Tag Archives: Banking

Market Analysis

Private Banking For Alternative Investment Success

Private banking benefits its high-income clients with personalized services which contrast with mass services rendered by retail banking. The Italian group ALBERTINI SYZ is active in private banking, managing assets for both private and institutional investments, as well as alternative investments (hedge funds). The partnership between Albertini, a major player in the Italian financial markets and the Swiss banking group SYZ & CO strives for only the highest quality of products and services.

Talented fund managers include vice president Alfredo Piacentini, who has 30 years of experience in areas ranging from market analysis to fund management to mergers and acquisitions. As a founding shareholder of Banque SYZ & CO and a member of the Steering Committee, Alfredo Piacentini banchiere, directs activities of private wealth management and centralized management, including the division of investment funds for the Oyster Italian Opportunities Fund. As vice chairman of Banca Albertini Syz & C., Alfredo Piacentini has helped develop the group’s exceptional reputation in the private banking industry.

Within the group, hedge funds are selected in a four-stage process: identification of potential investments; investment analysis; assessment of risk management; and committee approval of the manager of the funds. To ensure that clients’ portfolios meet their objectives, a system of accountability was developed that involves the management team funds supervision for risk management. The group is especially concerned with changes in strategies or portfolios that are no longer in line with the original strategy as well as changes in the spread between the yields desired and those achieved.

Private banking like that done by ALBERTINI SYZ is subject to supervision of individual positions rather than on aggregated results, in keeping with the personal nature of private banking services. Portfolios are built based on both “bottom up” influence of managers and “top-down” guidance influenced by macroeconomic trends, new opportunities, and new risks. This system tends to optimize the use of the talents of the portfolio managers.

Successful creation of hedge fund portfolios requires a balance between managing positions already in the fund portfolio and capitalizing on expanded opportunities. Risk management is very important in this type of private banking services and is a process of selecting hedge funds with due diligence and systemic monitoring, as well as diversification according to individual clients’ styles and strategies. Quantitative monitoring involves analysis of Value at Risk, as well as stress tests and comparison with business models.

Risk management is an extremely important part of the management of hedge funds, and this is one place where private banking stands out, devoting attention to the exposure of each hedge fund, the liquidity of hedge funds assets, and the structural and operational risks that go along with alternative investments. Of course, hedge funds necessarily require a high tolerance for risk on the part of the individual investor, because these funds may be exposed to higher risks than traditional mutual funds.

Hedge funds may in fact waive some of the prohibitions and restrictions that ordinary funds are subject to. Therefore, any such investments must be considered only after a careful consideration of fund rules as well as all the information, clarifications, and explanations available about the funds. With private banking services such as those provided by highly experienced managers like Alfredo Piacentini, the client is assured of receiving all the relevant information with which to make sound decisions on alternative investments.

