The Riddle of Base Oil Prices

Over the past four to five months, the base oil market has been an enigma. Especially in Europe, the market has been stubbornly immune to factors that should have pushed prices up or down.
For example, when crude and feedstock prices fell below U.S. $90 per barrel for Dated Brent, base oil prices remained high, in some cases rising even higher. Producers cited two factors as justification. First, they claimed that base oil availability was limited.
Second, they said that, although demand was not as strong as in previous years, prices were still related to current raw material costs, which were relatively high.
Eventually, these arguments began to lose credence, and buyers adopted the stance that falling crude and feedstock costs should be reflected in base oil prices. Marketers began to
capitulate when Russian exports of solvent neutral 150, SN 500 and SN 900 from the Baltic and Black seas started to crash. This made distributors and resellers desperate to clear stocks as quickly as possible, in the belief that crude and petroleum product prices would continue falling. 
Sellers of Russian oil were also convinced to take this action due to the lowering of free carrier prices for Russian refinery output. This production appeared to have gone long after some six months of coming back into balance. With the commitment of lower priced material arriving at shore tanks, sellers of these grades slashed prices and consequently dragged the base oil market into free fall.
Price changes of $100 per metric ton over a period of one week were not uncommon during July. And pricing levels for Group I solvent neutrals fell to their lowest levels in nearly five years. Some reported FOB (freight on board) prices for these oils as low as $850 per ton for premium quality production from mainstream refineries in Europe.
These prices had retracted by nearly $400 per ton in a particularly short time. This fueled expectations that the market had bottomed out and that base oil prices would start the climb back to more sustainable levels. However, the products market was still falling, and there was no driver to make prices rise until world events intervened.
When Iran started sabre rattling against Israel and the United States, crude prices suddenly vaulted from $90 per barrel to around $107 per barrel in only two weeks. This alone had the effect of pushing gas oil prices to levels not seen for the previous five months. With gas oil prices overtaking base oil levels, the economics were apparent to all.
Or were they? Around this same time, many base oil producers were approaching the summer vacation season with high inventories. And buyers were staying away, counting on stocks they had built up to see them through the holiday periods in Europe and Middle East. An added element was that both Ramadan and Eid al Fatr came early this summer, coinciding with European vacations. This convergence created a near vacuum in the market, and very little business or trade was transacted.
Even given these circumstances, base oil prices still did not respond to the rising costs for crude, which peaked at about $117 for Dated Brent at the end of August, or to the fact that ICE gas oil reached $104 per ton for September front month trading. Base oil producers no longer appeared to be long in inventory, but one crucial factor was missing: demand.
With virtually no demand throughout the region, few deals were made, and no revisions were added to pricing that could be attached to offers to help lift base oils out of the void. Levels continued to stagnate with many suppliers stating that they had no material to sell. Instead, they preferred to conserve material they had in stock to avoid selling base oils at a loss.
One interesting development for Group I oil during this period was that bright stock suddenly went very long throughout the region. Prices dipped to such an extent that bright stock was being sold at levels below those of heavy neutrals. This anomaly posed problems for producers because production and handling costs for bright stock are higher than those for solvent neutral grades. This temporary situation was resolved when bright stock went short at the beginning of September. At that time, prices went back to levels above those of solvent neutrals – but only in areas where bright stock could be found.
Group II grades were sucked into this price vortex, having to maintain a respectable differential to Group I prices. Availability was stimulated by the situation in the Far East, where demand was exceptionally slack.
This glut was pushed into India and the Middle East. However, with these markets languishing in downturns, there was little success in increasing volumes into these areas. Europe was identified as a possible market for these barrels, and many producers were prepared to compete with Group II prices there to gain market share within mainland Europe. Also, at this time, importers from the U.S. were experiencing supply problems due to production restrictions, which perhaps allowed some Far East sourced imports to enter Europe.
Within Europe, Group III base oils have tended to exist in their own, almost isolated market, with little reference to other grades other than maintaining a hypothetical differential between Group III and Group I solvent neutrals of around $500 per ton. Group III prices have held almost firm throughout 2012 and might have increased had it not been for the ingress of new material – mostly a single, giant facility – from Middle East production. Even though this volume is not for general sale and is being used only by the controlling company, it has had the effect of diluting the Group III market. This is due to fact that the material used previously by the company in question has been released into the general market, changing the scenario from short to balanced – and perhaps even long.
The market in Europe, the Middle East and Africa has traditionally featured a “base oil time lag,” whereby price changes are frequently delayed. But the market has changed, and whilst producers have to recognize and reflect raw material costs, there would appear to be some independence from straight line cost allocation for base oil production.
Perhaps with costs being reviewed less frequently than for other petroleum product groups, refiners are prepared to look on a longer term basis at the contributions that base oil realizations add to the overall slate. For example, base oils produced high netbacks for many months before crude levels started moving around, so perhaps an ethos of swings and roundabouts prevails within the industry.
Recent months have shown once again that base oil prices are driven by a number of complex factors. One cannot rely on them to always behave in ways that are expected.


