From knowledge.wharton

When the ratings agencies downgraded General Motors debt to junk status in early May, a chill shot through the $1 trillion hedge fund industry. How many of these secretive investment pools for the rich and sophisticated would be caught on the wrong side of a GM bond bet? In the end, the GM bond bomb was a dud. Hedge funds were not as exposed as many had thought. But the scare did help fuel the growing debate about hedge funds. Are they a benefit to the financial markets, or a menace? Should they be allowed to continue operating in their free-wheeling style, or should they be reined in by new requirements, such as a move to make them register as investment advisors with the Securities and Exchange Commission?

From www.radio.com.pl

The imminent merger of Italy’s Unicredito and Germany’s HypoVereinsbank HVB may result in massive layoffs on the Polish banking sector. Unicredito Owns Pekao SA, Poland’s second largest bank, and HVB owns BPH PBK, the country’s third largest. According to analysts, this can precipitate a fresh wave of bank mergers on the Polish scene.

Marcin Belkin financial analyst for PEKAO SA has survived bank mergers in the past and isn’t looking forward to this one. Unicredito has a 52% stake in Pekao SA the second largest bank in Poland. HBV has a 71% stake in BPH the third largest bank in the country. Analysts predict that the merge would create more than a 20% market share making it the largest bank in the country.
Mariusz Zygierewicz from the Polish banking association says that the new bank may make bank services more user friendly. But there are those who wonder whether, with less competition, how attractive bank deposits will become. They even wonder if a banking monopoly is being created in the shadow of this proposed merger.

Polish banking trade unions are up in arms saying that the banking sector could loose several thousand people in one single swoop on account of the fusion. But this proposed merge is yet another sign as to what Poland can expect in the future according to people in the know. Merger talks between Unicredito and HVB could be finalized this week. The fusion is designed to cut costs and streamline operations. These measurers will be rather unpleasant in both banks as many jobs may disappear.

BERLIN (AP) - Germany’s HVB Group on Sunday accepted a euro15.4 billion (US$18.7 billion) takeover from Unicredito SpA of Italy, opening the way for Europe’s biggest ever cross-border banking deal and the creation of a dominant player in the former communist east. "The management board and the supervisory board of HypoVereinsbank approved the business combination,” HVB said in a statement after a meeting of the company’s executives in Munich

. The banks said Unicredito, Italy’s largest bank, offered five of its shares for each HVB share, valuing the deal at euro15.4 billion. It said it would also offer cash or stock for outstanding shares in HVB’s Austrian and Polish units. Unicredito said its board backed the offer at a meeting in Milan. However, shareholders in both companies as well as regulators must still give their approval. The agreement is a triumph for Unicredito chief executive Alessandro Profumo, who is to run the combined bank from Italy’s financial capital, Milan. Under his leadership, Unicredito has emerged as a force with the combination of seven Italian institutions, most of them regional savings banks, in 1998 and 1999. It has since carried out a string of acquisitions in countries such as Poland, Slovakiaand Romania, and also built up its asset-management arm with the acquisition of U.S.fund manger Pioneer in 2000. It moved for HVB, Germany’s No. 2 lender, as it struggled to cut costs at its domestic business after property writedowns last year pushed it to a net loss of euro2.3 billion. Unicredito, which is currently headquartered in Genoa, earned euro2.1 billion in 2004. "We will become the first truly European bank,” Profumo said in a statement which promised investors "compelling” growth in profits. Acquiring HVB would give Unicredito a major foothold in Germany, the continent’s largest economy, and neighboring Austria- wealthy areas adjoining its prosperous north Italian heartland. HVB had also pushed aggressively into eastern Europe, and the combination could face tough examination from regulators in countries such as Polandwhere it will dwarf competitors. However, the deal would be a further blow to the prestige of Germany’s once-mighty financial industry. Banks such as Deutsche Bank AG have shelved once ambitious expansion plans to concentrate on painful restructuring at home to shore up earnings.  Analysts expect more consolidation, including further foreign takeovers. Shares in Commerzbank AG, itself tipped as a partner for Unicredito as far back as 2001, have risen in recent weeks following renewed peculation that it could be a target for rivals in Franceor Britain. It could even darken the hopes of Chancellor Gerhard Schroeder, under fire over stubbornly high unemployment, in expected fall elections if it leads to redundancies among HVB’s 26,000 German employees - almost half its total work force. A statement from Unicredito made no mention of job cuts, but forecast savings of about euro900 million (US$1.1 billion) by 2008 from merging overlapping units. While its retail, corporate and asset management business would be based in Milan, the investment banking division would go to Munich. Viennawould be the headquarters for its central and eastern European business. HVB chief Dieter Rampl, who would be chairman of the enlarged group, said it had found "the best partner” for both its shareholders and employees.Unicredito said it would list its shares in Frankfurt and Warsaw as well as Milan.

