The city-state has a handy habit of taking advantage of financial upheaval

IN THE 1950s the Bank of China could use 20-year-old architectural designs for its Singapore headquarters near the central post office. From buildings to businesses, things moved slowly in the city-state. Today the picturesque old Bank of China building stands out because little else in Singapore’s financial world stays the same.

One change is physical. Citigroup has moved its headquarters from the same district as Bank of China, first to Shenton Way, which now serves as one financial centre, and then to another, known as Suntec City. It will soon join Standard Chartered at a third site, Marina Bay, which has been built on reclaimed land. A fourth centre for back-office workers is opening up near the (excellent) airport. In an area near Chinatown once known for brothels, converted shops now house investment firms, lawyers and the like. ...

How debt problems are constantly explained away

GREECE denied that it was planning to restructure its debt this week (see Economics focus), even as traders in the credit-default-swaps market made bigger bets that it would. A pattern of denial in the face of mounting evidence has been a recurring feature of the debt crisis.

Back in 2005 and 2006 received wisdom denied that the rapid growth of subprime mortgages was a problem. American house prices were extremely unlikely to fall at the national level. In any case, the debt had been widely spread among investors thanks to the derivatives market. ...

The worst is over for American banks. Shame about the recovery

IN THE second world war America’s army developed a reputation for unsentimentally sacking divisional commanders who lost battles. The effect was to clear out the incompetents but also remove those who were merely unlucky. The policy may sound strangely familiar to the chief financial officers of America’s banks.

The door has revolved fastest at Bank of America (BofA). It is now on its sixth finance chief in seven years, having announced the appointment of Bruce Thompson when it released lacklustre first-quarter earnings on April 15th. The bank typifies many of the problems facing the industry. Almost all are still reporting steep falls in revenue from investment banking, and commercial banking is proving to be a lot less profitable than it was. ...

Talk of restructuring Greece’s debt is unlikely to solve the country’s economic woes

SOVEREIGN-DEBT restructuring is a familiar story in the developing world but an untold one in advanced economies since the aftermath of the second world war. European leaders have desperately tried to maintain that record by providing bail-out funding to struggling euro-area members. Sheltering these borrowers from the markets gives them space to right their finances, the argument runs. Increasingly, however, the game looks up. A strong showing by the True Finns, a populist party, in Finnish elections on April 17th may derail a Portuguese bail-out. But the real problem lies where the euro-area crisis began, in Greece.

The Greek government still stoutly denies any plan to restructure its debt. The European Central Bank (ECB) is adamantly opposed, fearing havoc among European banks exposed to the countries in question. But the mechanics of a restructuring are now being pored over in Europe and at the IMF. In Germany both Wolfgang Schauble, the finance minister, and Werner Hoyer, minister for European affairs, caused consternation earlier this month by openly raising the possibility of a debt restructuring. Markets take it as read: ten-year Greek government-bond yields hit a euro-era record of 14.6% on April 19th. Borrowing costs for other countries rose, too, Spain’s among them. ...

Microlending has helped make BTPN one of Asia’s most profitable banks

MENTION microfinance in Asia and thoughts usually turn to India, which is struggling to regulate the industry, and Bangladesh, where Muhammad Yunus, the Nobel prize-winning founder of Grameen Bank, has been turfed out of his job. Indonesia offers a brighter picture. There, a range of lenders is successfully funnelling credit to its entrepreneurial poor.

They include Bank Rakyat Indonesia, a state-owned behemoth that had a whopping $7.4 billion in microloans outstanding in September and operates throughout Indonesia’s many islands. Non-profit lenders, pawnshops and co-operatives also swim in the microcredit sea. ...

Ever more jobs in finance are migrating to growth markets, particularly in Asia

“A LOT of my friends are going to Asia and Latin America to do their internships,” says Ben Zhang, a student at the University of Chicago’s Booth School of Business who will do his in Hong Kong with Morgan Stanley. “It may be outside their comfort zone, but they see getting some experience there as helpful, since that’s where many of the jobs will be.”

