Summit Notebook

Cure for lending constipation needed

Yes, the market for IPOs is opening up, investors are regaining confidence and the worst seems to be over, but challenges are still looming and there’s a dire need for a change in regulation. Or so suggested Shuaa Capitals’ chief Sameer al-Ansari.

“With the balance sheet of banks, whatever is keeping them constipated, we need to give them something to start. Banks have to be more comfortable and confident that there are no more shocks on the horizon,” said Ansari at the Reuters Middle East Investment Summit in Dubai on Tuesday.

The right provisions need to be made — and that means more acknowledgment of non-performing loans — in turn bringing adequacy ratios down, so that banks get a boost and start lending again, Ansari noted.

“We need to open the tap a bit, even if its a drip,” the banking exec said, using hand gestures to illustrate his point. “We can’t have growth in the economy if its negative.”

Ansari, who’d made recommendations – simple to drastic – to decision makers in Dubai, suggesting solutions, cited the Irish example of gathering all bad debts linked to real estate and placing them in a government bank.

“It should be looked at here. If that’s what’s making the banks constipated, then lets do it!” he says.

Dubai, one of seven emirates that make-up the UAE federation, was hard hit by the global financial downturn and endured billions of dollars in projects cancellations, not to mention the $25 billion debt restructuring of Dubai World.

No bonds for Arabtec; not for now anyway

Just to be clear, Arabtec is not considering a convertible bond issue.

The builder has no need for funds and has adequate access to capital if needed. But nonetheless its chief financial officer Ziad Makhzoumi is watching the region’s increasing capital raising activities with interest.

“I don’t think we need any funding whatsoever… As a CFO I have to look at all the options all the time,” he told the Reuters Middle East Investment Summit in Dubai on Monday.

Convertible bonds are an attractive way to raise funds for listed companies, he said, highlighting Emaar Properties’ recent issuance plans.

Earlier this month, Emaar, the builder of the world’s tallest tower in Dubai, outlined plans for a $500 million convertible bond issue.

Makhzoumi said he saw more convertible bonds coming to the market, but there was no mention at all of Arabtec.

Arabtec has expansion plans which include a push into Central Asian states like Kazakhstan and Uzbekistan, which could be funded from internal resources, he said.

Is investor confidence returning to the Middle East?

A recovery in the Middle East and the prospects for investment are on the agenda at the Reuters Middle East and Investment Summit, taking place in Dubai, Riyadh, Cairo, Kuwait, Beirut, Bagdad, Abu Dhabi and London.

In the wake of Dubai’s debt crisis, which rocked financial markets globally and dented confidence in the region, top executives and officials will discuss whether the investment climate in the region is improving and confidence returning. 2011 will be a year of more restructurings, but the region’s capital needs will lead to a surge in debt issues and even a possible revival of the IPO market.

Reuters Middle East Investment Summit will generate exclusive stories, investable insights, online videos and blog postings. Check back here for more over the course of this week.

Private bankers must show restraint in Europe

Private bankers remain in demand in some key European markets, but they will have to live with lower salaries if they want to continue to be part of this business. Top wealth managers told the Reuters Global Private Banking summit that they have stopped offering the huge packages seen in the run up to the financial crisis of 2008-2009. “We are not offering packages that are outlandish. And I do not see the other banks doing that either,” said Samir Raslan, General Manager of Citibank (Switzerland). Raslan said the structure of banker’s salaries had also changed. Relationship managers who form the backbone of a private bank’s workforce were getting higher fixed salaries than before, but no more huge bonuses. “We see more rational hiring, rather than aggressive, open cheque-book hiring,” said Raslan.

from Sakthi Prasad:

New Contracts are like honeymoon

As the old adage goes, it is easy to build a new house as compared to remodeling an old one. If one would like to extend this adage to the new-age IT industry, then we could use what L. Ravichandran, president, IT Services of Tech Mahindra, told the Journalists at Reuters India Investment Summit in Bangalore: it is easy to negotiate new contracts with the clients rather than renegotiating old ones. He likened the new contracts to that of a honeymoon -- both the customer and the service provider are happy. But, of course, he did not extend his metaphor to old contracts by likening it to a marriage gone vinegary.

Ravichandran also pondered over the fate of fixed lines telephones. According to him, the fixed line phone will not be done away with altogether. Instead, it will be increasingly used to deliver other digital services like broadband internet, IPTV etc.  So in a perverse way, landlines may continue to be used, but not much to make phone calls though.

from Sakthi Prasad:

Old business in New bottle

When the term “real estate” is mentioned, people immediately get images of bricks, cement, sand, gravel, dusty construction sites and so on. And the business is rightfully termed as “brick-and-mortar” or categorized as “old economy.”

 Many youngsters nowadays would prefer to work in swanky offices of a software company or an investment bank instead of sweating it out in dust and heat at construction locations.

But for J.C. Sharma, managing director of Bangalore-based real estate firm Sobha Developers, it makes business sense to combine the selling power of “new economy” Internet and “old economy” real estate. 

While speaking to Journalists at Reuters India Investment Summit in Bangalore, Sharma said the Non-Resident Indian (NRI) demand has gone up to 17 percent this year compared to less than 10 percent of demand last year -- thanks to the power of Internet.

