Treasury Blogs
Below are the latest treasury blog posts by NFS consultants and partners. Please check the sources in the right column for a complete view of all posts.
Risky Banks and Sovereigns
03 Feb 2012
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| Reality strikes back! |
We have a funny world. The corporate sector is sound and creditworthy when the banks and the sovereign sectors are bad credits. This is the opposite situation as the financial regulators assume in Basel III.
Let me provide you with this example concerning manufacturers of large goods, e.g. construction companies. When a customer procures from them we are talking about serious capital investments and therefore the customer expects its supplier to provide some form of guarantee for performance/delivery. Firstly it is very hard to find a bank providing that guarantee, secondly when you finally find a bank, the customer might not approve the rating of that particular bank. On top of that if you as a supplier are located in a country on the brink of bankruptcy the situation gets even worse.
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| Raising the Corporate Voice |
We have a banking and sovereign system that does not sufficiently support the corporate sector. But they enjoy the taxes and the taxpayers support. How did that happen? Maybe we have had incorrect financial incentives in society driving us into this abyss?
From the treasury blog post Risky Banks and Sovereigns
Why the Basel III resistance?
01 Feb 2012
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| Japan as no. 1... |
When I studied to become an engineer Japan was no. 1 (it was in mid 1980-ties). We discussed the strength of the consensus model. In Japan the boss did not decide single handedly what, when and how to implement a new routine, rule or whatever. First all had a say, making the solution optimized from all perspectives. When the consensus was reached implementation was swift and very well executed.
 |
Dig a trench and die
for a millimeter of land -
what's the purpose? |
Compare it with how Basel III and other financial regulation is implemented. A few bureaucrats develop a new regulation from their singular perspective. Thereafter they make the politicians sign a deed and then implementation starts. All those that haven't been involved start to oppose - banks, corporates etc. The regulators' position hardens and it's suddenly down to prestige, and a situation of "we won't give in". And the opponents take the same position. Deadlock!
The financial regulation has to be developed in harmony. There is no one saying we won't need to regulate the financial system. We only have to make the process much more transparent. When all perspectives are added and form a consensus we will be able to avoid these locked positions and the corporate sector planning for a situation where funding won't come from the banking system and the banks will be turned into cheap ATMs for the public sector. Hasn't the public debt mountain reached unsustainable levels already?
The question is why the regulators do not want a transparent process? It must be painful for them as well...
From the treasury blog post Why the Basel III resistance?
How to deal with an insolvent bank
30 Jan 2012
 |
Chris Skinner
Sharp eye and tongue, and
inspirational speaker and writer. |
This is a
reblog from my dear friend
Chris Skinner of Financial Services Club's popular blog:
http://www.thefinanser.com/. Follow it and I'm sure you'll enjoy his insights and very pleasant writing style.
For me this post by Chris highlights the fact that the answer to the financial crisis is not only more financial regulation of the same. We need to understand all the perspectives of all society's stakeholders. We should therefore expand the, presently very small, group influencing and designing the world financial order. Obviously the corporate sector should have a much larger say, since there is where the growth and tax revenues come from.
Here it goes:
"Sitting in a conference talking about living wills isn’t how you want to spend your typical day, but it did spark a whole bunch of thoughts in my mind.
The FSA issued their consultative paper 11/16 last summer.
The idea is that every bank with assets over £15 billion must produce a Recovery and Resolution Plan (RRP) by the end of this June.
The RRP = a ‘living will’.
I’m not going to delve into the depths of such matters – you can read all about it on the FSAs website - except to say that the RRP comprises a Recovery Plan and a Resolution Plan. The Recovery Plan must include a sufficient range of material and credible options to address a range of crisis scenarios, and show how the institution would address these issues to continue operating in a stable way, avoiding capital shortfalls and pressures on liquidity.
The Resolution Plan would show how a firm would wind-down if it failed for any reason, including how it would avoid any impact to taxpayers and the public funds.
Whilst I like the idea of a living will for a zombie bank, it strikes me that we still haven’t gotten to the heart of the matter.
The question is really: what do we do with an insolvent bank that could bring down the economy of our nation?
The answer is not to let a bank become so big that it could bring down the economy of the nation.
So the real answer should actually be more to do with limitations on bank size, structure and asset base leverage, rather than getting it to open up a living will.