The percentage of business-school graduates choosing finance as a career has dipped only slightly since the crisis, no doubt largely because pay in the industry has held up remarkably (some would say obscenely) well. But within the industry career priorities are changing, at least when it comes to location. Talent and transactions are migrating from London and New York to faster-growing markets, particularly in Asia. Though some headhunters predict indigestion in Hong Kong, Singapore and Shanghai this year after an overzealous bout of hiring, most are bullish on the region’s long-term prospects. ...

Boardroom ructions at Italy’s largest insurer

NO NEED for a knife. The threat of forcible ejection and the offer of a huge €16.6m ($24m) exit package was enough to convince Cesare Geronzi to resign on April 6th as the chairman of Assicurazioni Generali, Italy’s largest insurer. He was replaced two days later by the more emollient figure of Gabriele Galateri, Generali’s deputy chairman from 2003 until last year.

Mr Geronzi, a longtime mover in Italian corporate and political circles, antagonised much of the board in his one-year reign, thanks largely to outspoken ideas on the firm’s future strategy. But his spell as chairman did not seem to throw the company off balance. Generali recorded a leap of 30% in net profits to €1.7 billion in 2010. Giovanni Perissinotto, Generali’s chief executive, puts its strong performance in the life sector in particular down to active investment and proprietary distribution networks in Italy, France and Germany. ...

Raj Rajaratnam defends his investment strategy in court

PEOPLE often say regrettable things but they usually don’t have to hear their words played back to them. That’s not true for Raj Rajaratnam, the former boss of Galleon Group, a hedge fund, who is on trial for insider trading. For the past five weeks Mr Rajaratnam has sat quietly in a New York courtroom while his phone conversations with friends and colleagues, which had been recorded by the government, were played for the jury.

In one taped conversation he appears to share unannounced revenue figures for Advanced Micro Devices (AMD), a semiconductor company, with Danielle Chiesi, a former hedge-fund executive who has since pleaded guilty to insider trading. “Tell me I’m the best on AMD now,” he boasts. “You are the best,” she replies. ...

Is Germany bailing out euro-area countries to save its own banks?

IF THE euro zone were an old-fashioned family, Germany would be the stern father telling his wayward children to go to bed early and not to spend all their pocket money at once. It has resisted efforts to ease the conditions attached to the bail-outs of Greece and Ireland, and is insisting that Portugal, which started negotiations on a bail-out this week, also gets licked into shape. (The European Central Bank, too, has a ring of the stern German in its insistence that banks in weaker euro-zone countries, Ireland’s in particular, pay back their debts in full.) That seems fair: Germany is putting more money at risk in funding the errant trio than any other country. But some observers argue that the real bail-out is of Germany’s own banks.

That depends, in part, on the assumptions you make about what might happen if one of the peripheral countries were to default. Start with government debt. Germany’s two biggest banks, Deutsche Bank and Commerzbank, have a surprisingly low direct exposure to Greek, Irish and Portuguese governments. They held less than €6 billion ($8.7 billion) in government debt from the three bail-out recipients at the end of last year, according to company disclosures. But the total exposure of the German banking system is a lot larger, at almost €27 billion. ...

The second article in our series on economies that exemplify global trends looks at Colombia’s rising fortunes

“I WAS here ten years ago when the economy was in crisis and every day’s news was worse than the day before. Now all the news is better than expected.” Juan Carlos Echeverry was a top official in Colombia’s finance ministry when the country, then violence-ridden, went through a messy mortgage bust and budget crunch in the late 1990s. Now, as finance minister, he is in charge of an economy on the rise.

Foreign investment is up, drawn by an improved security situation, the lure of minerals and a bouncy regional market. Public coffers are swelling, thanks to rising commodity prices and oil output. Standard & Poor’s hiked Colombia’s sovereign-debt rating to investment grade last month. ...