benchmark rate has still not
become mainstream for cash products because
it lacks a forward-looking term structure.
But this should change as the US Federal
Reserve promotes its use. For now, the
CHICAGO MERCANTILE EXCHANGE has introduced
three-month and one-month SOFR futures,
and clearinghouse LCH in mid-July cleared
the first dollar interest rate swaps
referencing SOFR.
In terms of deals, FANNIE MAE raised US$6bn
through six, 12 and 18-month unsecured
notes using the benchmark rate and last
month the WORLD BANK priced a US$1bn two-
year deal via Citigroup and TD Securities - the
first from a supranational and the longest.
“We made the decision to launch these
two data products because, from experience,
all signs are pointing to the emergence of a
robust market,” said Sinclair.
Shankar RamakrishnanEXIT LEFT?
Chinese conglomerate HNA plans to sell its 7.6%
stake in DEUTSCHE BANK over the next 18 months,
The Wall Street Journal reported. The stake is
worth about €1.5bn (US$1.8bn) at current market
prices.
The WSJ said HNA intended to unload the vast
majority of overseas investments it has made in
recent years. Its stake in Deutsche has already
declined from just under 10% earlier this year.
The aviation-to-financial services group is
selling assets to reduce massive debts built during
an acquisition spree. It was rocked in July by the
sudden death of its co-chairman, Wang Jian,
during a business trip. Deutsche Bank and HNA
declined to comment. UBS, which is HNA’s bank
for the holding, also declined to comment.US$2.3BN FINTECH
Britain’s OAKNORTH, a start-up specialist bank that
provides business and property loans, has been
valued at US$2.3bn after closing a US$100m
funding round. OakNorth, which also provides
personal and business savings, said the funds
would be used to increase the size of its business
in Britain and drive sales of its financial technology
platform to other banks internationally.
Its valuation, which had been pegged at
US$1.4bn last year, is the latest example of the
quickly increasing values investors are putting
on fintech firms they believe are set to shake-up
an industry still dominated by long-established
giants.
Rishi Khosla, OakNorth’s co-founder and chief
executive, said in a statement the firm, which
was launched in September 2015, had been
overwhelmed by interest in its fintech platform,
dubbed Acorn, which helps banks that adopt
it lend to small and medium-sized firms more
efficiently.LEVFIN PLANS
CREDIT AGRICOLE has strengthened its acquisition,
leveraged finance and advisory businesses with
the creation of two dedicated teams. The French
lender has combined the acquisition and leveraged
finance and advisory businesses with an eye on
creating synergies and offering event-driven
financing and capital structure advisory solutions
to clients. It has also created a dedicated funds
coverage team to expand its coverage in Asia.
Veteran event-driven financing banker Jean-Yves
Korenian has been appointed head of acquisition
finance and advisory for Asia, while Luyi Shen has
been named head of funds coverage.
Korenian will report to Christophe Cretot,
head of debt origination and advisory for Asia
Pacific, while Shen will report to Francois Martin,
senior country officer in Hong Kong and head of
structured finance for Asia.Cuts at Lloyds’ commercial arm
LLOYDS BANKING GROUP is making cuts to senior
staff in its commercial banking division as
part of a reorganisation across the bank that
will cost 380 jobs.
Lloyds last week streamlined its
commercial bank from four to three
segments - SME and mid-corporates; large
corporates; and financial institutions.
The changes are being overseen by David
Oldfield, head of the commercial unit since
last year, and sources said it has resulted in a
number of senior staff departures.
The team covering large corporates is now
led by Scott Barton, who joined Lloyds in
November. He previously worked at Royal
Bank of Scotland and Standard Chartered.
The SME and mid-corporates team is
being led by Paul Gordon, who has held
several leadership positions at Lloyds,including in its cards, consumer finance and
Australian units.
The financial institutions team will
continue to be led by Robina Barker Bennett.
Lloyds said it was cutting 380 jobs across
the bank, but also creating 435 new roles to
better compete in a market increasingly
reliant on digital banking.
The reorganisation is part of Lloyds’ latest
three-year strategy announced in February,
which will see the bank invest £3bn in
technology and staff as it looks to adapt to
the increasing popularity of digital banking
and declining footfall in branches.
The cuts will mostly affect the commercial
banking, people and productivity, retail and
transformation divisions, according to Accord,
a union representing Lloyds’ staff.
Steve Slater5 PM 2250 p15-24.indd 23 07/09/2018 18:36:15