To me, this is what the Vickers report separating investment and retail banking, and the Volcker Rule shutting down prop trading is all about.
So the two work in tandem – a bank must shrink its size to be big enough to fail and, if it does, have a clear plan for how to deal with failure.
Yet even then, it doesn’t solve the issues.
For example, the average life of a company in the S&P500 is just 15 years today; most banks have been around for over 100 years.
The reason why banks have been around so long is down to governments regulating and maintaining them, rather than any c0mpetitive forces.
If banks weren’t protected by regulations, they would fail far more often, just as commercial firms do.
And if a large commercial firm fails – Rover, BP or Tesco – they just get acquired or shutdown.
They don’t bring down the entire economy.
When a bank fails, it brings down the whole economy because the economy runs on finance.
Finance is the oil in commerce – no oil, no commerce.
That’s why banks aren’t allowed to fail.
It’s also why we realise the mistake when they do.
A small bank – a Northern Rock – can fail, but it won’t shake the fabric of the economy of system.,
A large bank – a Citibank or Royal Bank of Scotland – is different.
At the height of the banking crisis, UK bank liabilities were 400% of GDP: £5 trillion against GDP of £1.2 trillion – and the Royal Bank of Scotland alone had more liabilities (£1.8 trillion) than the UK’s GDP.
So now we get into the heart of the matter.
How do you deal with an insolvent bank that could break the economy?
A living will is one piece.
The separation of investment and commercial banking (Vickers) is another.
But the real test would be to go back to the trigger of this crisis: would these regulations have dealt with Lehman Brothers collapse any better?
There are two or three things that come to light in this area.
First, when Lehmans collapsed they had $400 billion of debt on their books. That debt was linked to global credit default swap derivatives (CDS) and amplified by a factor of 20, according to Barclays Capital.
So for every $1 of debt that Lehmans were exposed to, the markets were exposed to $20 due to their AAA-rating backing derivatives traded through the OTC markets.
Hence, the real exposure of risk the markets felt on September 14th 2008 was a $8 trillion market collapse, not a small bank folding.
Do living wills, Vickers and Volcker deal with this spaghetti of complexity that each banks’ balance sheet is linked with?
Second, when Lehmans collapsed the company most wrapped up in their web of debt was AIG. AIG Financial Products in London had been trading CDS to such an extent that most of the market exposure landed on their doorstep and dragged the firm down.
However, AIG Financial Products was also a complex web of structure.
AIG was the largest insurance firm in America, trading in risks through their London office which was registered for European operations in Paris.
So three regulators were meant to track the global risks being traded by one global firm through a web of global offices.
Do living wills, Vickers and Volcker deal with this web of globality that each banks’ balance sheet is linked with?
The two points made here are making it clear that the regulators need a global level playing field if their attempts to regulate the markets successfully are going to truly succeed.
But a global level playing field is also impossible, as no country can agree with another on taxation, fiscal and monetary policies.
Just look at the EU right now, and the transaction tax, if you want to see why a global level playing field is not going to work.
Sorry to be a downer Messrs Osbourne, Barnier and Bernanke but, as one speaker said yesterday, “the worst mistake regulators can make is to believe in their own rules”.
Postnote: yes, I know that OTC Derivatives regulations with a single data repository is addressing some of the last points made here, but do bear in mind that they haven't yet agreed how to define 'speculative' versus 'commercial' derivatives locally, let alone globally, and you get a sense of why this isn't working yet."
Finance and Ethics
31 Jan 2012
ATEL, the Association of Corporate Treasurers in Luxembourg, recently published a very good article with a very different perspective from that of the "Western" world. It's name "
Finance and ethics: the Islamic View" gives a hint. Enjoy with the compliments of Francois Masquelier et al.
From the treasury blog post Finance and Ethics
"I Can't Get No Satisfaction..."
26 Jan 2012
"...if I can't raise the tax burden. Heyheyhey that's what I say."
Sometimes that is what comes to my mind when I hear raising taxes is the answer-to-all-problems. That seems also to be the case regarding the
tax on financial transactions.
Facts:
1. The collected tax has to come from somewhere, those imposed will charge it to the next party in the chain ending up that the consumer will have to pay, in the end. The expectations are 10th of billions of EUR in tax revenues. From where shall that be taken and for what will it be used?