From english people

The supervisory board of Germany’s second largest bank, HypoVereinsbank (HVB), agreed on Sunday to merge with Italy’s Unicredito bank. Under the deal, which would be the largest cross-border banking acquisition in Europe, Unicredito has offered 15 billion euros (18 billion US dollars) in shares for the German bank in an agreement reached between representatives of the two banks, sources said.

The HVB supervisory board also recommended that shareholders agree to the bid after hours of discussion.

According to the agreement, five out of the 11 Unicredito members of the merged bank’s board would be from HVB, whose representatives would also take important positions. HVB chief Dieter Rampl would be president of Unicredito’s supervisory board.

Unicredito, Italy’s most profitable bank with a 2004 net profit of 2.13 billion euros, has offered to swap five of its shares for each HVB share. Based on trading late Friday, the HVB would be valued at about 20.50 euros per share, totaling about 15.1 billion euros.

The new bank will have about 127,000 employees, but analysts believe that around 10,000 of them will be jobless following the merger, reports said.

The merger would create the fourth largest bank in the euro zone and the ninth biggest in Europe as a whole if the deal is done.

The acquisition, expected to result in cost savings of about 900 million euros per year, is the price HVB pays for the long real estate crisis in Germany and the previous merger that led to the bank’s creation in 1998.

The HVB was established seven years ago when Bayerische Vereinsbank merged with Hypo-Bank, which specialized in real estate loans especially in the east of Germany that went into default.

From | Read more

A key adviser to institutional investors late Friday gave a thumbs up to Symantec’s pending merger with storage specialist Veritas Software.

The ISS approval offsets a recommendation Glass, Lewis & Co. issued late Thursday against the merger. Advisory service companies like ISS and Glass, Lewis provide guidance to institutional investors–such as mutual funds, index funds and pension funds–on how to vote their shares on issues that come up for a shareholder vote.

Symantec and Veritas will ask their respective investors to vote on the merger, valued at $13.5 billion, on June 24. Symantec is largely owned by institutional investors, which make up more than 90 percent of its shareholder base.

From HedgeCo.net | To Register

June 27-28, Dorchester Hotel, London

The Asset Allocation Summit is a two-day conference covering all aspects of strategic and tactical asset allocation, current strategy and alternative investing.  The theory and practice of asset allocation is undergoing dramatic change, and IRC has assembled a list of speakers at the very heart of these key changes. The Summit also brings together a number of truly world-class economists and strategists, to help you plan investment strategy over the next twelve months and beyond. For anyone involved in asset allocation, this will be the most significant investment conference of 2005.

AGENDA – MONDAY 27 JUNE 2005

• Pension Fund Benchmarks - Tim Gardener, Mercer Investment Consulting Ltd
• Making Sense of Liability Driven Investing - Joanna Munro, AXA
• Structured Products in Asset Allocation - David Escoffier & Lionel Martellini
• The Medium Term Investment Outlook - Dr. David W. Mullins, Jr., Vega
• How to Prosper in a Challenging Environment - Gavyn Davies
• Tactical Asset Allocation using pair strategies - Daan Potjer, ABN AMRO
• ETFs: Moving beyond large cap UK and European equity - Bruce Lavine, BGI
• Asset allocation in a world of lower returns - Rob Arnott, Research Affiliates
• The investment case for gold - Katharine Pulvermacher, World Gold Council
• Investing in Private Equity - Susan Flynn, Coller Capital
• Life Settlements as an Alternative - Larry Alan Simon, Life Settlement Solutions

(more…)