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ContactSeptember 22, 2009
Will Standard Chartered Be the First Foreign Company to List on an Indian Exchange?
According to the Wall Street Journal:
U.K.-based financial-services company Standard Chartered PLC is expected to file paperwork with Indian securities regulators as soon as this week to become the first foreign company to list its shares on an Indian stock exchange, according to people familiar with the matter.
Posted by Anupam Chander on September 22, 2009 at 08:53 PM in Globalization, International Finance | Permalink | Comments (0) | TrackBack
October 29, 2008
What Can Constitutional Law Learn from Corporate Law?
In 2003, I argued in the Yale Law Journal that constitutional law can learn much from corporate law with respect to the protection of minorities. The Yale Law Journal has now revisited my argument in Minorities, Shareholder and Otherwise, by inviting three leading scholars--Steve Bainbridge, Richard Delgado, and Kevin Johnson to comment on the piece. I introduce this online symposium and also respond to the comments.
The Yale Law Journal has now published an online symposium on my paper through its Pocket Park, with an introduction and a response by me.
Posted by Anupam Chander on October 29, 2008 at 08:29 AM in International Finance | Permalink | Comments (1) | TrackBack
October 05, 2008
Is a Lifeline Offer Enforceable, When It Comes for a Financial Institution?
In its merger arrangements with Wachovia, Citi required Wachovia to sign an "exclusivity agreement," which Citi is now accusing Wachovia of breaching.
According to the Financial Times, the exclusivity agreement provides in pertinent part as follows:
Wachovia “shall not ... solicit, initiate or take action to facilitate or encourage the submission of any acquisition proposal [or] enter into or participate in any discussions or negotiations”.
Wachovia's board has now snubbed Citi, preferring a higher offer from Wells Fargo. According to Wachovia, all Citi now has to do is trump Wells' offer.
But what of future white knights that come to the rescue of a financial institution at risk of failing? If Wachovia is allowed to walk away, will companies be less willing to promise mergers in the future with vulnerable financial institutions?
The New York Times makes the same observation:
The litigation could put regulators in a tough spot. The Wells Fargo deal may be better for taxpayers, but if it succeeds, in the future other financial institutions may not be willing to help the government, as Citigroup did, because of the risk that they might not reap the anticipated benefit.
Link: Citigroup Says Judge’s Order Suspends Wachovia Deal - NYTimes.com.
A few questions:
1. Did Wachovia violate the exclusivity agreement?
2. Did Wells Fargo tortiously interfere with Wachovia's contract with Citi?
3. If either 1 or 2 above, then what is the remedy? Should the damages be limited to the additional amount of money that Wachovia is demanding to consummate the merger with Citi? (I realize that we don't really know that amount, because a higher Citi offer will likely be met by yet another trumping offer by Wells Fargo, and on and on.)
4. Was Wachovia vulnerable to failing, had it not been for Citi's public merger offer? Would depositors have withdrawn funds from Wachovia, or institutional counterparties from deals with Wachovia, including short-term funding?
5. Will a failure by Citi deter future rescuers, or simply cause them (a) to offer better deals from the get-go, or (b) more tightly contractually locked in deals (with the possibility that these might face scrutiny from a corporate governance perspective)?
Posted by Anupam Chander on October 5, 2008 at 03:30 AM in International Finance | Permalink | Comments (0) | TrackBack
September 25, 2008
A Critique of the Paulson Plan
A Plan for Addressing the Financial Crisis <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1273241>
by Lucian Bebchuk
Download Paper<http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1273241>
Below please find the abstract of the paper.
Abstract: This paper critiques the proposed emergency legislation for spending $700 billion on purchasing financial firms' troubled assets to address the 2008 financial crisis. It also puts forward a superior alternative for advancing the two goals of the proposed legislation – restoring stability to the financial markets and protecting taxpayers.
I show that the proposed legislation can be redesigned to limit greatly the cost to taxpayers while doing much better in terms of restoring stability to the financial markets. The proposed redesign is based on four interrelated elements:
• No overpaying for troubled assets: The Treasury's authority to purchase troubled assets should be limited to doing so at fair market value.
• Addressing undercapitalization problems directly: Because the purchase of troubled assets at fair market value may leave financial firms severely undercapitalized, the Treasury’s authority should be expanded to allow purchasing, again at fair market value, new securities issued by financial institutions in need of additional capital.
• Market-based discipline: to ensure that purchases are made at fair market value, the Treasury should conduct them through multi-buyer competitive processes with appropriate incentives.