3. Volatility will increase since market liquidity will decrease. I was a bond dealer in Sweden at the time we had the tax. The Reuter screens stopped blinking overnight and each large trading post made the price jump up or down when market makers pushed it like a hot potato onto each other
4. There is a dispute among different country leadership risking legal problems
5. Market liquidity will decrease making it more costly and difficult hedging commercial exposure from corporates
6. Financial transactions will move out of the EUR area learnt from Swedish empirical evidence. Is that something we will benefit from at this stage?
What shall we, the corporates do, to make the EU leadership understand the consequences on the real economy of their decisions?
First Smells of Victory
23 Jan 2012
Today the
Financial Times and
Reuters refer to the French and German ministers of Finance wanting to relax Basel III to steer off any possible negative effects on the real economy. Especially on the SME...
A wish come true, or maybe "be careful what you wish for"? Wishes are powerful, you see.
LINKSBasel III for Dummies!Basel III postsPosts on Regulation
From the treasury blog post First Smells of Victory
Basel III Survey Results
22 Jan 2012
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Getting the Financial Incentives
right is crucial in a company
as well as in society. We need
to steer right, not just steer.
Take the "Highway to hhh..."? |
I found these very interesting
survey results from Eurofinance on corporate expectations from the Basel III implementation. The fact is that many corporates have already prepared themselves and reduced dependence on funding for growth.
Interestingly a majority of the respondents didn't believe the regulatory bodies understand the effects on the real economy. It is a strange situation that the corporates do not rely on the ruling elite's ability to create good conditions for growth and welfare generation in the private sector . Let's think of that for a while...
From the treasury blog post Basel III Survey Results
Regulation Forces Corporates Become Banks
17 Jan 2012
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Keeping eyes and ears open
for the corporate perspective |
I talk to treasurers and many of them realize that in the future they will not any more be able to rely on the banking system for funding. Basically all funding needs to come from the capital markets, through working capital management and own cash generation. Decreased leverage is therefore a trend that will continue. As one peer puts it:
"Cash sourcing will be the big issue in the future, the cash is no longer available in the places we have been used to. The treasurers job will be to re-invent the way we secure cash." For the large and cash rich corporates that is further challenged since they also have to consider that the
strongest part of the supply and demand chains needs to take a much stronger role in financing.
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Pushing through the
regulatory glass walls |
Thus Regulation Forces Corporates Become Banks.
When regulation is putting banks in the role of being cheap ATMs for the public sector, it is time for a
Radical Rethink. We will continue presenting more players reinventing the financial system for corporates, a system where banks play a much smaller role than yesterday. The corporates will push the glass walls .
From the treasury blog post Regulation Forces Corporates Become Banks
Euro Contingency Planning
11 Jan 2012
With the kind permission from the
UK ACT I here post a link to a very good structure for analyzing your
effects of a possible EUR breakup.
Enjoy the "Final Countdown" on "broken wings with a heart of stone".
Rock on Merkozy for a
Radical Rethink!
From the treasury blog post Euro Contingency Planning
Basel III Faces Serious Opposition
06 Jan 2012
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Othmar Karas
MEP EU Commission |
Us corporates shall be very content and feel the support. Thanks Othmar et al.
From the treasury blog post Basel III Faces Serious Opposition
Trends in Corporate Treasury
04 Jan 2012
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| Dave Robertson |
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| Petr Polak |
I havepublished an academic paper together with my dear friends Dr Petr Polak, AssociateProfessor in Finance at Universiti Brunei Darussalam, and Dave Robertson at Treasury Strategies. The titleis: "TheNew Role of the Corporate Treasurer: Emerging Trends in Response to theFinancial Crisis". Hopeit proves useful to you.
From the treasury blog post Trends in Corporate Treasury
ECB On Right Track
31 Dec 2011
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The complete
ECB logotype |
Stressful situations requires boldness, cold mind and a warm heart. During stress a leader must be able to take risks and point out the direction despite not having time to perform complete analysis and he or she even has to take unexplored routes. This is what the ECB (European Central Bank) did on the 21 December when they granted a
3-year 490-billion financing to the banks, at the unbeatable rate of 1%. This action is proof of bold leadership and may not work without hiccups but with the information we have today it seems to be a clever thing to do. It will certainly counter some of the
liquidity quota problems in Basel 3.
