Posts Tagged ‘Lending’
February 21st, 2012 | Author: admin
* UK banks missed small/medium business targets in 2011
* UKs Hoban says to focus on lowering credit costs
* Small businesses deterred by credit costs, tough
conditions
By Fiona Shaikh
LONDON, Feb 13 (Reuters) – Britains top banks fell
short of their government targets to lend to small businesses
last year, official data showed on Monday, dealing a blow to the
Conservative-led coalitions hopes of removing a barrier to
economic recovery.
The Project Merlin deal had obliged banks to meet fixed
lending targets in recompense for state aid during the financial
crisis, and banks failure to meet their goal will raise
pressure on the government to toughen its stance on the sector.
Prime Minister David Camerons government is already under
fire for not doing enough to curb bank bonuses at a time when
many borrowers are being hit by punitive bank charges.
The government is looking to the private sector to drive
economic growth as it cuts spending. Since the 2007/08 financial
crisis, many smaller firms have found it hard to borrow to
expand, and they complain that Project Merlin failed to help
them enough.
Britains finance ministry has already said it will not
extend the agreement, and will replace it with a loan guarantee
scheme aimed at lowering the cost of borrowing for small firms.
The Bank of England said the five banks that signed up to the
Merlin agreement failed to meet their target for lending to
small and medium-sized businesses, making 74.9 billion pounds
($118 billion) available, below the 76 billion pound target.
However, banks beat their overall 190 billion pound target,
making available a total 214.9 billion pounds. The figures
confirm data from the British Bankers Association on Friday.
Treasury minister Mark Hoban said the Merlin scheme had at
least encouraged banks to bring forward lending. What we need
to do now is focus on … how we actually reduce the cost of
credit to businesses, he told Sky television.
TIGHT CREDIT
The government had hoped that its Merlin deal with Royal
Bank of Scotland, Lloyds, HSBC,
Barclays and Santander UK would boost private
sector investment to offset its own spending and job cuts.
But a survey by the Federation of Small Businesses showed
that the proportion of small businesses that have used a bank
overdraft or loan has fallen in the past two years.
Critics of the Merlin scheme argued that the targets were of
little use as they only measured gross lending, not net new
lending, and gauged only credit facilities made available,
rather than how much money has actually been lent. The BoEs own
data showed net lending fell by 9.6 billion pounds last year.
These targets were fairly meaningless in the first place
and there are plenty of reasons to expect credit growth to
remain a constraint on the economic recovery for a while yet,
said Vicky Redwood of Capital Economics.
Britains EEF manufacturers organisation said the high cost
of borrowing and stringent terms and conditions for bank loans
had deterred many small firms from seeking credit.
The governments Credit Easing initiatives will be
challenging to implement but seem to offer a prospect of making
some improvement on access to finance, EEF chief economist Lee
Hopley said of the loan guarantee scheme.
Posted in 
Tags:
February 20th, 2012 | Author: admin
Fixed Income Lending on the Rise in Australia, eSecLending Says
Posted: 15 Feb 2012
-
There is an increasing focus on the lending of fixed income securities in the Australian market, according to eSecLending, a leading global securities lending agent.
“While equities are still being lent and demand exists there is a shift toward more focus on the fixed income space in Australia,” says Giselle Awad, a senior vice president at eSecLending. “There has been a move towards introducing tri-party agents to the market, and that has brought more international players. The RBA [Reserve Bank of Australia] is very focused on the fixed interest space in the sense of bringing more liquidity to the market. There are a lot of high-grade assets that aren’t moving around the market. By introducing tri-party repo, having more participants and encouraging repo, it does help facilitate the general liquidity in the market.”
There has been increased focus on lending and borrowing of fixed income assets driven by both domestic and international demand, Awad says.
“I think it works both ways,” Awad says. “Superannuation funds are lending their fixed income assets, and there are offshore holders of Australian fixed income that are being encouraged to lend into the market. Insurance companies in Australia may also start to play a role because of the changes to APRA [Australian Prudential Regulation Authority] rules that they’re required to hold more fixed income on their balance sheets.”
The Australian demand for fixed income assets to borrow is driven by market need to meet collateral obligations. Awad also points to the potential for the Australian market to then move on to lending cash in repo transactions, noting that Australia could follow on from developments in the US, in which corporate institutions that are long on cash are deriving additional revenue by using the cash in a repo transaction.
