India is flavour of the month – rapid economic growth, booming stock markets and surging valuation multiples – but can international investment banks make decent money there? And can they rely on India to offset the decline in fees from China? A look at the numbers suggests that the answer – at least at the moment – to both questions is “no, not really”. In the first half of 2024, according to LSEG statistics, India investment banking fees were just US$530m – around a 10th of the US$5.6bn IB fees in China and only 1% of global fees. Even Japan has a much bigger investment banking fee pool than India at US$2.3bn, up 7% on the year in the first half. In fact, despite the booming stock market, the India IB fee pool has been rangebound at US$450m–$600m for the last seven years. In contrast, the China IB pool has been above US$5bn every year since 2016 and peaked at almost US$10bn in 2021. Digging deeper To size the relevant market opportunity for international banks in India it is best to dig a little more into the details. In China and India, DCM and syndicated lending are dominated by local institutions – in both countries all the top 10 banks in terms of fees for bond deals are domestic players. But there’s a significant difference: in China debt deals made up 83% of the IB revenue pool; in India it was just 35%. In other words, international banks are scrapping for around 17% of the fee pool in China, and 65% in India. That fee pool is essentially ECM and M&A. So that should be good news for Western banks in India – if they get paid properly. The problem is, they don’t. According to LSEG statistics, first-half 2024 ECM underwriting revenues in India were US$243.8m – up 127% on the year – while China’s ECM underwriting fees were down 75% but nonetheless much larger at US$645.8m. The gap reflects the fact that banks get paid much more for working on deals from Chinese issuers, including those listed overseas or in Hong Kong, than those from India. In China, those ECM fees came from US$26.6bn of deals. In India, its ECM fees came from US$29.5bn of deals. In other words, banks got paid 2.43% in fees for money raised via ECM for Chinese issuers, and just 0.83% for those from India. That is in part a reflection of the deal mix, with activity in India dominated by follow-on offers while China saw several large convertible offerings for dual-listed companies. It is also a cultural preference in India towards having skin in the game – in terms of banks providing financing – as opposed to paying high fees for investment banking advice. Even when it comes to IPOs, the simple story of deal volumes from China falling 82% and those from India nearly doubling disguises the fact that funds raised via IPOs of Chinese companies at US$5.8bn were higher in the first half than funds raised by Indian IPOs at US$4.4bn. And that is despite Indian stock markets being up considerably and trading at more than twice the price-to-earnings multiple of Chinese stock markets and even as, according to Fidelity, eight of Asia’s 20 most dramatic trading debuts in the first half were in India, with the average Indian IPO rising by 61% on the first day of trading. India bulls will suggest that the wild success of these mid-sized listings is likely to encourage a host of US$1bn-plus IPOs, particularly as private markets are not awash with cash. The first of these big-ticket IPOs was Ola Electric Mobility, which listed on August 9 and like most other Indian IPOs this year had a huge first-day pop, rising 20%. What the market is really waiting for, though, is Reliance Industries and the IPO or spin-offs of the huge Reliance Retail and Jio mobile empires. Both businesses have had valuations of around US$100bn and a host of high-profile international investors from private equity and sovereign wealth funds to tech giants. Investment bankers are of course po

Regulators in the US and UK have significantly watered down major elements of final Basel III bank capital rules following a backlash from banks about the severity of earlier proposals, and also admitted they don't want to curtail lending in a global fight for economic growth. Last week, the Federal Reserve and the Bank of England's Prudential Regulation Authority said they had made changes to earlier proposals over how they will implement Basel III rules to reduce the impact of capital requirements for the largest banks. Michael Barr, Fed vice-chairman for bank supervision, estimated the new Basel III plan will increase the capital requirements of major US banks by 9%, less than half the estimated 19% increase in the original plan released last year. It may appear at first glance that US regulators have made major concessions but it doesn’t mean US banks will accept the higher capital levels without a fight. They say the rules are being more harshly