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Welcome to the lost bank

After pounding the exhibit hall for a while, and dropping
into a few sessions on SEPA and regulations without learning too much, I
decided to see what today’s main plenary would tell me.

Walking down towards the plenary, my mood continued to be
cheered by the signage that SWIFT has laid on here this year. The signage is called “The Dialogue Zone”
and, bearing in mind that SWIFT’s theme is “Advancing Critical Dialogue” (this
is a community), the aim is to stimulate interactions.

All over the hallways leading to the plenary hall are
posters that have “write your view here” and “add a post-it note”, although not
many people have (I added one though, saying read my blog at SWIFTcommunity.net
… nothing like advertising is there?).

There are also pictorial mind maps of all the key
sessions. These are being drawn by an
agency SWIFT have hired, and it tracks the session by picking key questions,
quotes and themes and drawing them out on large flip charts with pictures and


I like them a lot.

As you walk down the hallway, they all seem to be saying: “Financial
Shockwaves”, “Economic Powershift”, “Global Financial Crisis”, “What was the
role of regulators” and such like.

Yep, that really cheered me up.

The plenary session is packed, probably because this one has
the title, “What keeps CEOs awake at night?”

Apart from “jet-lag” and “worrying about my daughter’s
boyfriend”, there were some good comments. Rather than summarising them, I thought I’d share with you the rough dialogue
onstage (please do not take the quotes as exact, as I was summarising).

The debate was moderated by Juan Senor (JS), Business
presenter, formerly CNBC and International Herald Tribune. To begin with, JS asked the guys what keeps
them awake at night in terms of internal or external industry concerns and
received various answers including:

* How do you change your business model to replace all the
costs of the write-downs over the last 18 months?

* Liquidity funding

* How to restore the trust and faith of corporates and
citizens in their financial institutions?

* How to manage the impact of new uncertainties in terms of
risk management, risk positions and risk exposures?

* Keeping innovation going and the internal talent pool
retained and motivated?

* The capital capacity to allow for reinvestment

* Risk transparency and to ensure our risk positions are clear
at all times

Tim Ryan (TR), CEO, the Securities Industry and Financial
Markets Association (SIFMA): “The ingenuity in financial services has created
some concerns, especially with terms like opaqueness … risk management is a nice
term but if you don’t have the tools to manage and measure the risk, it’s just
a nice term.”

Brian Stevenson (BS), Chief Executive, Global Transaction
Services, Royal Bank of Scotland: until recently “risk was not a factor that featured
in the everyday conversations around risk management”.

Hans Van der Noordaa (HVdN), Member Executive Board, ING
Group: “Don’t fly on autopilot. There
are so many models out there that are full of assumptions, so if the commons sense
is not there, then it’s extremely dangerous.”

JS: we see the beginning of the great American unwinding and
the end of the standalone investment banking model. When will it take place?

TR: “Right now, there’s headlines saying it’s cataclysmic. But no-one knows what will happen when they
are in the middle of the firestorm. What
we’ve been seeing is a serious challenge to any entity which relies on
wholesale funding. People who have access
to liquidity through deposits, a traditional bank, are advantaged. People who have to rely on others for liquidity through repos or securitisation,
are challenged.

BS: “Investment banking, and before that merchant banking,
has been around for over two centuries. This concept will continue.”

HVdN: “We focus now on the failures, but there are a lot of
prudent banks out there. We see a lot healthy banks, growing fast and doing
good jobs. The rotten ones are really
spoiling the reputation for the industry, and I worry what this will do for the
long-term confidence in the industry.”

TR: “Dennis Weatherstone, the former Chairman of JPMorgan, made
sure that every innovation within the bank had to be taken to him and explained. If he understood it and liked it, then it
went ahead. If he didn’t understand it,
you got one more chance to explain it. If
he still didn’t understand it, it was not implemented. We seem to have lost some of that rigorous
process in recent times.”

HVdN: “Most of our focus upon innovation will be in
distribution. There is room in the large
and fast growing markets to innovate. My
children will never visit a bank branch and if you can see new market
opportunities, such as where farmers have access to mobile telephony, that’s
where the focus should be.”

BS: “The innovations that went wrong are in investment
banking, the rest of banking is still innovating and competing in a very robust
way, and are nowhere near as impacted as investment banking.”

All in all, a good chat.

Then you leave the conference hall to find more shocking

Everyone’s now agog with the news that Lloyds TSB may be
merging with HBOS, after the HBOS share price tanked yesterday.

I wonder what it would be called.

Lloyds of Scotland Trustees Bank or the LOST Bank for short?

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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