General Investing

Islamic Banking

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The events of recent years have demonstrated the resentment of the Muslim world against the Western powers. Such power is most evident in the financial arena, where Western banks and financial markets dominate in clear contrast to traditional Islamic beliefs. However, in the last 25 years, there has been development of a non-violent challenge to that power. The change has come from a group of Islamic financial institutions and subsidiaries of international banks that have expanded their operations. The Islamic holy book, the Koran puts a ban on charging Riba, a form of common interest in pre-Islamic Arab society. This mechanism doubles the rate if a debt is not paid when due and continues in each time interval. Many consider the riba as an extemporaneous, and many Muslims see the interest as something that goes against religion. This could regulate the operation of modern banking, but the Muslims want to save money, protect it from inflation and invest in order to obtain benefits, and also to see the expansion of their businesses, build new power plants investing more in new capital. These conflicting demands of religious beliefs and economic need have been the impetus for change and growth of Islamic banking. In 1973, seven Arab nations joined to form the Islamic Development Bank, which function as the World Bank, promoting economic development but within the parameters of Islam (the bank has now 55 members). Among other initiatives, Elli Elhadj, says it was first introduced in 1980, an instrument in accordance with Islam. Today there are 150 Islamic banks around the world. With growth, conventional international banks also have followed the trend by offering special products to investors and even private ATM or the possibility for Muslim clients know their money is being handled in a religiously pure. Today a Muslim can even easily be benefited by the availability of Credit cards Dubai. The Islamic finance industry has started to gain major momentum outside Islamic bank Dubai. As more financial institutions begin to introduce Sharia-compliant banking products and services, the growth of this market segment provides a new opportunity for Banks of Dubai to export their business outside of the region to serve the more than 1 billion Muslims living worldwide. There is now a Dow Jones Islamic Index, which includes companies that produce alcohol, snuff and other items prohibited by Islam. However, some obstacles prevail, and cultural differences of each country, between different Islamic banks and product offerings of these institutions. The market is segmented by the level of religious conservatism. Consequently, some groups have met to try to set standards. To some experts, the underdevelopment of the Muslim world in some areas has been the result of religious rules that limited the size of the organization, inheritance patterns preached and held some legal protection to corporations and individuals. In the process, the Muslim world lost valuable time while the industrial revolution was changing the western and developing new legal and religious systems, which drove economic growth. However, innovations that occur in Islamic finance could boost development in the Muslim world after the facilitation of internet banking, debit & credit cards in various banks of Dubai and all over the middle-east.

General Investing

Understanding Investment Banking: Grasping the Language of Investment

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Fixed interest investments

These are investments where the income is a fixed amount, at least for the time being. Usually the capital value is also fixed, although in some cases it can change, too. However, either income or capital are fixed and in many cases both.

Equities

These are investments in ordinary shares of companies, where both the income and the capital can vary up or down. They can be bought and sold on a stock exchange and they participate in profits (after any preference dividend is paid) and receive dividends, usually paid half yearly.

Shares have a par value – usually £1 or 50p – but this bears no relationship to their market value and can be ignored.

Fixed interest versus equities

All statistics show that in the long run, due to capital growth, equities beat fixed interest by a big margin, whereas fixed interest may not even beat inflation

Here is another comparison. If you invested £1,000 in 1973, 20 years later, in 1993, it would have grown to:

– building society (average) £43,000

– shares (FTSE 100) £297,000

Even after allowing for inflation, the equity investment would have risen to £56,000, whereas the building society would not have kept pace with inflation and would have fallen to £8,700.

Although the income on equities is less than on fixed interest to start with, it catches up and passes it in the long run. Over the past 30 years or so, income from equities has on average doubled every seven years

But to achieve the best returns on equities it is necessary to have flexibility in the timing of both buying and selling and an ability to remain invested for the long term say five years at least.

Risk

The more you have invested and the longer you can leave it alone, the more risk you can afford to take with some of it to achieve a higher reward. The most important thing is to recognise the existence of risk and to take appropriate steps.

Spread your investments over a number of different categories, having perhaps more than one investment in each category. Consider pooled investments such as unit trusts

In this connection, some advisers suggest that you should take into account your income from earnings (or from your pension if you are retired), which they capitalise and call your lifetime capital. The relative steadiness of this income can mean that you can take more risk with your investments.

Always look at the downside risk of each investment and decide whether you are happy with it. However, to achieve higher returns in the long run, you need to take some risk.

Shares have three opportunities/risks:

– the individual company,

– the market sector (such as stores, banks); and

– the overall market.

The volatility of individual shares has increased significantly in recent years and the potential to lose money is something like three times as great as 30 40 years ago. This applies in particular to shares in the FTSE 100 index (smaller companies are less volatile). In very recent times this increased volatility is due to the Internet linked companies.

Events in the lifecycle of shares

New issues

New shares sometimes come to the market as a result of de nationalisation and de mutualisation but any company coming to the market for the first time is a new issue. Application forms are printed in newspapers and are available on request. You fill in the form and send it off with a cheque.

You may not get all the shares you ask for. Some people apply for more than they expect to get. Stags are people who aim for a quick profit, applying for a large number of shares with the intention of selling them as soon as they are received.