BY RAY MASSON

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Dallas sees dividends from visa program for foreign investors

Dallas is gaining another laurel for bragging rights in business development.
Local officials say the city is leading the nation in attracting foreign investment through a reinvigorated federal immigration program that gives permanent residency status to wealthy foreigners who put at least $500,000 into local development projects.
The program has raised $119 million here in the past 2½ years, giving a number of local projects a boost at a time when commercial loans were scarce. The money has created 2,380 jobs; funded all or part of seven development projects; and has dispensed 238 EB-5 visas to the investors and their immediate family members, the program’s managers say.
There are more projects in the pipeline and the program will continue to build momentum, said Karl Zavitkovsky, the city’s economic development director.
“Initially you have to build credibility with investors overseas and you have to develop credibility with the builders and developers in Dallas,” Zavitkovsky said. “When you have something that is a great job creator, you have to work hard to build up the pipeline.”
The local project is one of 204 Immigrant Investor Regional Centers overseen by U.S. Citizenship and Immigration Services in 40 states. Nationally, the program has corralled $2.3 billion in foreign investment since its inception in 1990, according to a USCIS spokesman.
Until 2007, though, the EB-5 program approved an average of little more than 300 green cards per year. Since the rules were revised that year, the program has ballooned, approving almost 7,000 green cards in the past 41/2 years, for an average of more than 1,500 a year.
And it’s growing. In the first six months of fiscal 2012, the EB-5 program nationwide has approved 2,101 investors and their families for green cards, which afford permanent residency status.
The Dallas program differs from most others. Many of the other regional centers are focused on finding investors for a single industry or project: housing and real estate in Florida, tourism in Vermont or the film industry in California. But the Dallas center seeks funds for all types of projects.
While the USCIS doesn’t keep a tally of activity at regional centers, Zavitkovsky and Dan Healy, director of the Dallas regional center, said they don’t know of another that is bringing in the numbers of investors attracted here.
The 238 visas obtained through investments in the City of Dallas Regional Center’s first 2½ years represent 5 percent of the total granted nationally during that time. Because many of the other regional centers are formed for a single project or support a single industry, they may not get a successful investor-applicant for a year or more, local and federal officials confirmed.
The benefits
So far, the city’s largest source of investors has been China, where Dallas has a “very active agent” soliciting business from wealthy individuals, Zavitkovsky said. The second-largest source of investment has been Mexico and Latin America, which accounts for about 20 percent of participants, local officials said. Investors from Russia, Europe and other parts of Asia have also participated, bringing to 26 the total number of countries represented.
The city maintains an arm’s-length relationship with the projects by using a third party to help find appropriate and feasible projects and to recruit investors. That role is played by Civitas Capital Management, which operates the Dallas regional center.
The money raised so far has gone to such projects as the conversion of the former Dallas Coffin Co. building on South Lamar Street just south of downtown into a 76-room Nylo hotel, now under renovation and expected to open this summer.
Other projects include a $15 million call center for Encore Enterprises at Inwood Road and Stemmons Freeway. That project was funded by 30 investors, each putting up $500,000.
They also include a nursing home for low-income patients, a multifamily development in Oak Cliff, a mixed-use residential and retail development and the expansion of a restaurant chain.
The attraction of foreign investors also has other benefits, said Healy, who’s also a Civitas managing partner.
“You are bringing in highly motivated entrepreneurs into the country,” Healy said. “They range from well-off to very wealthy.”
Once they learn the area and establish relationships, they are often likely to invest more, he said.
Recruiting investors
In addition to their investment, participants also pay about $50,000 in fees, and some of that goes to the city for administrative costs, Zavitkovsky said.
Of course, the investors expect a return on their investment. Part of Civitas’ role is to ensure the financial feasibility of the projects and to ensure that investors get their money’s worth.
“We’re evaluating projects as a disinterested party,” Healy said. “We’re just looking for projects that will work.”
Most of the applicants are seeking visas to get children into U.S. colleges and universities, Healy said. Others hope to set up a family member to start a U.S. branch of a successful enterprise already established in the investor’s home country.
Nationally, the program requires that visa applicants invest $1 million, or $500,000 in “targeted employment” areas. In Dallas, all of the projects are aimed at areas deemed in need of jobs.
Each investor’s contribution must create at least 10 jobs, a number that is verified after two years of the initial investment. Applicants must otherwise undergo the other background checks that all visa applicants must successfully pass.
The investors are often recruited by agents in their home country or financial institutions who are familiar with the program and offer help in participating as a part of their wealth management services, Zavitkovsky said.
“Wealth preservation is very important” in the recruitment process, Healy said.
The investors are often willing to get a lower return than usual because they are getting other benefits through the program, Healy added.
In some cases, the deals can arrange financing that might be difficult to get otherwise, those involved with the EB-5 program said.
For the Nylo deal, 11 investors chipped in $5.5 million in equity financing, said Jack Matthews, president of Matthews Southwest, the hotel’s developer.
“I don’t know the last time a high-end hotel was built in south Dallas, but I bet it’s been a long time,” Matthews said. “In my opinion, it may change people’s opinion about investing in south Dallas.”
The city usually kicks in additional inducements for the projects. Some of the projects are located in tax-increment finance districts, where the developer receives a portion of the increased property tax brought by the added value to the property the development creates, Zavitkovsky said. Other projects are eligible for federal grants, part of $55 million the feds gave to the city for projects in low-income areas.
Zavitkovsky said that the program occupies about 25 percent of his time and costs the city only his travel time and the salary of an assistant on his staff who speaks Mandarin Chinese.
“It’s rather inexpensive,” Zavitkovsky said, given the benefits.
businessnews@dallasnews.com