“This hasn’t been a focus in the Australian market as yet, but it’s applicable,” she says. “For Australia, they’re just expanding on the fixed income market and building the infrastructure, which needs to happen before cash can be placed.”
Meanwhile, eSecLending’s new ProxyValue service has attracted attention from clients in Australia. ProxyValue was launched last month in conjunction with Institutional Shareholder Services (ISS) to provide clients with information to balance the objectives of generating revenue through securities lending versus the corporate governance responsibilities of proxy voting.
“We found that there was nothing out there that says to the beneficial owner, ‘Here is a situation when you need to vote the proxy versus the profitability of the loan,’” says Peter Bassler, managing director of eSecLending. “As the fiduciary or the fund manager, you want to demonstrate strong corporate governance, and you want to generate the return. This gives the tools to manage the information on both of those competing objectives. It allows a client to set the metrics so they can customise on how they want to use this. It addresses a need – proxy voting is the one major right for a long holder that you give up when you loan your securities.”
Awad notes that ProxyValue should fit well into the Australian market.
“It has piqued interest, and it’s a service that we’re providing to clients for them to better manage the process and fulfil their fiduciary duties,” Awad says. “This might be one variable that might help potential clients make a decision in our favour, because it’s distinct to services in the custodial model. Australian funds do take corporate governance and voting obligations seriously, so it is something they’re interested in, and they’re familiar with ISS.”
(RA)
If you have any comments about this story or news tips, contact Christopher Gohlke in New York at cgohlke@globalcustodian.com or Janet Du Chenne in London at jduchenne@globalcustodian.com.
February 19th, 2012 | Author: admin
NEW YORK, LONDON, THE HAGUE, Netherlands and TUNIS, Tunisia, Feb. 14, 2012 — /PRNewswire/ –#xA0;ContourGlobal announced today that it has been awarded the 2011 Africa Power Deal of the Year by Euromoneys Project Finance magazine for its $142 million KivuWatt project, which was signed in August 2011 and reached financial closing in December 2011.#xA0; Representatives from ContourGlobal and the KivuWatt lending group accepted the award on behalf of the project at the annual Euromoney Project Finance Awards dinner in London on February 9, 2012.#xA0; The award was published yesterday in the February 2012 issue of Euromoney Project Finance magazine.
The KivuWatt lending group includes the Emerging Africa Infrastructure Fund (EAIF), Netherlands Development Finance Company (FMO), the African Development Bank, and Belgian Investment Company for Developing Countries NV/SA (BIO).#xA0; This award represents the third consecutive African Power Deal of the Year prize for ContourGlobal.
Located at Lake Kivu in Rwanda, the KivuWatt project is an integrated methane gas extraction and production facility and associated 25 MW power plant.#xA0; When completed later this year, the project will raise and process methane gas trapped deep in the waters of Lake Kivu for use as fuel to generate critically needed electricity for the people of Rwanda, while simultaneously safely removing harmful lake gases.#xA0; KivuWatt greatly mitigates the environmental hazards associated with the natural release of these gases, reducing the risk to the two million people who live around the lake. Phase I of the project will cost approximately $142 million to complete of which $91.25 million was financed by the lending group. The effort represents the first large-scale use of the gas and will be followed by three more phases reaching 100 MW.
This award recognizes the groundbreaking nature of the KivuWatt project and the commitment and hard work of the financing team, including Norton Rose and Clifford Chance, who produced an innovative financing that will enable a safe, low cost, and environmentally friendly source of power generation.#xA0;
Joseph C. Brandt, President and Chief Executive Officer of ContourGlobal, said: We are grateful for this recognition of our innovative and path-breaking KivuWatt project and are delighted to share this award with our finance and legal partners without whom this much needed project would not have been realized.#xA0; We look forward to bringing Phase I of KivuWatt into operation later this year.
Tim Turner, Director, Private Sector Operations at the African Development Bank, said: The AfDB is proud to support this project which is an example of how to adapt an advanced technology to a unique country situation: the methane which lies beneath Lake Kivu will be converted into critical electricity for Rwandans, while reducing greenhouse gas emissions.
From Orli Arav, Head of Project Finance at EAIF, Frontier Markets Fund Managers, fund manager of the Emerging Africa Infrastructure Fund, is extremely proud to be the co- lead arranger for this pioneering transaction that will transform the Rwandan power sector.
