NEWSLETTER of August 21, 2020

The following content has been added at finexpert:

McKinsey & Company
THE FUTURE OF PRIVATE BANKING IN EUROPE
In 2019, European private banks had to accept lower profits for the second year in a row despite strong gains on the financial markets. Many top executives shied away from necessary operational adjustments, although low growth and rising costs gnawed away at profits. In addition to challenges, the current pandemic has created new problems, such as increasing customer dissatisfaction and operational difficulties due to the home office situation. One in five customers of European private banks has already transferred money to another provider this year, while one third of clients expressed dissatisfaction with service standards. McKinsey's latest analysis, which covers 102 private banks in Western Europe, shows a 1.5 percent drop in profits last year to 13.3 billion euros. >more

Bain & Company
HÖCHSTE EFFIZIENZ IN DER TIEFSTEN REZESSION: WIE VERSICHERER DIE NEUE NORMALITÄT MEISTERN
The worst recession in decades, interest rates close to zero over a long period of time and ever faster digitalization: the business model of insurers is currently facing several major challenges. The corona pandemic alone and the global economic crisis it has triggered are forcing insurance companies to act. Against this background, a structural and permanent reduction in costs in the double-digit percentage range will become a decisive lever for sustainable success in the coming years. Traditional cost-cutting programs are reaching their limits, especially since they often fail to produce the desired results across all industries. >more

Bain & Company
REVERSING THE WINNER'S CURSE OF THE IPO
According to the bain analysis, two out of three new issues perform weaker than their respective peer group - regardless of region, sector or previous owners. However, there are significant differences between different industries and countries. Healthcare and retail stocks, in particular, lag well behind their benchmarks. Commodity and energy stocks, on the other hand, suffer only relatively small losses on average. >more

Mergermarket | Aon
GLOBAL RISK IN REVIEW 2020
Mergermarket is pleased to present the quarterly Risk in Review 2020 report, published in association with Aon’s Transaction Solutions team. For this report, Aon commissioned Mergermarket to interview global M&A insurers and managing general underwriters to learn their views about the risks and challenges in the year ahead. The coverage includes exclusive data exploring regional, deal size and sectoral variations as well as insights on claims, a potential hardening market and premiums, positions and policies. >more

TRADEOFF THEORY AND LEVERAGE DYNAMICS OF HIGH-FREQUENCY DEBT ISSUERS
B. Espen Eckbo, and Michael Kisser
2020
We test whether high-frequency net-debt issuers (HFIs) - public industrial companies with relatively low issuance costs and high debt-financing benefits - manage leverage towards long-run targets. Our answer is they do not: (1) the leverage-profitability correlation is negative even in quarters with leverage rebalancings, (2) the speed-of-adjustment to target leverage deviations is no higher for HFIs than for low-frequency net-debt issuers, and (3) under-leveraged HFIs do not speed up rebalancing activity in significant investment periods. Thus, even in the subset of firms most likely to follow dynamic tradeoff theory, the theory does not appear to hold. >more
 

THE EFFECT OF REGULATORY CONSTRAINTS ON FUND PERFORMANCE: NEW EVIDENCE FROM UCITS HEDGE FUNDS
Juha Joenväärä, and Robert Kosowski
2020
This paper examines the effect of regulatory constraints on fund performance and risk by comparing conventional and UCITS hedge funds. Using a matching estimator approach, we estimate the indirect cost of UCITS regulation to be between 1.06% and 4.05% per annum in terms of risk-adjusted returns. These performance differences are likely to stem from UCITS constraints such as those governing eligible assets, diversification, and short selling, and cannot be explained by differences in redemption terms or level of leverage. We confirm that our performance results are not driven by management company characteristics, fund manager characteristics or unobserved confounder bias. >more