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| Mario Draghi |
This is a quote from a
Financial Times interview with Mario Draghi, new h
ead of the ECB: "The objective is to ease the funding pressures that banks are experiencing. They will then decide what the best use of these funds is. One aspiration is to have them financing the real economy, especially small and medium sized enterprises (SMEs). What we are observing is that small and medium sized banks are the ones having the biggest funding difficulties, and they are generally the ones who provide most of the financing for the SMEs. And SMEs account for about 70 per cent of employment in the euro area’s corporate sector". I have had some discussions with people in the industry and there are two main scenarios as to how effective this program will be.Optimistic ScenarioSince the European leadership previously has done
several blunders unnecessarily escalating the debt crisis to unforeseen levels, something had to be done. Too many investors are leaving the European debt markets, they have especially stopped investing in sovereign and bank debt. A similar operation is planned on February 29, 2012. The credit institutions may use this new cheap resource to finance governments, corporates (remember the emphasis on the SME, often being the
weak links in the supply chains) or households, or merely to anticipate the refinancing of most of the banks own 600-billion debts maturing in 2012. In both cases, this operation will provide them with a few dozens of billions of Euros of additional profits over the next 3 years, some easy money to facilitate their recapitalization.
Pessimistic Scenario
 |
Will the Transmission Effect
work this time? |
Draghi does not say that this money will go to the SMEs or weak, but important lenders, he says that ideally it should go to them. However the banks can do whatever they want with this money. Many people working in the banking sector or in the capital markets don't believe banks will use these funds to finance the economy instead they will keep them to refinance their own debt maturing next year and deposit them with the central banks and finance old lending only. That is actually what they did with the hundreds of billions injected in 2008-2009 blaming a sharp fall in credit demand and surprisingly got many central banks believing them. Recommendations
This huge bank financing scheme could have been combined with a method to limit how much a bank can deposit with the central banks to ensure the so called Transmission Effect remains effective.
The ECB might also consider introducing certain quotas of collateral originators, e.g. x % for SME, the banks have to submit to receive the funding. This could be expected to ensure the ambition to steer the funding to the ailing sectors.
Missing Tomas and Season's Greetings
15 Jan 2012
This Tuesday Tomas, a very dear friend passed away. He had been ill for quite some time and fought bravely and forcefully his lethal disease. Tomas was wonderfully crazy and always full of ideas. Talking constantly sharing his thoughts with everyone. He was very particular with whom he spent time as if he wanted to optimize to whom he gave his energy. Tomas is a role model of how to live a life and a great source for inspiration. Meeting Tomas was always extremely energizing. I'm very glad he could be active, making plans and starting projects to the very end. He left this life as he had lived it, full of ideas, positive, and energized. I also want to send special greetings to Tomas' wife, another dear friend, with same qualities as Tomas. She described Tomas as someone who didn't regard life as a problem to solve, instead as an opportunity to enjoy.
/Magnus
Starting this blog has been a very valuable experience. It has taken us places, made friends and acquaintances we could only have dreamt of before. To all of you reading and supporting this blog, we thank you. To all of you who have joined our private network, the Peer Group, we are proud of being in your network. To all of you who sign up to our ambition to create an optimal global financial regulatory environment, we thank you.
Look forward to talk to you, to meet with you and to work with you in the coming year. We are always available for a call.
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| Aneth Eriksson, Magnus Lind, Susanna Bondéus |
We wish you a wonderful Christmas and a Happy and Prosperous and Healthy New Year!
From the treasury blog post Missing Tomas and Season's Greetings
Titles in Treasury Updated 2011-2012
20 Dec 2011
The treasury industry has specialized recruiters with a vast knowledge of the treasury profession and impressive track record and networks. One of them is MR Recruitment with front figures Mike Richards and Mike Tucker. They are really experts in their field and we are particularly impressed they manage to cover almost all corners of the world. If there is someone knowing the global recruiting trends in treasury it is these two Mikes. When we met recently we discussed trends in recruiting and the MR Recruitment's salary survey.
