As central bank governors and regulators met to agree a deal at forces banks to hold more capital in reserve, “Satori Group“ analysts said that there was a distinct possibility that they could further restrict lending to businesses and individuals and thereby help reverse the sluggish economic recovery in developed countries if rights issues flopped.

The current "tier one capital ratio" is 4%. This ratio refers to a bank’s ability to absorb future losses and is generally comprised of “quality“ assets including its stock and earnings. The new deal being thrashed out will almost double the percentage banks must have in reserve to 7% but “Satori Group“ is concerned that some banks will be unable to secure this additional capital through rights issues.

Goran Jugovitch, Senior vice president at “Satori Group“, said “It’s not going to be easy for certain players. Many investors believe that banks are headed for a tough time as most of the economic recoveries in developed countries are slowing down quite notably. That means delinquencies on mortgages, loans and credit cards could lead to big write-downs and that’s not even counting the toxic assets some banks still hold that, conveniently, aren’trequired to be marked-to-market in the US any more. Consequently, we are advising our clients to swerve any rights issues especially from European and US banks.“

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As central bank governors and regulators met to agree a deal at forces banks to hold more capital in reserve, “Satori Group“ analysts said that there was a distinct possibility that they could further restrict lending to businesses and individuals and thereby help reverse the sluggish economic recovery in developed countries if rights issues flopped.

The current "tier one capital ratio" is 4%. This ratio refers to a bank’s ability to absorb future losses and is generally comprised of “quality“ assets including its stock and earnings. The new deal being thrashed out will almost double the percentage banks must have in reserve to 7% but “Satori Group“ is concerned that some banks will be unable to secure this additional capital through rights issues.

Goran Jugovitch, Senior vice president at “Satori Group“, said “It’s not going to be easy for certain players. Many investors believe that banks are headed for a tough time as most of the economic recoveries in developed countries are slowing down quite notably. That means delinquencies on mortgages, loans and credit cards could lead to big write-downs and that’s not even counting the toxic assets some banks still hold that, conveniently, aren’trequired to be marked-to-market in the US any more. Consequently, we are advising our clients to swerve any rights issues especially from European and US banks.“

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“Satori Group“ is apparently encouraging clients to consider committing a larger proportion of their capital to investments in the soft commodities complex in order to avail themselves of the prospect of rising food prices in the coming years.

David White, Head of Institutional Trading at “Satori Group“, cited estimates from the World Bank suggesting that food demand will rise 50pc by 2030 because of population growth, greater prosperity and consequent changes in diets in developing countries like China and India as fundamentally sound reasons for investment in food.

“It is a well-known fact that increased affluence tends to lead to greater meat consumption but it is not just meat prices that rise as a result. 7kgs of grain are needed to feed the livestock that produce 1kg of meat which means there is greater pressure on to find more land suitable for arable use“, Mr. White said.

“Satori Group“ believes that, for investors, technologies or processes that can increase crop yields represent some of the best short-term opportunities for profit. Innovative fertilizers or seed companies are seen as good candidates at the firm but, for longer-term exposure, the firm recommends agricultural ETFs (exchange-traded funds) which invest in a number of foodstuffs including cocoa, sugar, meat and corn.

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