Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Draghi: Eurozone will decline without vital productivity growth

It’s productivity, stupid. European Central Bank president Mario Draghi has become the latest major policymaker to warn of the long-term economic damage posed by chronically low productivity growth, as he urged eurozone governments to take action to lift growth and stoke innovation. Speaking in Madrid on Wednesday, Mr Draghi noted that productivity rises in the […]

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Currencies, Equities

Scary movie sequel beckons for eurozone markets

Just as horror movies can spook fright nerds more than they expect, so political risk is sparking heightened levels of anxiety among seasoned investors. Investors caught out by Brexit and Donald Trump are making better preparations for political risk in Europe, plotting a route to the exit door if the unfolding story of French, German […]

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Barclays: life in the old dog yet

Barclays, a former basket case of British banking, is beginning to look inspiringly mediocre. The bank has failed Bank of England stress tests less resoundingly than Royal Bank of Scotland. Investors believe its assets are worth only 10 per cent less than their book value, judging from the share price. Although Barclays’s legal team have […]

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Banks, Financial

Banking app targets millennials who want help budgeting

Graduate debt, rent and high living costs have made it hard for millennials to save for a house, a pension or even a holiday. For Ollie Purdue, a 23-year-old law graduate, this was reason enough to launch Loot, a banking app targeted at tech-dependent 20-somethings who want help to manage their money and avoid falling […]

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Categorized | Financial

Debt fund trio raise $73bn in five years

Posted on August 31, 2014

The top three private debt funds raised more than $73bn in the past five years, underlining the appetite for alternative credit at a time when banks are under pressure to shrink their balance sheets in the wake of the financial crisis.

According to a Private Debt Investor survey, the top fund raiser was Dallas-based Lone Star Funds, which collected $28bn from investors including major pension funds, followed by Oaktree Capital Management with $23bn and Apollo Global Management at $22bn.

    Most of the 30 funds included in Private Debt Investor’s list are distressed specialists and only one in the top 10, fifth-placed M&G Investment Management of the UK, is based outside the US, illustrating how little risk capital there is beyond US shores. Together the 30 funds raised a total of $318bn over the past five years.

    The total is unchanged from the past survey a year ago, demonstrating how distressed debt funds are continuing to draw new investor money even as the financial crisis eases.

    Lone Star and its peers have benefited as banks have come under pressure from regulators to sell assets to boost their capital ratios. Lone Star, founded by John Grayken in 1995, has bought several loan portfolios from Germany’s Commerzbank, including its UK real estate portfolio in partnership with Wells Fargo, and its Spanish loan portfolio, together with JPMorgan.

    Similarly Oaktree bought a shipping loan portfolio from the UK’s Lloyds bank.

    Apollo, which topped the list last year, dropped to third place for the period from January 2009 to the start of June 2014. However, Apollo has $106bn in total credit assets when debt investments are more broadly defined.

    The methodology that Private Debt Investor uses includes investors in the debt of private companies, leveraged buyouts, infrastructure and real estate. But it excludes high yield funds, hedge funds that trade debt but do not hold it for any period, and collateralised loan obligations managers.

    Jim Zelter, head of Apollo’s credit business, said growth in the alternative credit industry was driven by institutional investors seeking diversity, which ranged from yield to opportunistic.

    While distressed investors enjoyed tailwinds from the financial crisis, zero interest rates have meant that in recent years the debt burden of even highly levered companies has become easier to bear.

    The opportunity to invest in companies with unsustainable balance sheets has shrunk – at least for the time being, leading Oaktree, for example, to actually return money to investors.

    It also focuses on capital raising in the past five years so does not necessarily indicate market power.

    Pimco is included at number 17, while BlackRock, the world’s largest fund manager, does not appear at all. Neither does Centerbridge Partners, which along with Oaktree, Apollo and Blackstone, is regarded as a specialist distressed debt investor.

    Goldman Sachs is the only bank to appear on the list.