As part of that survey is their definition of someone’s official job title. When they review the information of the participant in the survey they have to consider factors such as:
- how many people report into them
- how long someone has worked in Treasury
- what size of treasury department does someone work in
- the size of company and how this affects the complexity of the treasury operation
They therefore have to sometimes reclassify someone’s official title using the following guidelines:
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| Secret Mike |
Group Treasurer
- Head of the Treasury Function
- Reports directly to the CFO / FD
- Potentially on the board of the treasury entity or similar
- Is ultimately responsible of all treasury operations of the group
Deputy Treasurer
There is often only one Deputy Treasurer. They will be the clearly defined second in charge of the treasury department they will be the absolute Deputy for the Group Treasurer. As deputy they have the same “sign-off” capability that the Treasurer possesses and would be expected to act in their stead whenever needed, whereas an Assistant Treasurer would be expected to refer many major decisions to / through their Group Treasurer.
Assistant Treasurer
Often there are two Assistant Treasurers in the group. Typically one may focus on front office activity and supervision of the operations team and the other Assistant Treasurer will oversee treasury control and the middle / back office functions.
International / Regional Treasurer
This position often has a number of similarities to that of Deputy Treasurer however they will usually report into a Global / Group Treasurer and will not be number two in the overall group treasury function. It will be considered a senior treasury role but they will have specific responsibility for an area linked to geography, global financial markets, group risk etc.
Typically from then the following are titles with linked responsibility areas:
- Treasury Manager
- Cash Manager
- Treasury Dealer
- Treasury Accountant
- Treasury Systems Manager
- Treasury Analyst
- Treasury Assistant
The European Treasurers' Peer Group is very successful in recruiting the most experienced treasurers to the
peer group where we many times discuss the new role of the treasurer and
business leadership. There are many examples when treasurers have taken on the role as
business leader.
From the treasury blog post Titles in Treasury Updated 2011-2012
To Basel III or Not to Basel III
14 Dec 2011
 |
Our famous Hamlet with a
very dead bank |
This is
the very detail oriented program for a 2012 Basel III event in London. Only analysts, bank directors, vendors are invited as speakers. Not any of this event's target groups are
corporate representatives, or any other major stakeholder, e.g. unions, or consumer groups. This is an upside down world.
The Basel III regulation is the financial incentives and framework for the whole world (anyway it's the intention) and only a group of experts are involved in the design. That is really scary!
Remember that the Basel I and II had the intention to create financial stability and avoid banks defaulting.
How successful have these experts been? Shall we leave them alone one more time or join them and arrange for a transparent discussion with all stakeholders agreeing? That's the question...
- Find "Basel III for Dummies" here...
- Apply to the Peer Group here...
- We need a Radical Rethink
- If the event organizer wants to sign me up as a speaker here...
From the treasury blog post To Basel III or Not to Basel III
Corporates Key Choices from Regulatory Pressure
20 Dec 2011
 |
Stefan Ingves, Governor
Central Bank of Sweden,
presently Chair of the
Basel Committee |
After meeting with a large number of peers during our European tour, currently in the UK, and talking to many of you, group treasurers, CEOs and CFOs, over the phone we understand you share a deep concern over the present credit crunch and the outlook for the future. We have also been in frequent and close contact with large banks and other players in the market. The conclusion is clear that the new regulation, mostly Basel III and the OTC regulation, will impose severe restrictions on corporate lending and risk management from banks. The corporate community reacts on this fact:
1. Default reaction– Pragmaticallyadjust the business to the newconditions. In this case it means adjusting to less availability of cashleading to reduced employment, growth, investments, cash tied up in new margincalls, increased vulnerability of the supply chain etc
2. Necessary reaction – Build up a new ”corporate financial system” with peer to peer lending, derivatives trading, A/R auctioning etc. The strongest company in thesupply chain will have to take increased financial responsibility for theweaker parts
3. Optional reaction – Actively act to change the new regulatory regime. Here is where the peer group and this blog come in....
1and 2 is already happeningand by passively adapting to the situation we risk further severe disruptions in theglobal economic activity. 3is at the moment not even contemplatedby the corporates themselves. Thereason is that the probability of the regulatory framework to change isregarded as slim and there has been no uniting force voicingthe concerns of the corporates. Contact me if you want to discuss ideas to change the situation.¨
Peer to Peer Hedging
08 Dec 2011
Yesterday we met with Philippe Gelis, CEO of
Kantox, definitely a smart guy (check him out on
linkedin). He and his team has a very interesting new solution for peer-to-peer derivatives trading starting with foreign exchange. Regulated under the
FSA in the UK Kantox provides a platform for corporates to connect and peer to peer exchange foreign currency exposure. We were very impressed by the simplicity of the solution and have chosen to publish it under our page "
Time for a Radical Rethink".
