LOOSE CHANGE

Malaysia's Bank Negara last week adopted measures which favour the country's strongest commercial banks at the expense of their weaker competitors. Bank Negara apparently hopes that its new preferential terms will spur mergers between weaker banks in a "second tier" or with ten "first tier" banks. Under the new measures, first tier banks can issue negotiable instruments of deposit of up to five times their capital funds, compared with three times previously. First tier banks are also allowed to set up branches, subsidiaries and representative offices abroad.

NationsBank has assembled a new risk management advisory team to help its clients hedge the market risks of their foreign exchange investments, according to FX Week's sister publication Risk Management Operations' July 29 issue. The risk group is headed by Dick Ward, NationsBank's senior vice president of client advisory services and technology. Ward will oversee five risk group staff, three based in London and two in Chicago. David Napalo, a vice president and risk management adviser in the bank's Chicago office, says the new group's main purpose is to "work with our foreign exchange sales team to deliver the most cost effective risk management solutions" to NationsBank clients. "That might involve an array of foreign exchange products and it might involve cross-commodity hedging and portfolio approaches to currency exposures," he says. The idea of offering this kind of consultancy started a year ago, says Jim Kamphoefner, who staffs the team's Chicago office along with Napalo. Two additional bank vice presidents, Charlie Brown and Dave Clarke, will work in the London end of the risk group. Brown was formerly at Deutsche Morgan Grenfell while Clarke was at SBC.

Scotiabank is the first Canadian bank to receive approval from the Malaysian government to open a branch in the offshore financial centre of Labuan. The branch is scheduled to open in November and will provide a broad range of services, including foreign currency loans, trade finance and private banking to both residents and non-residents of Malaysia. It will also do business with medium and large corporations operating in the area.

Salomon Swapco last week breached the $150 billion level in total outstanding notional of fixed income, foreign exchange and equity derivatives. Over the last two years, outstanding notional has grown at a rate of $1 billion per week. Swapco also announced last week that it has entered into Isda Master Swap Agreements with 240 clients, consisting primarily of highly-rated sovereigns, government agencies, corporates and financial institutions.