There is no commission or stamp duty payable on new issues and the full amount may be payable in instalments.

Rights issues

This is where a company raises further capital by offering existing shareholders the right to apply for more shares. The price is usually set below the current market price so that the rights themselves have a market value.

Shareholders can decide whether to take up their rights, so investing more money in the company, or to sell them. Those taking no action usually have the rights sold for them.

There is a third way, called tail swallowing, which is particularly appropriate if your investment is in a PEP or ISA. If you wish to take up the rights but have insufficient cash in the account, you can sell enough rights to bring your cash available up to the amount required for the remaining rights.

Bonus issues

This is a misnomer: there is no bonus! A better term is scrip issues (or capitalisation issues) and it is where existing shares are subdivided into, say, two new shares, thus doubling the number of shares and halving their value. No new money passes, the action being taken usually because the share price has risen to a level which is considered too high for an effective market.

Scrip dividends

This is where companies offer shareholders the opportunity to take new shares instead of a cash dividend. It is a cheap way to invest more money in a company but it complicates capital gains tax calculations.

Share buy backs

A company sometimes buys back shares, usually because it has surplus cash which cannot be invested more profitably elsewhere. The effect should be an increase in the share price.

Take over bids

From time to time one company will attempt to take over another by offering an attractive price for the shares. It is worth waiting for a competitive offer, even if the directors recommend acceptance. Newspapers and investment magazines will comment on the offer.

If the buying company is successful it can force the purchase against reluctant sellers.

Receivership and liquidation

If a company fails to pay debts a lender of money to it can appoint a receiver to manage its affairs (or have one appointed by the creditors) or the company can be put into liquidation. In either case, it is unlikely that the equity shareholders will get much, if anything they are at the end of the queue.

General Investing

The Impact Of Metrics For Investment Banking Performance

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Financial investments are measured through metrics for investment banking performance. This is a way of gauging if a financial undertaking is worth the risk and the effort. There is no point of providing inputs if the output is not satisfactory and if it does not meet certain specifications of what needs to be achieved.

Depending on the investment, there are several Key Performance Indicators that one may look at before arriving to a conclusion whether the financial investment is earning or losing money. One of these things is the return of investment of ROI. To compute this, the total amount of investment should be subtracted from the incremental earnings or profits. The difference will then be divided by the investment to get the percentage. To be more accurate in the calculation, data analysis must also be used. Numbers that will show sales, outgoing funds, expenses, and such will give an analyst a clearer view on whether there is substantial return on investment or not.

Another metric used is the years the investment was active. This will help individuals or businesses know what return they want to calculate. It is not wise to make judgment for the feasibility of an investment if it was just active for one month. Therefore, there should be a substantial amount of data to be studied. The ideal number of data points to be compared or used in an analysis is 20 data points. This means that the results of an investment should be measure for a minimum of 20 weeks, or 20 months, or even 20 years. Only then will an analyst see the causal effects of actions taken and how these things can be corrected in an objective way.

Always take note that measuring the financial performance of a company should be data driven. Just because the company did not earn does not mean it should be closed. Action plans and decisions should never be based on assumptions. All of them should be backed up by numbers and data since numbers do not lie. With this, people will not be fired or blamed because of poor logic and unwarranted assumptions and politically motivated intentions.

Another performance indicator of an investment is yield. The yield should be calculated in percentage and this will show an investor how much his investment has made in profit. If the investor has a certain target in mind, what he has to do is to divide target by the yield percentage, to find out how much he needs to add to his investment. For example, an investor has $1,000,000 in investment to the bank and he wants to measure its performance. After a month, he received a profit of $100,000. His yield percentage is 10%. If his target profit is $150,000, this means he is short of $50,000.

To determine how much investment should be added, he should divide by $150,000 by 10. The result is $150,000. This means he has to invest $150,000 to get the profit he wants, in order to get a substantial result of his metrics for investment banking performance.