applied in the US than in Europe. “There's an old phrase that says 'show them death and they’ll take despair',” Bank of America chief executive Brian Moynihan said at a financial conference in New York organised by Barclays. "I feel that's what we just got." As a result, US banks may find it hard to drop their opposition to any capital increase. “If our capital goes up by 10%, it stops us from making US$160bn of loans we could otherwise make, and those loans would go into small businesses and middle market companies,” Moynihan said, hours after Barr spoke. JP Morgan chief operating officer Daniel Pinto said the devil is in the details. “Obviously, 10% is better than 20%. It's not just the overall number. It's a composition of it, and we have no idea yet what the composition is ... we have no idea what they have changed,” Pinto said at same conference. Endgame fight Global regulators started drawing up stricter capital rules after the 2008 financial crisis in a bid to make banks more resilient and better able to withstand shocks. Basel III rules already in force have massively increased the amount of equity available to absorb losses, and the latest iteration – dubbed Basel endgame or Basel 3.1 – will increase the level again by adjusting how banks calculate their risk-weighted assets in many areas. The changes in the US endgame “re-proposal” cover all major areas of the rules: credit risk; operational risk; and market risk. US mid-sized banks with assets of between US$100bn and US$250bn will be exempt from the endgame changes, except the requirement to recognise unrealised gains and losses of their securities in regulatory capital. The new proposal would reduce risk-weights for residential real estate and retail exposures, and extend the scope of the reduced risk weight for certain low-risk corporate debt, and eliminate the minimum haircut for securities financing transactions. The Fed also backed away from a plan to prohibit banks from using internal models to set capital levels for market risk. With respect to derivatives activities, Barr said the new plan would adjust the capital treatment for client-cleared derivatives activities by reducing the capital required for the client-facing leg of a client-cleared derivative. Wells Fargo bank analyst Mike Mayo said he had expected the US proposals to be scaled back so the capital impact would be 5%–7%, but he still said the reduction to 9% should allow banks to release significant amounts of capital, boosting stock buybacks over the next two years. Backing off Two days after Barr walked back on the US proposals, the UK's PRA said it had made "substantial amendments" in response to feedback and evidence from banks. The most significant changes are to the capital impact for exposures to small and mid-sized companies; infrastructure exposure; trade finance-related activities; and the valuation of residential property. The PRA also adjusted proposals for the "

Oman's state-owned energy investment company OQ has launched its next privatisation, the US$2bn IPO of OQ Exploration and Production, showing rapid progression from the two subsidiaries that listed in 2023 as Oman develops its local exchange. A deal of around US$2bn is a significant step up from the OR288m (US$748m) float of OQ Gas Networks in October, which itself was several times the size of OQ unit Abraj Energy Services' OR90.7m IPO in March 2023 that reintroduced Oman to international investors. OQEP is looking at a valuation of around US$8bn and a dividend yield of 7.5%–8%, according to a banker involved. Investors are largely focused on dividend yield with OQGN and Abraj the main peers alongside other regional comps such as Saudi Aramco. International investors are said to welcome the larger size for the increased liquidity it should provide compared with earlier Omani deals and engagement so far has been 50:50 international and domestic, the banker said. “The conundrum is there is always better feedback from internationals but the majority of demand comes locally,” he said. OQGN priced its IPO at the top of the range and generated OR4bn of demand, or 13.9 times' coverage. The performance since then has been underwhelming, with shares only 3.6% above the IPO price at the end of last week. The IPO was the largest since 2005 when Omantel raised OR292.5m. Abraj shares are up 20% since its IPO. Following Adnoc “It’s a similar route that Abu Dhabi took two or three years ago when you found Adnoc getting different subsidiaries, different business lines to the market in successive deals and it went really well and opened the market after that for the private sector,” said a regional banker away from the deal. Abu Dhabi National Oil Company has floated five units in the past three years, with Adnoc Drilling, fertiliser company JV Fertiglobe, plastics JV Borouge, Adnoc Gas