“Relative to last year, our revenue from
European clients is multiple times higher”
GREENHILL CHAIRMAN ROBERT GREENHILL, P15
Research firm launches governance risk score
&RENCHûRATINGSûAGENCYûSPREAD RESEARCH is
launching methodology to score governance
RISKûASûPARTûOFûITSûCREDITûANALYSISûASûHIGH
YIELDû
INVESTORSûFOCUSûONûGOVERNANCEûISSUESûGROWS
Spread, which also provides independent
CREDITûRESEARCHûFOCUSEDûONûSUB
INVESTMENT
grade companies to the buyside, said it is
launching the methodology in partnership
with its environmental, social and
GOVERNANCEûDIVISION û%THI&INANCE
4HEûMETHODOLOGYûWILLûASSIGNûCREDITSûAû
governance score to be included in Spread’s
CREDITûVIEWû4HEûAGENCYûEXPECTSûTOûBEûABLEûTOû
identify a potential spread impact from
WEAKûGOVERNANCEû4HEûSCOREûWILLûBEûBASEDûONû
15 criteria of governance, which are
GROUPEDûINTOûlVEûCATEGORIES ûSAIDû0IERRE
9VESû
,Eû3TRADIC ûHEADûOFûRESEARCHûATû%THI&INANCE
4HEûCATEGORIESûADDRESSûSHAREHOLDERû
behaviour, board considerations, leadership
ANDûAUDITORS ûPLUSûAûlFTHûSEGMENTûTHATûLOOKSû
at various other governance issues,
INCLUDINGûRELATEDûPARTYûTRANSACTIONS
,Eû3TRADICûTOLDû)&2ûMUCHûOFûCURRENTû%3'û
RESEARCHûFOCUSESûONûLONG
TERMûCONCERNSû
from the perspective of shareholders, while
HIGH
YIELDûINVESTORSûAREûCONCERNEDûWITHû
whether or not the company will pay them
BACKûINûAûSHORTERûTIMEFRAME
He said the 15 criteria were chosen in line
with likelihood of occurrence in a shorter
rather than longer period of time and basedon issues that pertain to creditors rather
THANûSHAREHOLDERS
%UROPEANûHIGH
YIELDûINVESTORSûAREûALSOû
INCREASINGLYûFOCUSINGûONû%3'ûISSUESûANDû
integrating those concerns into their credit
ANALYSISû-ANYûHIGH
YIELDûISSUERSûAREûNON
listed and restrict access to their investor
relations sites, creating a challenge for those
INVESTORS
h4HEûCHALLENGEûTHATûWASûUPONûUSûWASûTOû
drive consistent information in a universe
WHEREûMOSTûISSUERSûAREûNON
LISTEDû7EVEû
been focusing on criteria where the
availability of the information is quite high,”
,Eû3TRADICûSAID
Yoruk BahceliFROM THE ARCHIVE: 10 years ago this week
THE FINANCIAL CRISIS
From November 1 2008 issue
Bargain Barclays issue
When RBS, Lloyds TSB and HBOS
took the taxpayers’ pound, Barclays
made much of its determination to
avoid turning to the UK government
to boost its capital. The argument
was, and remains, that avoiding
being in the government’s debt was
fundamental to the bank’s future.
Senior management held a
conference call last Friday when
announcing a capital increase of
up to £7.3bn in which they said that
the board had discussed how to
maximise value for shareholders
and had concluded that the best
course was to maintain strategic
and operational independence.
In particular the bank
highlighted its desire to develop
an equities business in Europe,the purchase of Lehman Brothers’
platform in the US and the ability
to recruit for both – all of which
it believes would be impeded by
taking UK government money.
Independence was achieved
through a package that sees
Middle Eastern investors delivering
£5.8bn from a mix of high-yielding
instruments, warrants that are
offered in effect free and convertibles
that are structured very close to
equity but still pay a massive coupon.
Qatar Holding and Mansour Bin
Zayed Al Nahyan, a member of
the royal family of Abu Dhabi, will
purchase £1.5bn each of reserve
capital instruments, which pay an
annual coupon of 14% until June- Alongside these they will also
receive warrants covering 1.5bn
shares, equivalent to 18.1% of existing
capital, which have an exercise price
of 197.775p to total £3bn. The five-
year warrants could not be given for
free but the issue price is negligible.
MUFG deal spooks Japan
Halloween was a fitting end to a
monstrous October for Japan’s
financial firms, which, burdened by
the worst month on record for the
Nikkei index, were forced into equity
raisings and profit warnings.Grabbing the most ghoulish
headlines was Mitsubishi UFJ
Financial Group, which surprised
the market by announcing
plans for a ¥990bn (US$10.1bn)
fundraising made up of ¥600bn
of common stock and ¥390bn of
preferred stock. The announcement
effectively shattered the impression
that Japan would be the big winner
of the sub-prime meltdown.
With the stock market down 24%
last month and analysts putting
the total of unrealised losses at
¥14trn, Japan’s financial firms
appear to be suffering a different
tsunami than that which has hit
the US and Europe, even if the
result is remarkably similar. Rather
than being hit by sub-prime losses,
they were damaged once again
by their perennial weakness: their
huge shareholdings in Japanese
companies.Marriage of unequals
Nomura bankers in Europe are
trying to come to terms with
the dominance of their new ex-
Lehman colleagues as further
details emerge of the post-merger
management line-up. But although
the combination still looks like
a good fit, there are growingconcerns about how difficult the
integration process will be.
Bankers at Nomura’s London
operation are getting used to
hiding their frustration as they
watch former Lehman Brothers
executives securing attractive
guarantee packages as well as
most of the top management roles
in the newly combined business.
And as the firm grapples with
the complexity of integrating
a horde of ex-Lehman bankers
in what many Nomura staffers
describe as a reverse takeover, the
strain is already beginning to show,
especially when it comes to the
widely predicted culture clash.
One banker tells of a recent
meeting between two senior
Lehman executives and two
Japanese counterparts from
Nomura. Observing that he had
to drive to work that morning
in his Aston Martin because his
Porsche was being repaired, one of
the Lehman bankers asked what
cars his new Japanese colleagues
drove. For some Nomura staff,
the answers – a Toyota Picnic
and a Nissan Almera – were
more illustrative of the perceived
culture clash than any difference in
investment banking strategy.