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How Much Life Insurance Do You Need?

In Canada, two out of every 1,000 persons age 40 are expected to die in any one year. No one can determine exactly which two will die. However, if all 1,000 paid $100 for the mutual protection, the two that did die would each leave their estate $50,000.
This is the basic premise on which insurance is based. The insurance companies act as the intermediary and holder of these funds until they are paid out. The premiums you pay are based on your perceived risk (age, health, occupation, etc) determined by extensive study on the part of the insurance companies and the amount and type of insurance you may wish to purchase.
Life insurance should be purchased with a view to providing your family with two basic forms of protection:
a) An amount to pay off debts and death-related expenses, and
b) A capital sum for investment to provide immediate and/or future income for your dependents.

How to Determine What Life Insurance You Need

How much will you need?  Every individual is different.  You have different income levels, different
expenses, more or less financial assets built up already and so on.  How much money will your family need?
First they will need some money to bury you and pay off your debts.  Second they will need some ongoing income to replace what you were providing.  On page 15 you will find a worksheet where you can fill in the appropriate amounts.

The first pool of cash will be needed to pay your last expenses and ease your family’s way.  A Last Expense fund should include money for the funeral, legal and accounting fees, and administration of your estate. An amount of $10,000 would be a basic minimum.

You may require a fund to pay any income taxes that are due on your death.  If you have just employment income then there should be few additional taxes.  If you own stocks or investment real estate, Revenue Canada assumes that you sold them the day that you died and there may be taxes owing on any capital gains.

From this first pool of cash you will have to pay off any debts that you have outstanding, including the mortgage.  This will allow your family to continue with their lives without having to worry about continuing to pay for old debts.  You may have mortgage or loan insurance to help pay for your debts, this amount should be listed below under What You Have Now.

If you have children that have not finished their education, then you should set up a fund for this purpose. If this amount is going to be funded as a result of your death, you can be generous.  What was the ideal fulfillment of your goal of educating your children?  Put that amount down for the education fund.

If you do not yet have an emergency fund then you can set money aside for this purpose from your estate. Life is going to be tough enough for your family, no need to burden them further by not having some cash available to pay for basic living expenses.  Set aside between 3 to 6 months of expenses in this fund.

Total up the amount needed in this first pool of cash.

Next look at the continuing income requirements of your family.  How much of your income will your family need to replace?  How will your family replace this income?  Do you expect your partner or children to get jobs or do you want to set aside a lump sum of capital that when invested will replace your income? How long do you want this lump sum of capital to last?

You can look at your Cash Flow Worksheet to see what you contribute towards the family expenses now. This can be reduced by a certain amount because the family will no longer have to feed and clothe you. To this amount you could add an amount for income taxes and subtract the amount of income your family will receive that they do not receive now (i.e. CPP Survivor and Orphan’s benefits, or partner returning to work).
To determine the amount of capital needed to generate the desired monthly income, multiply the monthly income by the appropriate factor for the length of time you wish the income to continue from the following table.