 Maybe, Internet would after all help a homesick Indian toiling in faraway foreign lands to find a home in India. And as J.C. Sharma would have it, one could always find a Sobha home on the cyber highway.

Infrastructure still top-of-mind in India

On Monday, we kick-off the 2010 India Investment Summit. We’ll have exclusive interviews in Mumbai and Bangalore. In 2006 we held the first Reuters India Investment Summit. It was my first time in India. I’ve had the privilege to return every year. How time flies. Here we are four years later. Some of the key players may have changed but the big, over-arching theme is still the same: Infrastructure. It’s the key to realizing the country’s potential but bureaucracy, tough financing and hesitant overseas investment have slowed development in the sector, calling into question the future of India as a powerhouse.

India has had only mixed success in its efforts to accelerate construction of roads, bridges and power plants. The statistics are mind-blowing…the country is growing at 8.5% and has a population of 1.2 billion that is making a mad-dash from the countryside to sprawling cities. Call them growing pains…in India’s expanding cities there is an acute need to speed project approvals, implement new financing models and attract overseas investment for much needed infrastructure. But, while the business opportunity is tremendous investors looking to India as a way to play the emerging markets are wary given the history of missed deadlines and red tape that makes getting projects completed a challenge.

Is red tape getting better or worse? Which sectors are attracting most interest? How do returns compare with similar projects globally? How do sector companies attract foreign investment in large projects? Are the challenges forcing investors and developers to look overseas instead?

These topics and more will be the key points of discussion at the Reuters India Investment Summit in Mumbai and Bangalore September 27-29.

To read our exclusive stories and analysis starting September 27 copy and paste the link below to your browser: www.reuters.com/summit/IndiaInvestment10

Lady Gaga may not be the only one singing a new tune in November

The 2010 Reuters Washington Summit included 4 days of on-the-record interviews with policymakers, congressmen and Obama Administration officials here in the DC bureau. The interviews covered a wide range of topics…from the impact of the mid-term elections to the importance of the Lady Gaga vote.

With less than six weeks to go before the mid-term elections the focus was on what a potential shift in power to a Republican-controlled Congress could mean for policy priorities in the coming year. We heard from Senators’ McCain, Dodd, Gregg and Bingaman. On the House side we spoke with the man responsible for getting Democrats elected…Rep. Chris Van Hollen, Chairman of the Democratic Congressional Campaign Committee. He called this election season a “tough and challenging environment,’ but predicted Democrats would retain control of the House.

From the Obama Administration, White House Press Secretary Robert Gibbs opened his comments by admitting that early on the administration did not have a “real understanding of the depth of what we were in.” News of Larry Summers’ departure as White House advisor came on the eve of our interview with a man who has worked with Summers, Austan Goolsbee, Chairman of the White House Council of Economic Advisors. Goolsbee said he expected that Mr. Summers’ replacement wouldn’t be part of “a dramatic change in direction.” On the economy, Goolsbee noted that he does not see a double dip on the horizon and that “pulling back on current spending programs could spook the markets.”

On the regulatory front, FDIC Chairman Sheila Bair was adamant in her remarks about “ending too big to fail” and said that “the banking system is healing…and there is continuing improvement in low quality loans.” Meanwhile, Treasury’s Special Inspector General for TARP, Neil Barofsky, the man charged with policing the government’s exit from GM and AIG, said his group would begin a probe into the GM IPO after it launches to make sure that it was in the best interest of taxpayers.

On Afghanistan, we heard from Richard Holbrooke, Special Advisor on Afghanistan and Pakistan who was measured in his response to the Obama Administration’s planned timetable for withdrawal.

And, what about the Lady Gaga vote? Senator McCain brought up the pop star and her opposition to ‘Don’t Ask Don’t Tell’ which was scheduled for a vote the day after McCain’s visit to our bureau, saying “I didn’t Twitter back. I only twitter with Snooki as you know. I did say, I said, look, I welcome her in the debate, I’ll welcome all of her young fans into the debate. Let’s have everybody in the the debate…it’s good to have lots of people involved.”

The summit upshot: if polls are correct and Republicans win more seats in the Senate and retake the House, all of Washington may be singing a different tune come November 3rd.

Shift in power on the horizon in Washington?

Republicans stand poised to gain substantial influence in Congress, putting at stake billions of dollars in investment as a shift among power brokers throws legislative initiatives old and new into doubt. Reuters Washington Summit will bring together an influential line-up of insiders just weeks before Americans cast their votes, promising a must-read stream of exclusive news on the outlook for Congress and President Barack Obama’s agenda. Editors and correspondents from the Reuters Washington bureau are sitting down with senior lawmakers, including GOP heavyweights in line for leadership, and regulators whose implementation of Wall Street and healthcare reform could be complicated by a change in control on Capitol Hill.

The Summit will generate exclusive stories, investable insights, online videos and blog postings, which will be immediately available only to Thomson Reuters clients during the Summit. Key interviews will air live exclusively on Reuters Insider – a new multimedia platform delivering relevant news, analysis and trade ideas presented through a personalized video experience. Visit http://etv.thomsonreuters.com/

Lockheed Martin bracing for a new reality

Lockheed Martin CEO Robert Stevens says despite cost cutting, the defense industry will survive based on new global security needs and adds that Lockheed’s portfolio is well positioned for change.