Huub Cornelissen, Director Energy and Housing said: FMO is delighted that the KivuWatt project has received this prestigious award for this financing. KivuWatt will provide affordable power using an indigenous renewable gas resource and will improve reliability and electricity access rates. It is delighted that its role of co-arranger is appreciated though this award, which fits well within FMOs mission.
Alain De Muyter, Head of Infrastructure Department at BIO, said: BIO is particularly proud to be part of this financing in Rwanda, a partner country of the Belgian Development Cooperation.
About ContourGlobal
ContourGlobal is a New York based international power company with 2,730 megawatts of installed gross capacity in operation or under construction in 14 countries.#xA0; Founded#xA0; in late 2005 by Chief Executive Officer Joseph Brandt and Reservoir Capital Group, a $5billion investment fund based in New York, ContourGlobals 1,500 people develop and operate electric power generation facilities in high-growth, under-served markets and innovative niches within developed markets.
For more information, visit www.contourglobal.com.
About the African Development Bank (AfDB)
The AfDB is a multilateral development bank whose shareholders comprise 53 African countries (regional member countries #x2013; RMCs) and 24 non-African countries (non-Regional Member Countries #x2013; non-RMCs). The Bank Groups primary objective is to contribute to the sustainable economic development and social progress of its regional members, individually and jointly. This objective is met by financing a broad range of development projects and programs through: (i) public sector loans (including policy-based loans), private sector loans, guarantees and equity investments; (ii) providing technical assistance for institutional support projects and programs; and (iii) emergency assistance grants. The Bank Group approvals in 2010 amounted to $6.5 billion. Through its private sector window, the AfDB provides a range of financial products to the private sector to complement its traditional lending operations to Governments, including financial and technical assistance for viable projects. Private Sector project approvals as at end of April 2011 reached $7.7 billion. Infrastructure, especially energy, is the core of Private Sector Operations priorities.#xA0;
About EAIF
The Emerging Africa Infrastructure Fund (EAIF) was established in January 2002 and is currently a $755 million debt fund. EAIF is a Public Private Partnership able to provide long-term USD or EUR denominated debt or mezzanine finance on commercial terms to finance the construction and development of private infrastructure in 47 countries across sub-Saharan Africa. Sectors include telecoms, transport, water and power. #xA0;While EAIF lends on commercial terms, it aims to support projects that promote economic growth and reduce poverty, benefit broad-based population groups, address issues of equity and participation, and promote social, economic and cultural rights.
EAIF is managed by Frontier Markets Fund Managers, a division of Standard Bank Plc.
For more information visit the EAIF website www.emergingafricafund.com
About FMO
FMO (the Netherlands Development Finance Company) is the Dutch development bank. FMO supports sustainable private sector growth in developing and emerging markets by investing in ambitious entrepreneurs. FMO believes a strong private sector leads to economic and social development, empowering people to employ their skills and improve their quality of life. FMO focuses on four sectors that have high development impact: financial institutions, energy, housing, and agribusiness. With an investment portfolio of#xA0; EUR 5 billion, FMO is one of the largest bilateral private sector development banks.
For more information, please visit www.fmo.nl
SOURCE ContourGlobal
February 19th, 2012 | Author: admin
AddThis Button END –>
Georgian central bank keeps key lending rate unchanged at 6.5 pct
TBILISI, Feb 15, 2012 (Xinhua via COMTEX) –
The central bank of Georgia on
Wednesday kept its key lending rate unchanged at 6.5 percent,
after taking into consideration the current trends of development
in the south Caucasus country.
The National Bank of Georgia made the call after the meeting
of its monetary policy committee.
The countrys annual inflation rate was 0.5 percent in
January, the lowest in more than two years and the fourth and last
quarter of last year witnessed a faster-than-expected gross
domestic product growth at 6.8 percent.
In the past month, the central bank further reduced its key
lending rate by another 0.5 percentage points to 6.5 percent. The
rate was kept at 8.0 percent for almost six months early last year
before starting to come down after July.
Georgia ended 2010 with a 10-year-high annual inflation rate
of 11.2 percent, which ended last year with an annual inflation of
2 percent.
But the National Bank of Georgia has warned that annual
inflation rate would pick up in the second half of this year.
Copyright 2012 XINHUA NEWS AGENCY
Print Email
January 25th, 2012 | Author: admin
The Institute of International
Finance said net private capital inflows to emerging economies
will fall 18 percent to $746 billion this year as the European
debt crisis erodes the ability of banks to provide funding.
