Breaking: Saxo Bank Boosts Its Capital Base With €77.5 mln
The firm has issued €46.25 million in notes and raised €31.25 new equity capital from Alternative Investments Fund Manager CarVal
According to an announcement by Saxo Bank, the Danish multi-asset brokerage has strengthened its capital base by issuing convertible notes and raising equity capital. The Tier 2 Notes which the company sold are valued at €46.25 million ($49.3 million) and the new equity capital raised totals €31.25 million ($33.35 million).
The issues have been taken by CarVal Investors, a global alternative investment fund manager with more than $10 billion under management. The company purchased the notes when investing in the Convertible Tier 2 and became a minority shareholder in Saxo Bank by subscribing to shares equaling to 2.5% of the share capital of the Danish bank before the issue.
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The investment is testament to the trust in the bank’s ability to capitalise on significant growth opportunities
Commenting on the successful capital raising effort, the co-CEOs and co-founders of Saxo Bank Kim Fournais and Lars Seier Christensen, said, “In the process of exploring opportunities in the market, we found a combination which allows us to both issue additional capital and raise equity capital which will benefit the Bank, the shareholders, investors and clients.”
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“This framework enables Saxo Bank to not only meet potential future capital requirements, but also to consolidate our market position as a solid industry player. The investment is testament to the trust in the bank’s ability to capitalise on significant growth opportunities. We welcome CarVal Investors as new shareholders and note owners,” they concluded.
Saxo Bank A/S and Saxo Bank Group’s regulatory capital ratio are 22.8% and 19.0% respectively
In the aftermath of the Swiss National Bank’s move to remove the floor under the Swiss franc, Saxo Bank has announced that it faced losses of up to $107 million in credit exposure. The company has since taken steps to recover some of the lost funds. The €77 million ($82 million) capital boost which the company announces comes to solidify the company’s core tier one capital ratio.
The valuation deriving from the equity stake taken by CarVal Investors values the Danish multi-asset brokerage at about €1.25 billion ($1.33 billion).
Following the issues Saxo Bank A/S and Saxo Bank Group’s regulatory capital ratio are 22.8% and 19.0% respectively, while the estimated solvency need is 13.8% and 12.8% respectively.
I thought the valuation of Saxo was once close to 3 billion, or am I wrong?
The whole “singularity” concept is grossly overhyped and moderately ridiculous. The notion of such technological dominance in decision making assumes perfect information, instantaneous interpretation of new information, a single perfect interpretation and view of that information, and a lack of conflict in the value of holding different assets over different timescales. More importantly, it ignores the impact of liquidity limits and differing goals of market participants. Sometimes participants will be more interested in retaining wealth than in return on assets and vice versa. The last obstacle that technology cannot readily overcome is financial forecasting. We’ve seen just how bad economists… Read more »
In defence of the concept, I think the point speakers were trying to make is that it’s time for a debate on the way markets are changing with respect to how to seek alpha considering the tech reality of markets, and some of the ethics surrounding that tech. Thanks for adding your voice to that debate!
Good article, this is an interesting subject. As to AI, there isnt really such thing, the programmed systems behind this kind of automated adaption to the market changes are developed by humans, the limit and performance is in the limit of the human who designed the system. Such adaptive systems are always based on someone having an idea how to make such adaption – the computer simply execute the code, there are no alien ghost or other unexplainable woodoo things in a mystery box. As to the example of having 600 systems per market – as I read it –… Read more »
Your comment is most appreciated. On QuantBridge’s 600 systems: indeed there are distinctions between machine learning and artificial intelligence. This can be quite dense to write about, and the company’s methods are worth taking a closer look at towards understanding the way technology is used to underpin strategies.
And yes, I do sometimes describe machine learning as a calculator, a smart calculator no doubt, but the output is subject to the human inputting data at the end of the day. Still, one of the more exciting developments/debates to watch unfold in the quantitative finance space IMHO.
As to “Singularity”, one shouldnt be worried about this – since the variants of methods to adapt to the market are billions – not likely that two system designers will have the same idea and model as to how to adapt to the market.
But, the better system designers get to think new methods of adaption, the more likely it is these systems will find the same optimal entry point/time in today´s market behaviour. But the moment this happen, the market behaviour will begin change against these systems, problem solved, system developers will need to make new models of adaption.
Absolutely. I do get the feeling that the discussion is moving from tech to make things go superfast to tech that supports being smart w/ precision timing. The adaptation, so to speak, is inevitable I would guess.
Anna – there are many manners to automatically adapt to the markets. I personally do not believe in “push a green button Monday, and push it again Friday”. I hope TickCOM will not have to take the last step into automated adaption – we will for now stay in “computer assisted” development, since our vision and mission is the user is the one in charge not a robot. In fully automated adaptive trading, the user is not in control – it is a robot running the show. If you take a look at our website, you may see we are… Read more »
I’m not yet sure we truly know what the “last step” is. But one thing’s for sure, risk management and controls are top priority. As technology and our understanding of it adapts, definitions of risk will as well. Undoubtedly a debate is in order as that happens. (And will definitely check out your website).
.. having said that, our app for Smartphones fully support adaptive behaviour, used inhouse for testing, but not accessible for the users. Intraday, every minute.
“The last step” is to remove the last human interaction with the automated trading – to make a system which runs year after year without human interaction – as said, I personally do not like that, and if any body have such running profitable, they will run it inhouse for prop trading. Anyone who claim they can do it, and try sell it, do probably not have the performance they claim 🙂
“Last step” is likely to be quite dynamic once the granularity becomes apparent, and may end up being just “a step”. And yes, due diligence! Always.
@ Anna – “I do get the feeling that the discussion is moving from tech to make things go superfast to tech that supports being smart w/ precision timing”. – we develop 100.000 strategies in a few seconds on a Smartphone, do you consider this to be slow, super fast, or hyper fast ?
Soren – to follow up on this string, I think “fast” is relative – compared to whom? Towards what purpose? But I would really love to open up this conversation to the wider community – any thoughts on Soren’s comments?