These factors are an estimate to determine the amount of capital required based on an interest rate of 5% and inflation of 3%.
Add this amount to the first pool of cash. This is the total amount of cash that you will have to leave behind for your beneficiaries.

How to Determine What You Have

Where will this money come from?  It usually comes from two sources, the capital you have accumulated and life insurance. What capital do you already have?  Look at your Net Worth Statement, put down what you already have saved in Liquid Assets, Investment Assets, Retirement Assets and Personal Assets (which your family would sell).

Second put down what you already have in life insurance. This may be group life insurance from work or an association, or life insurance on your loans or private life insurance that you have purchased in the past (do not include accident insurance, you cannot guarantee that you will die by way of accident).  Add this amount to what you have saved already.
Subtract the amount that you have available upon death from what you require at death. This is the amount of additional life insurance that you require.

What Type of Life Insurance

Once you have determined how much, if any, life insurance is required, you must decide what type of
insurance to carry.  There are a multitude of products available.  However, when all the window dressing is removed, there are really two types of coverage available, permanent (Whole Life) and temporary (Term).

Term insurance provides protection for a specified period of time.  It may be one year, five years, 10 or 20 years, or to age 65 or 100.  If you do not die within the specified period of time, there will be no payment. This is similar to your car insurance, if you do not have an accident; the insurance payments were “wasted”.
Whole Life insurance provides for permanent protection.  In other words, it will pay out when you die not only if you die within a certain time period.
The type you select will depend on your decision on the benefit provided versus the cost.  While you are unemployed, you may want a term insurance policy to tide you over until your next job.  Then you can apply for group life insurance through your new employer.

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What Happens if You Die Without a Will?

If you do not have a will, each provincial government has an “Intestate Succession Act” which will tell the administrator (appointed by the government) who will inherit your estate.  Do not assume that if you are married, that your spouse would receive your estate.
In Alberta, the Intestate Succession Act divides up your estate according to the following table.

If your wishes will be carried out by the terms of the Intestate Succession Act, then you may not need a will. You should be aware, however, that the cost and time of having the province divide up your estate will be greater than the cost of preparing a will.
Some of the problems that may be created without a will are:
• Your spouse may not receive the desired amount,
• Your children may receive too much too young (their money is held in trust until they reach
the age of majority, then they receive the total amount),
• A common disaster (where both spouses die) may benefit an undesired relative (family of
younger spouse if no children),
• You have no control over which beneficiaries receive which assets,
• Your friends or charities receive nothing,
• There is no planning for tax reduction,
• You have no opportunity to select a guardian for your children.

 What Happens to Assets Not in the Estate

The will is not the only control that you have over your assets when you die.  The will controls just the estate.  Assets held in “joint tenancy” are not part of the estate.  Upon death, these assets would go directly to the survivor.  If your home, bank accounts and investments are in joint names with your partner, then these assets would go directly to your partner.  In the case of bank accounts, it is important that your partner have signing authority. If not, they would own the funds in the bank account but the funds would be frozen for a period of time.
Assets held as “tenants in common” are not the same.  Tenants in common means that each individual
named owns an undivided share.  If you hold any assets as tenants in common, then if you die, your share would go into your estate.  The remainder would continue to belong to the survivor(s).
If you own any assets that have beneficiaries designated, then at your death, these would go directly to your chosen beneficiary.  You can designate a beneficiary on your RRSPs, RPPs and DPSPs.  Upon your death they would not make up part of your estate but go directly to the beneficiary.  You can also designate a beneficiary on your life insurance policies.  But remember, if you change your will, you will probably have to change the beneficiaries on these assets as well.

Probate Fees

If you want to get the maximum amount of your assets into your beneficiaries hands, you will want to
minimize probate fees and taxes.  In Alberta, probate fees start out relatively small but increase as the size of  the estate get larger ($25 for estates of $5,000 or less up to $400 for estates of $250,000 or more).  To reduce probate fees on the estate, you can reduce its size.
You can reduce the size of your estate easily by registering your assets in joint name.  These assets would go around the estate directly to the survivor.  If you designate a beneficiary on your other assets such as RRSPs, RPPs and life insurance, these assets would go directly to the beneficiaries, bypassing the estate.  Some nonregistered insurance products like Guaranteed Investment Annuities and Segregated Funds (the insurance industry’s equivalent of GICs and Mutual Funds) can have beneficiaries designated.
If you give away some of your assets before death, you will reduce the value of the estate.  You could give away your assets directly or by setting up a trust.  If you have real estate, you could give it away and retain a life interest.  There are other, more complicated ways of reducing the size of the estate.

