So, another fun evening at the Financial Services Club the other day, with Sir Win Bischoff kindly agreeing to be our keynote speaker. The result was a record turnout of 120 people for a dinner discussion about the future of banking from someone who is an expert.
Sir Win Bischoff was appointed Chairman of Lloyds Banking Group on 15th September 2009, after being formerly chairman of Citigroup Inc. (2007-2009) and interim CEO in 2007.Sir Win was knighted in January 2000 for services to the banking industry. He started his career with Chase Manhattan Bank in New York in the 1960s. Subsequently he joined J. Henry Schroder & Co. and became Group Chief Executive of Schroders plc in December 1984. Schroders was worth £170 million then. When the investment banking division of the company was acquired by Citigroup in January 2000, the Group was valued at just under £5 billion, generated wholly by organic growth.
Alongside his responsibilities at Lloyds Banking Group, Sir Win is a non-executive director at McGraw-Hill, and Eli Lilly and Company in the U.S. and Chairman of the British educational charity Career Academies UK. He co-chaired with the Chancellor, Alistair Darling, a review of the competitiveness of UK financial services and is Chairman of the Advisory Council of the newly formed TheCityUK, the promotional organisation recommended by that review.
We all wanted to know what was happening with Lloyds Banking Group, I’m sure, but the evening was under Chatham House rules and so none of that is bloggable. What I will say is that he gave a very good insight into where the industry has come from and is going, so here are a few of my own notes.
We talked about bank capital positions, which are all much improved today, but that has not solved the issues in the industry as liquidity is still a challenge. In fact, the lack of trust across the system is still not what it was or should be, and so liquidity risk will remain a high priority for the near-term.
The public and media debate about banks being bailed out will also remain for a while to come, but is mis-directed as the gross direct support from governments has not been as high as initially reported and is reducing all of the time. In fact, it is reducing at a rapid rate and the feeling is that all of the capital injections into banks will be repaid with interest sooner rather than later, unlike some of the more risky industries like auto.
Meanwhile, the tax regime being discussed for the banking industry is slightly concerning, and it implies that banks can be taxed in isolation and in different forms in different countries. That won’t work. Similarly, the IMF proposals won’t work if there is opportunity for regulatory arbitrage.
In other words, unilateral action by any government is not going to work ... even though the City of London says that global action won’t work either.
What is interesting here is the quandary it leaves for the UK Coalition government who came out with a stack of regulatory reforms and tax proposals for the banking sector, just as European markets meltdown and the USA introduce their own regulatory reforms.
Nothing like co-ordinated action is there?
Anyways, full proceedings of this and future Club meetings can be found at www.fsclub.net and on the blog.