and Adnoc Logistics & Services all listing on the domestic exchange. Most have traded up substantially and have been the backbone of Abu Dhabi's privatisation push that has drawn investor interest and are now giving way to more private sector IPOs. OQEP benefits from Oman’s hydrocarbon resources and strategic location with direct access to global shipping routes and logistics hubs and has expanded production by nearly 14 times from 2009 to 2023. The company has partnered with Shell, TotalEnergies, BP and Eni. OQEP averages 249,000 barrels of oil equivalent per day and has prospective working interest reserves of approximately 0.974 billion barrels of oil equivalent and contingent working interest resources of 820 million barrels of oil equivalent, based on company estimates as of June 30. The portfolio is weighted towards gas. The company has little debt, with leverage of 0.5 times taking into account repayment of a shareholder loan and a pre-IPO dividend. OQEP will offer a first dividend of approximately OR57.7m in December relating to Q3 and around OR57.7m in March for Q4. For 2025 and 2026, there is a base dividend of OR230.7m. Adjusted revenue was OR428m for the first six months of 2024, with adjusted profit before tax of OR179m and adjusted Ebitda of OR317m. OQEP will have a 25% free-float. The deal is split between 60% for institutional investors and 40% for retail. For OQGN, retail took 30%, with 20% going to local institutional investors, 20% to foreign institutions and 30% to anchor investors. HSBC, Natixis, OIB and Sohar International are joint global coordinators. Bank of America, Bank Muscat and EFG Hermes ran the OQGN float. Bank Muscat and EFG Hermes are among the collection agents for OQEP. There is more to come. State-owned shipping and logistics firm Asayad Group is expected to float towards the end of the year or in Q1, with Jefferies and EFG Hermes attached, while another IPO is being prepared for next year.

Bank of America is probably not the first name that springs to mind alongside football, or soccer. Yet the US bank last month agreed a deal as an official sponsor of FIFA World Cup 2026 tournament to become the first global bank sponsor for any FIFA World Cup. The deal comes as BofA is keen to build a stronger brand around the world and marks a statement of intent about its ambitions. “It is absolutely part of a global push. A critically important part of our organisation is our efforts on the international front. We’re in growth mode,” said David Tyrie, chief digital officer and chief marketing officer for BofA. Tyrie said sport is a key area to target, partly because it is live, unpredictable and draws on an audience’s emotions. “Sports is a place where you have human connections. It’s a happy place, it’s about large audiences, it’s about diverse demographics, it’s about authentic live events where you don’t know the answers. That’s sports,” he told IFR in an interview. The men's World Cup is held every four years and is the world's biggest single-sport event in terms of audience. The 2026 tournament is being hosted by three countries for the first time – the US, Mexico and Canada. “The World Cup is religious for the fans, it’s an entirely different beast. It allows us a very powerful place for the emotional connections to build the brand,” Tyrie said. The span of the World Cup is part of the appeal. In 2026 there will be 16 host cities, with 11 in the US, including New York, Los Angeles, Atlanta, Miami and Houston. The tournament is expanding to 48 teams from 32 previously and will feature 104 matches from June 11 to July 19. Win-win? BofA hopes the sponsorship deal opens doors for investment bankers, wealth managers and commercial bankers, as well as the expected mass promotions for consumer bank and credit card customers. Advising sports teams and investors has become big business and spans ownership, investment, stadium financing, raising capital, media rights and advice on how to generate revenue from fans. BofA is one of the leading investment banks in the field alongside the likes of JP Morgan, Goldman Sachs, Barclays and smaller advisory firms such as Raine Group and Inner Circle Sports. The sports and media rights industry is estimated to be worth more than US$400bn, and Bloomberg estimates there was US$25bn of sports-related M&A in 2023, a third consecutive record year. Private equity firms are increasingly big investors alongside billionaire individuals – and US sports franchises and European football clubs are typically top of shopping lists, as shown by the complex £4.2bn takeover of English football club Chelsea in 2022. “This brings opportunities for the entire bank, especially our investment bankers, to deepen our connection with customers and clients globally. It’s such an exciting conversation to have and I hope this will