Income Taxes

Income taxes arise from your estate in two ways.  The first is the tax that you pay on income up to your death.  The second is on the income generated by your assets after death, either in your estate or in the hands of your beneficiaries.
When you die, Canada Revenue Agency assumes that you sold all of your capital assets that day, including your cabin at the lake, your rental real estate, all your investment assets and even your personal assets like art, stamp collections etc.  Canada Revenue Agency also assumes that you collapsed all of your tax-sheltered savings plans like RRSPs, RRIFs, RPPs and DPSPs.  These are on top of any income that you have already received during the year.
To reduce the income taxes on death, there are a few simple things that you can do.  First is to designate your spouse as beneficiary on your tax-sheltered savings plans. These can be rolled over into your spouse’s plans without triggering any taxes.  In addition, your executor can make an RRSP contribution on your behalf to your spousal RRSP up to sixty days after the end of the year of your death. 

You can transfer all of your capital assets to your spouse at the original cost.  Doing so avoids the tax on the capital gains until your spouse disposes of them.  However, if you transfer the assets, then you will not be able to use your capital gains exemption.  It would make sense to declare enough capital gains to use up the balance of your exemption and transfer the balance of your assets at original cost.
After your death, any income from your investments will continue to be taxed.  You can reduce this tax by setting up a trust and allocating the income to beneficiaries that are in lower tax brackets (i.e. your children or grand children).  If the inheritance is spent (even to reduce debt) then there will be no investment left to generate income and there will be no taxes owing.
Other, more complicated methods can be used to reduce income taxes on your assets.  Do not allow the planning for reduced probate fees or income taxes to interfere with your initial desires of getting your assets into your beneficiaries’ hands as quickly and as easily as possible.  It may be worth while paying higher probate fees or taxes if you can be more certain that your wishes will be complied with.

Executors

The executor looks after the administration of the estate.  The trustee looks after the administration of any trusts that are created from the estate.  Some of the duties of the executor are:
  Review your will and carry out all the instructions in it;
  Meet with your heirs, lawyers, bankers, brokers and insurance agent;
  Prepare a statement of your assets and liabilities;
  Arrange for probate of the will;
  Sell securities and property or anything else necessary to carry out your wishes;
  Pay your debts, funeral expenses and taxes;
  Prepare and file your final tax return;
  Distribute your estate and legacies.
Being an executor is not usually difficult.  Many people appoint their spouse as executor.  This makes sense as generally the spouse knows the most about your estate.  You can name a co-executor to help your spouse. This may be an older child, brother, friend, lawyer, accountant or trust company.  You should appoint alternate executors in the event that your executor is unable or unwilling to act.  It is probably a good idea to ask an executor if they would act for you before you appoint them, as they can renounce their executorship.
Other considerations to keep in mind when choosing an executor are:
• What is their financial acumen, can they handle the assets that are in your estate?
• What is their age, will they still be able to handle the assets when you die?
• Will they be able to work together?
• Where do they live? If they live outside the province, they may have to post a bond to act as executor.

Trustees

The trustee is usually the same person as the executor, although this is not mandatory.  You may choose to appoint the Guardian of your children as the trustee for their money.  The duties of the trustee are often spelled out in the will.  If the duties are not indicated or if they are not clear, then the Trustee Act of the particular province will apply.  You should give your trustee the power to invest the money to the best of their ability.  They should have to power to pay for the maintenance and education of your children.  You should also give them the power to provide for unexpected expenses.  These powers are not given in the Trustee Act.
You should spell out in your will when each of your children will receive their inheritance from the trust. Will they each receive their share when they reach the age of majority (as is indicated in the provincial Trustee Act, age 18 in Alberta)?  Will you choose to make them wait until they are more “grown up”?  You could stagger their inheritances, giving them one half at age 21 and the other half at 25 or one third at 21, a third at 25 and a third at age 30.  You can make up any distribution you want.

Guardians

A trustee looks after the financial well-being of your children, a guardian looks after the emotional and physical well-being of your children.  Being a guardian is probably a much more important job than trustee.
In your will you can appoint a guardian.  If both you and your spouse die, then the courts could review your will to determine your wishes.  Things to consider when appointing a guardian are:
• Is the guardian an appropriate age - not too young, not too old,
• Does the guardian have children of a similar age as yours,
• Does the guardian have similar views of raising children as yourself, and
• Where does the guardian live.

