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The bears run rampant

Bank of America, Merrill Lynch, Lehmans, AIG, HBOS, Lloyds TSB … and the week ain’t over yet. Add in a few other names: Bear Stearns, Northern Rock, Dresdner, Commerzbank, Deutsche Bank, Postbank, RBOS, Fortis, Santander, ABN AMRO … and more, and we can see a massive restructuring taking place in European and American banking.

Some of this has been driven by competitive factors but, based upon this week’s news, much of it is being driven by bargain basement bail-outs of good banking names gone wrong.

For example, the BBC published this chart today:

Market_values That shows Merrill, Lehman, Lloyds TSB, HBOS and AIG’s market cap in total is worth less than the GDP of Kazakhstan. Nice! Not that we Brits have anything against Kazakhstan, right Borat?

This backdrop to SIBOS, as mentioned, has made us all a little more sombre this week. For example, I went to a dinner and then a nightclub party last night. Although all were smiling, laughing, drinking and joking, there seemed a little bit of a restraint in all of these activities as nothing has been too exuberant so far.

It kinda reminds me of many years ago I was lucky enough to qualify for an all inclusive, 5-star trip to Hawaii as one of only a few sales people to reach their sales targets that year.

My wife and I took the 14-hour flight to Hawaii via San Francisco, and then the short hop on to Maui. The resort was the Grand Wailea Resort, an amazingly opulent beautiful resort in the lush, green islands of the Pacific.

The following morning, the CEO of our firm stood up and addressed the audience with the words: “Our firm entered Chapter 11 this morning …”

It dampened our spirits a little bit … but we still had one hell of a party.

That company was Wang.

A name that no longer exists in technology circles, but is remembered fondly by those who were around in the 1980’s. What you may not know however, is that a lot Wang is still around today. Microsoft Office was inspired by Wang Office. Microsoft’s image scanning systems are largely based around Wang’s. Getronics took over much of Wang’s engineering maintenance services business, and word processing today is still largely associated with Wang’s name.

The point is that whatever bad times we go through, we still have good times and remember our lost name’s fondly and salute their legacy.

That’s what we’ll be doing tonight at the Habsburg Palace where we have the final SIBOS party.

For veterans of SIBOS you will know that tonight’s party is a lavish affair, with thousands of people enjoying free wine, food, hospitality, dancing, entertainment and more at SWIFT’s expense.

I’m just guessing that some of the exuberance of this lavish affair will be slightly less exuberant than in previous years. Nevertheless, we will have a ball.

Meanwhile, back to the focus of today’s show, which still has some great content.

This morning, the first session I go to is all about securities infrastructures for the future. State Street, JPMorgan and Standard Chartered all talk about how fund managers’ needs for improved multi-asset, multi-product, multi-region information services is changing the business structure.

Jeff Conway of State Street probably put it best, when he described the basic infrastructure as the ‘sausage factory’. The sausage factory has to take data in and process it efficiently. That’s the hygiene factor.

Therefore, you use your investments in hardware, software, applications, resources and BPO as your sausage factory structure, and build global centres that link together and provide the underlying support. But the business focuses upon the client’s needs, and that’s the front office.

Right now, the retail and institutional clients needs, which the panel claim are merging together in terms of requirements and information support structures, are for a single window into their complete investment portfolio, cash management and risk exposures on a real-time global basis.

That is changing technology, service and product, and the infrastructure guys basically have to be flexible enough to adapt to these needs. If they cannot, if can increase risks and damage reputation, and that’s the key to why infrastructure investments now and into a planned strategic five-year cycle is always critical.


Meanwhile, the good news is that today is the first sunny day in Vienna, so maybe things are getting better after all.

About Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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