keep some of our competitors awake at night,” Tyrie said. Industry sources said BofA’s World Cup deal is likely to be one of the biggest ever for a single sports event and may have cost US$100m or more. BofA and FIFA declined to comment. FIFA, for its part, is also likely to have been keen to get a well-known US name as partner, as it tries to widen football’s popularity in the US and after the organisation was embroiled in a corruption scandal in 2015 and was criticised for hosting the past two men’s World Cup tournaments in Russia and Qatar. Spencer Fox, a brand strategy consultant based in London, said the deal could be a win-win for BofA and FIFA. “For Bank of America, in a sector disrupted with new fintechs, it gets a boost of energy and a global platform on which to build awareness and engage with a mass audience,” Fox said. “For FIFA, partnering with a brand known for responsibility, stability and consistency brings ref

A major overhaul of the €1.8trn Dutch pension fund industry is set to reverberate across the euro interest rate swaps market, as demand from these prominent users of long-term derivatives declines sharply in the coming years. The Dutch government laid out plans last year to revamp Europe’s largest pension system by 2028 by moving all employees on defined benefit schemes, in which members are guaranteed a certain level of income upon retirement relative to how long they've worked, to a defined contribution system, which forces members to take greater responsibility for building their pension pots. Traders say those changes will upend long-held dynamics in euro swaps markets, where Dutch pension funds have loomed large for years by buying ultra-long-dated hedges to dampen the impact of interest rate moves on their defined benefit schemes. The shift to the new arrangements is expected to trigger a significant repricing of risk across the euro swaps market, which is used in trillions of euros of bond sales and hedging transactions every year, as demand switches towards shorter-dated derivatives. "Dutch pension funds have long been one of the key players in long-term euro interest rate swaps, so this transition is obviously going to impact the euro swaps market in a pretty big way," said Frederic Goulipian, head of euro swaps trading at Natixis. "I’d estimate that Dutch pension funds contribute to more than half of the recurring long-end trades taking place within the euro interest rate swap market today.” Dutch pension funds are among the biggest users of long-dated euro swaps because of how defined benefit schemes, which ING says cover 87% of Dutch pension scheme members, are designed and managed. Future payouts to pensioners in these schemes are fixed, which makes them extremely sensitive to moves in interest rates. The robustness of these pension schemes, meanwhile, is monitored by calculating "coverage ratios" – the difference between the sum of those future payouts and the capital held by a pension fund. Those features encourage pension funds to hedge moves in long-dated interest rates that could affect the value of payouts a scheme makes to its members over the coming decades. Many funds hedge those moves by entering long-dated swaps, typically between 30 and 50 years in length. "Dutch pension funds are probably the biggest player at the long end of the euro swaps curve and are certainly the single biggest industry receiving at the long end of the euro swaps curve," said Steven Montgomery, rates strategist for Europe at BNP Paribas. Sizeable shift Those long-dated hedges won't be necessary under the revamped Dutch pension system as future payouts to pensioners will no longer be fixed. Bond giant Pimco estimates hedging activity on behalf of all Dutch pension funds will fall by about €400m in PV01 terms – a measure of interest rate risk that shows how much the value of a position changes for every basis point move in rates. That's equivalent to €200bn of 30-year swap hedges – or the total amount of interest rate risk from last year's record net supply of European government bonds. Defined contribution schemes will still have some need for euro swaps, though – albeit in smaller quantities and shorter maturities. That is because they will still need to hedge interest rate risk for members nearing retirement who typically want greater certainty over their pension payouts. While about €400m in DV01 (a similar measure of fixed-income market risk) could be unwound for hedges greater than 25 years, an additional €200m–€300m in DV01 may be put in place for hedges shorter than 25 years due to the transition, Montgomery estimated. Analysts said that will have a material impact on the euro swaps market, which is the main reference point used in pricing the €560bn of euro debt that corporates and financial institutions have issued this year. Euro swaps ar