Power of Attorney

A power of attorney is a legal document that appoints a person or persons to manage your personal and financial property.  If you become incapable of handling your own affairs and do not have an enduring power of attorney, a family member or friend will have to apply to the courts to appoint someone to manage your property.
An ordinary power of attorney comes into effect when you sign it.  It becomes null and void if you become incapacitated.  An enduring power of attorney continues (endures) if you become mentally incapacitated.
There are two types of enduring powers of attorney.  They are an “immediate” power and a “springing” power.  As you might expect, an immediate enduring power of attorney gives your attorney the power to manage your affairs as soon as it is signed and continues if you lose capacity.  You might want to use this type of power of attorney if you are leaving the country for a period of time and you want someone to look after your affairs while you are gone.  Other individuals will use this power to appoint their spouse or another trusted individual to manage their investments.  You should not give a power of attorney to your investment advisor or financial planner in the normal course of business.
A springing enduring power of attorney does not come into effect until you lose capacity.  In the document, you name a person or persons to decide when you have become incapacitated (this could be a spouse, child or family doctor).  The power of attorney springs into effect when that person or persons decides that you are no longer capable of managing your property.
A power of attorney can be changed or revoked at any time prior to you becoming mentally incapacitated.

Personal Directive

A personal directive is a legal document that appoints a person or persons to make personal decisions for you in the event that you cannot make your own decisions.  That person (called an agent) can make decisions on your behalf relating to any or all of the following:  your health care; where you live; with whom you live and associate; your participation in social, educational and employment activities; and legal matters that do not concern your property.
You may choose to appoint your spouse, friend or children to be your agent or agents.  You can name
alternate agents in case your primary agent is unable or unwilling to act for you.  You can specify when the personal directive will come into effect.  If that is to be when you lack capacity, then you should identify who will make that determination.  For instance, the decision could be made by your agent (possibly your spouse) and your family doctor acting together.  If you do not specify a person, then two medical service providers can bring the personal directive into effect.

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Diamond Bank introduces new mobile banking truck service

Nigeria based commercial lender Diamond Bank has introduced a new mobile banking truck service, known as Diamond–in–Motion, with an aim to offer banking services right at the customers’ door step.
Targeting existing as well as potential customers, the new service has initially been rolled out at its corporate headquarters in Lagos and will gradually be launched in other parts of the country.
The new service allows customers to open new accounts, pay bills, save money, use ATM as well as make cash/cheque deposits and withdrawals.
Diamond Bank proposition and liabilities head Olumide Akindele said that the new initiative is part of the bank's strategy to take banking to the customers, enabling them to carry out transactions with ease.
In order to launch the service across the country, the lender is also planning to purchase approximately 250 mobile banking trucks.
Designed to go anywhere and in accordance with the Central Bank of Nigeria's (CBN) cashless policy, the mobile van is fully secured for both those working in it as well as the money in transit.
Incorporated in 1990, Diamond Bank provides financial products and services in retail, corporate and investment banking.

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Sterne Agee adds new head for depository investment banking

US based privately-owned investment banking and brokerage firm Sterne, Agee & Leach has appointed Daryle DiLascia as the new senior managing director in charge of depository investment banking affairs for financial institutions and investment banks.
Working from the company's New York office, DiLascia will also oversee the firm's depository investment banking initiatives.
Prior to accepting the current role, he was working with Keefe Bruyette & Woods (KBW) as executive vice president & co-head of equities.
Having spent over 16 years with KBW, he spent the past five years focused on capital raising, primarily within the regional and community banking sector.
He was involved in private placement transactions, including recapitalizations and opportunistic capital related to mergers, acquisitions and FDIC-assisted deals.
Commenting on the DiLascia appointment, Sterne Agee equity capital markets executive managing director Ryan Medo said that DiLascia deep experience and business intelligence will benefit its existing and future clients.
Formed in 1901, Sterne Agee Group employs 1,300 staff in 47 offices in 22 states and offers various financial services through its subsidiaries.

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MainSource Bank acquires American Founders Bank Branch

US based community lender MainSource Bank has completed the acquisition of American Founders Bank branch in Shelbyville, Kentucky, for an undisclosed sum.
On completion of the transaction, which was inked in August this year, the purchaser will get nearly $35m in deposits and $27m in selected loans, the bank said.
The acquisition of branches will enable the acquirer to strengthen its footprint in Kentucky and Shelbyville regions.
The lender currently manages four offices in Mercer, Franklin and Anderson counties in Kentucky.
MainSource Bank president and chief executive officer Daryl Tressler said this acquisition is a strategic opportunity for the company to expand relationships in Kentucky markets.
Headquartered in Indiana, MainSource Bank trades as a banking subsidiary of $2.8bn MainSource Financial, and manages 77 full-service offices across Indiana, Illinois, Kentucky and Ohio region in US.
As of 31 December 2011, American Founders Bancorp had assets of $380m and manages seven financial centers, including two in Lexington, two in Louisville, and one each in Shelbyville, and Kentucky, through its banking subsidiary.