• Inducing infusion of private capital: to further expand the capital available for the financial sector, and to reduce the use of for public funds for this purpose, financial firms should be required or induced to raise capital through right offerings to their existing shareholders.
Compared with the proposed legislation, the alternative proposal put forward in this paper would provide a far better way to use taxpayers’ money to get the financial sector out of its current predicament.
Posted by Anupam Chander on September 25, 2008 at 08:00 AM in International Finance | Permalink | Comments (0) | TrackBack
September 24, 2008
$700,000,000,000
Maybe to better understand the magnitude of figures, we should endeavor to write them out, rather than using shorthand words. To my eye, $700,000,000,000 might seem a bit more daunting than $700 billion. That's 7 followed by 11 zeros.
Posted by Anupam Chander on September 24, 2008 at 09:50 AM in International Finance | Permalink | Comments (3) | TrackBack
September 17, 2008
Comparing 2008 to 1997/98 Asian Financial Crises
Link: Abroad, Bailout Is Seen as a Free Market Detour - NYTimes.com.
In parts of Asia, the bailouts stirred bitter memories of the different approach the United States and the International Monetary Fund adopted during the economic crises there a decade ago.When the I.M.F. pledged $20 billion to help South Korea survive the Asian financial crisis of the late 1990s, one of the conditions it imposed was that the Korean government allow ailing banks and other companies to collapse rather than bail them out, recalled Yung Chul Park, a professor of economics at Korea University in Seoul, who was deeply involved in the negotiations with the I.M.F.
While Mr. Park says the current crisis is different — it is global rather than limited to one region — “Washington is following a different script this time.”
“I understand why they do it,” he added. “But they’ve lost credibility to some extent in pushing for opening up overseas markets to foreign competition and liberalizing economies.”
Posted by Anupam Chander on September 17, 2008 at 10:02 PM in International Finance | Permalink | Comments (0) | TrackBack
May 21, 2008
U.S. Mortgage Crisis Loans Priced
Link: BBC NEWS | Business | UBS sells loans in cut-price deal.
Swiss bank UBS has sold loans - with a nominal value of about $22bn - to fund management group Blackrock for $15bn....The assets being sold include sub-prime, prime mortgage-backed securities and Alt-A (a grade of US mortgage debt that is just a bit better than sub-prime).
Posted by Anupam Chander on May 21, 2008 at 08:41 AM in International Finance | Permalink | Comments (0) | TrackBack
April 03, 2008
"The last days of Bear Stearns"
Link: The last days of Bear Stearns - Mar. 31, 2008.
The Fortune Magazine story offers a day-by-day account of the events precipitating the rescue of Bear Stearns.
Posted by Anupam Chander on April 3, 2008 at 04:44 AM in International Finance | Permalink | Comments (0) | TrackBack
March 25, 2008
SEC Announces Major Steps towards Recognizing Foreign Securities Regimes
Posted by Anupam Chander on March 25, 2008 at 12:30 AM in International Finance | Permalink | Comments (0) | TrackBack
March 17, 2008
Abu Dhabi Sovereign Wealth Fund Adopts Code of Conduct
Link: Abu Dhabi Sets Investment Code - WSJ.com.
In a three-page letter sent to U.S. Treasury Secretary Henry Paulson and other Western finance officials last week, Abu Dhabi also spelled out for Western finance officials a set of principles that it says guides its investing.... In the letter, Yousef Al Otaiba, Abu Dhabi's director of international affairs, writes that the emirate "has never and will never use its investments as a foreign policy tool." Instead, Abu Dhabi entities "have always sought solely to maximize risk-adjusted returns," the letter says.But Abu Dhabi also warns against blocking deals that could be important for the health of the global economic system. The emirate wants "to ensure that financial markets remain open, that investors that play by the rules are not discriminated against, and that the regulatory process remains transparent and predictable," the letter says.
... Instead, Abu Dhabi calls its investment entities "predominantly passive investors" that favor "small stakes in companies that involve no control rights, no board seats, and no involvement in the management or direction of firms." But it doesn't rule out changing tack in the future.
... The Abu Dhabi Investment Authority has been especially secretive. It was set up more than 30 years ago to invest the Persian Gulf emirate's oil wealth. It is managed by a team of local and expatriate money managers but also relies heavily on outside fund managers and advisers. In its letter, Abu Dhabi said that 80% of ADIA's funds are managed by outside firms.
Estimates of ADIA's portfolio range from $500 billion to $900 billion.
Posted by Anupam Chander on March 17, 2008 at 07:59 PM in International Finance | Permalink | Comments (0) | TrackBack