The flow of investment in emerging markets was an estimated
$910 billion in 2011 and is projected to rise to $893 billion in
2013, the Washington-based global lobby group for financial
companies said in a statement today.
Bank lending showed the largest decline and the IIF
estimates net flows from banks to emerging markets will be
“quite weak” for the whole year, Charles Dallara, the IIF’s
managing director, said at a meeting in Zurich today.
“The crisis is contributing to bank deleveraging, which is
damaging the prospects for both growth in Europe and for capital
flows to emerging markets,” he said.
Funding conditions deteriorated the most in emerging
European countries, including Hungary and the Czech Republic,
according to the institute. In a survey of banks in those
countries, 63 percent said credit standards had tightened
because of financial strains in the euro area.
The European Banking Authority’s new capital rules
requiring euro-area banks to achieve a 9 percent core Tier 1
capital ratio by the middle of this year is triggering asset
reductions.
“In an environment where raising new capital was extremely
expensive, euro-area banks responded by accelerating asset
shedding, especially in foreign markets,” IIF Chief Economist
Philip Suttle said.
The IIF said it expects net commercial bank flows to
emerging markets to drop to $38 billion this year from $137
billion in 2011.
To contact the reporter on this story:
Carolyn Bandel in Zurich at
cbandel@bloomberg.net
To contact the editor responsible for this story:
Frank Connelly at
fconnelly@bloomberg.net
-
-
Tweet
-
January 25th, 2012 | Author: admin
Weve been hearing about increased confidence in small business and, if youre like me, you want to believe it - but youre suspicious, too. How do we really know if things are getting better? How do we really know if lending is beginning to open up for small businesses? I dont think anyone is claiming that small business loans are becoming easy to obtain, but there are good signs that we are headed in the right direction and that the availability of funds are growing for main street.
Before we talk about the good news lets do a quick history lesson about how we got here. Some would say it started with the secondary mortgage market. As mortgages got closed, lenders were able to sell their mortgages on the secondary mortgage market and wall street turned them into mortgage bonds. As real estate prices increased and mortgage rates decreased and profits were flowing through wall street the appetite for these mortgage bonds increased. Then you join that with deteriorating underwriting criteria along with a staggering number of sub-prime loans to non-credit-worthy borrowers and weve got problems.
But how did this happen? It happened because the ratings agencies (Fitch, Moodys, and Standard amp; Poores) were giving the same grade to the pools of sub-prime mortgages as they were to the prime or A-Paper mortgages so these bad mortgages flowed through the system just like any other mortgage. As the defaults hit certain levels, the investors who shorted mortgages by buying insurance against the bad mortgages were able to cash in this is where you Google search who is John Paulson or you could try what did AIG do wrong?
History lesson almost over but what happens next? Its called TARP or the Troubled Assets Relief Program. TARP is where Uncle Ben (Bernanke) drew on the lessons of The Great Depression of the 1930s so we didnt repeat our mistakes. The Fed actually turned a recession into The Great Depression in 1929 by letting the money supply contract very sharply which caused prices to fall and inflation to hit.
Secondly, they let the banks fail and thousands of banks actually failed. TARP was a conscious effort to let the banks recover first because if the banks fail then we all fail and we propel ourselves into a much worse economic climate. TARP was an infusion of capital into the top banks yes, its 100% true that it was unfair to the smaller banks in an effort to get them to continue to lend (or at least to not totally shut down their lending). Interestingly, tax payers made money on TARP but, of course, that hasnt been talked about in the occupy movements.
So here we are a few years after TARP. Fortunately, The Great Recession did not become a depression.
According to CardWeb, $4.5 billion was extended to small business owners in 2009 by Citi. Then they increased that to $6 billion in 2010. Then they pledged to lend $24 billion to small business (defined by them as businesses with less than $20 million in annual revenue) over a three year period from 2011 2013. Citi announced last week that they are ahead of pace on their goal of lending $7.0 billion in 2011. They finished the calendar year very strong after a slow summer and ended up lending $7.9 billion in 2011 to small businesses.
I agree that theres a lot more to be done. However, if we put mistakes of the past aside, this is one lender who is showing us progress and who intends to continue to lend at a much more generous pace than we saw in 2008 and 2009.
Lending Photo via Shutterstock