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BofA to dispose of Japanese private banking JV stake to Mitsubishi UFJ BBR Staff Writer

Bank of America Merrill Lynch (BofA) has agreed to dispose of its stake in Japanese private banking joint venture (JV) to Mitsubishi UFJ Financial Group, as part of its strategy to focus on global banking business.
Under terms of the agreement, BofA will transfer all of the shares, which represents 49.02% of the JV, to the Bank of Tokyo-Mitsubishi UFJ, and Mitsubishi UFJ Securities Holdings.
The transaction, which is expected to complete on 26 December, would be valued at approximately JPY40bn ($487m).
Following the sale of JV, formed by Merrill Lynch and Mitsubishi UFJ in 2006, BofA will continue to provide products and business support to the private banking business in the country.
The joint venture between BofA and MUFG had operating revenues of JPY25bn ($298m) in the year March 2012 and net profits of JPY6.8bn ($81m).
In August this year, the US bank inked a deal with Swiss private bank Julius Baer to dispose of its unprofitable non-US wealth management business.

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SEC penalizes hedge fund manager for insider trading in Chinese bank stocks BBR Staff Writer

The US Securities and Exchange Commission (SEC) has sued Sung Kook ‘Bill’ Hwang, the founder and portfolio manager of Tiger Asia Management and Tiger Asia Partners, over insider trading by short selling three Chinese bank stocks.
According to the SEC's complaint filed in federal court in Newark, New Jersey, the accused conducted a pair of trading schemes involving China Construction Bank and Bank of China stocks and earned $16.7m in illicit profits.
The SEC has also sued Raymond Y H Park for his involvement in the above said schemes as he acted as head trader of the two hedge funds Tiger Asia Fund and Tiger Asia Overseas Fund.
SEC New York regional office associate director and Enforcement Division's Market Abuse Unit deputy chief Sanjay Wadhwa said Hwang betrayed his duty of confidentiality traded ahead of the private placements and deceived his investors.
As per settlement pending court approval, Hwang, Tiger Asia Management, and Tiger Asia Partners have agreed to collectively pay $19,048,787 in disgorgement and prejudgment interest.
Additionally, each of them has agreed to pay a penalty of $8,294,348 for a total of $44m to settle the charges.
Park also has agreed to pay $39,819 in disgorgement and prejudgment interest, and a penalty of $34,897.

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Canadian Household Finances and the Housing Market

The most important domestic risk to financial stability in Canada continues to stem from the elevated level of household indebtedness and stretched valuations in some segments of the housing market. These fragilities could themselves trigger financial stress or significantly amplify the adverse
effects of other shocks on the financial system.
In the past six months, the growth of household credit has continued to moderate, although credit still increased at a faster pace than disposable income. As a result, the aggregate debt-to-disposable-income ratio has risen further. The Bank’s stress-test simulations continue to suggest that households are vulnerable to adverse economic shocks. In the housing market, sales of existing homes have declined, owing in part to changes in mortgage insurance rules, and the growth in house prices has slowed. However, the ongoing strong rates of construction, particularly of multipleunit dwellings in some regions, have increased concerns about future stock imbalances. In this context, there are two dimensions to this risk: on the one hand, a rebound in housing-market momentum may cause a further buildup of imbalances, while on the other hand, the current moderation in the housing market may turn into a more severe correction.
Overall, the Governing Council judges that the risks associated with high levels of household debt and housing market imbalances are elevated and broadly unchanged since June.

Household indebtedness continues to rise

Revised National Balance Sheet Accounts (NBSA) data from Statistics Canada show higher household indebtedness in recent years—as measured by the debt-to-disposable-income ratio—than in the previous series. For the reasons outlined in Box 1, this information suggests that vulnerabilities in the household sector are marginally higher than estimated earlier.
Data for the second quarter show that the household debt-to-disposableincome ratio increased by another 1 1/2 percentage points to 163 per cent,26 while the aggregate credit-to-GDP gap remained high (Chart 15).

The latest monthly data on total household credit published by the Bank show that the 3-month annualized growth rate has slowed from 5.5 per cent at the time of the June FSR to about 4 per cent in October (Chart 16), owing to a moderation in the growth of mortgage credit and continued low

growth in consumer credit. While the underlying trend may be somewhat higher than the recent growth rate, the new information shows a continuation of the downward tendency since 2010. The trend decrease in credit growth reflects a number of factors, including the pulling forward of housing activity to earlier periods because of greater affordability, as well as the cumulative effects of changes to mortgage insurance rules (Box 2) and the tightening of mortgage underwriting guidelines.
Looking ahead, the Bank expects the underlying trend in credit growth to moderate further, since housing activity is projected to move back in line with demographic demand. This view is consistent with the debt-to-disposable-income ratio stabilizing over the next couple of years.
In terms of loan performance, mortgage and consumer loans in arrears
declined in the second quarter of 2012, although they remain above precrisis
levels (Chart 17).

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Umpqua Bank opens new homebuilder finance division

US based Umpqua Bank has launched a new homebuilder finance division to help expand its commercial real estate businesses in the Pacific Northwest.
The new group will offer construction and development loans to Oregon- and Washington-based residential regional homebuilders and developers.
The lender has also appointed Kelly Warter to serve as senior vice president and homebuilder finance manager of the new venture.
Based in Seattle and reporting to John Swanson, senior vice president and head of Umpqua Bank's commercial real estate division, Warter will manage operations, such as expansion of products and portfolios.
The bank has also selected Lisa Woodruff, as the firms' senior assistant relationship manager, and Sheneil Kliewer as senior loan administrator.
Umpqua Bank is located between San Francisco and Seattle, along the Oregon and Northern California Coast, and in Central Oregon and Northern Nevada.

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Greece launches bond buyback in effort to cut national debt

ATHENS, Greece - Greece plans to spend up to €10 billion ($13 billion) in a bond buyback program that it hopes will help stabilize its mountainous debt, the government revealed Monday.

The buyback is part of efforts to reform Greece's moribund economy and reduce its debt to sustainable levels, and is among steps the country is taking to secure the disbursement of vital international rescue loans.
If implemented on time, the new measures "are positive developments, which create plausible expectations of a recovery of the Greek economy," the Bank of Greece said in an interim report on monetary policy released Monday.
"This outcome, however, hinges upon a consistent implementation of all the measures legislated, together with policies that will speed up the onset of recovery, including a broader program of structural reforms," it warned. "Any delays will push the recovery back, with consequences that will be far more severe than anything that has so far happened."
The bond buyback was agreed in a meeting of eurozone finance ministers in Brussels last week, which also approved the release of a critical €44 billion ($57 billion) installment of rescue loans from the International Monetary Fund and the other 16 European Union countries that use the euro.
It is hoped the buyback will shave about €20 billion ($26 billion) off the country's debt. It comes less than a year after private holders of Greek debt agreed a big writedown in the value of their Greek bonds.
Under the buyback program, private holders of Greek bonds, such as banks, pension funds and other investors, have until Friday to register their interest in participating. The sale will be conducted by what is known as a Dutch auction, in which prices start high and then decline.
There are 20 series of outstanding bonds eligible for the scheme, which will command different prices depending on the bond maturity, the Public Debt Management Agency said. Greece has set a minimum range of 30.2 per cent to 38.1 per cent of the bond's face value, and a maximum of between 32.2 per cent and 40.1 per cent, depending on the bond issue. The buyback should be completed by Dec. 17.
The scheme is expected to be of particular interest to investors who bought the bonds on the secondary market at far cheaper prices than their original value — over the past few months, some Greek bonds have hit as little as 11 per cent of their face value.
Greek officials are to brief eurozone finance ministers on details of the scheme when they meet in Brussels later Monday.
Greece has been dependent since May 2010 on international rescue loans from the IMF and its partners in the euro. The funds have prevented the country going bankrupt and possibly leaving the euro.
In return, Greece has had to take drastic measures to reform its economy, including slashing pensions and salaries, and increasing taxes. But the measures have not had the effect Greece's creditors had hoped, with a worse-than-expected recession now heading into its sixth year and undermining efforts to make the country's debt sustainable.
The Bank of Greece projected that the country's economy would contract by more than 6 per cent of gross domestic product this year, and by a further 4-4.5 per cent next year. Unemployment, currently at an annual average of just over 23.5 per cent, is expected to exceed 26 per cent in 2013 and 2014.
"A recession of this intensity and duration is unprecedented in Greece's peacetime history and has taken a heavy toll not only on incomes, but also on potential output and social cohesion," the central bank's report said.
 By Elena Becatoros, The Associated Press | The Canadian Press – Mon, 3 Dec, 2012 9:37 AM EST

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