The European and the American Way
20 Dec 2011
A Swedish ministry of treasury remarked already in the 80-ties that the more we spent on health care the less we got. Bureacracy is in the European DNA since centuries.
Before the EMU (European Monetary Authority) we had 17 central banks managing 17 currencies and 17 interest rates. In EMU they all replaced their currencies to EUR but we now have 18 central banks. In Europe bureaucracy is constantly added and never questioned or forced to transparently present its value add to society. There seems to be a total lack of respect for the tax payers' money.
Au the contrary the actions to remedy the financial crisis in the US were swift and precise. On July 20, 2010 President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law. The Act is comprised of 16 titles, more than 200 new rules, 60 to 70 studies and 22 periodic report. End of story.
In Europe we tried to increase the financial stability by adding several new authorities in the European Systemic Risk Board (ESRB) and three new European Supervisory Authorities (ESAs). The ESAs are comprised of the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA). These new authorities was added to the three bodies we already had, which wasn't regarded as powerful enough. In turn the ESAs shall work in a network with all the existing 27 national supervisory bodies. In addition the European Financial Stability Facility (EFSF) was introduced to supply financial support to ailing EU sovereigns. I stop the listing here despite it can be much longer...
It is obvious the European solution is never going to work and it won't be increasing neither financial stability nor transparency. As with most public authorities they will strive to restrict their responsibilities over time and the gaps between what they actually perform and what we expect from them will grow bigger and bigger. And it is impossible to see the big picture and how each authority fit in and what they actually are supposed to do. That is very convenient for the bureaucrats of course. There is actually something like a free lunch.
The EU is sadly a perfect example of how bureaucracy is self feeding and performing less the bigger it gets.
There is a huge difference between the European and the American way and I'm really concerned about Europe, there is not any leadership, just an enormous overhead. That was not what the EU intended to be and I feel betrayed.
We can now also see why it is so important for them to:
 |
| Corporates need to voice its opinion |
Another sad effect is that the immense funding needs of thisoverhead is forcing Europe to pay extra high taxes and ofcourse bureaucrats introduce bureaucracy forcingcorporations doing lots of none value adding activities. It is no wonder Europe is lagging in growth and has high real unemployment since the corporate world is pragmatic. If Europe is not structured to promote, instead demote corporate activity it will decrease and since decades we have experienced a silent revolution where corporates have abandoned Europe and few new have appeared. Soon there will be an infliction point where it all has to be reversed. We are getting closer and closer to that point. I believe we must voice the corporate position more widely. CEO, CFO and Group Treasurer of companies say they are not paid for philosophical or even political discussions. That is correct. However we all have a responsibility to voice our concerns of the development of our homelands. Support this blog by becoming a "follower" and/or join the peer group so we can act.
Great Analysis of Basel III by S&P
20 Dec 2011
I have kindly received the permission from Standards and Poor's to publish this
analysis on the effects on corporates from Basel III and Solvency II. I'm not opposed to tightening of capital requirements as such since it will impose higher financial discipline in society. However the most disciplined and well governed sector is the corporate sector and they do not need higher capital requirements per se. We also need to consider the large tax burden the European corporations has to pay, e.g. largest social contribution, high capital gains and income taxes for entrepreneurs, large hidden taxes in the sense of immense and multi-layered bureaucracy and expensive labor laws. All these costs has to be financed. If the highest capital requirements are imposed on the corporates, how are they going to finance all this and have any cash over to run and grow the business? That is the crucial question.
We also see a significant risk for the SME sector, being the weakest parties of the supply chain, already basically unable to attain sufficient financing.
We should respect that a very large part of the population is employed in SME and they require working capital. If the banks are pushed out from SME financing the strongest company in the supply chain will need to step in or we need to find other solutions.The sector in most urgent need of
very tight governance are the sovereigns but they will remain capital requirement favored.
The crowding out of the corporate funding is a huge risk, which will continue to enforce the misallocation of capital being a major cause behind the present crisis. We need a paradigm shift in regulatory strategy.
An interesting quote from the S&P paper on new initiatives in the corporate financial markets:
"When considering the future, it’s tempting to make the mistake of projecting changes in a static environment. Capital markets have in the past shown their capacity to reinvent themselves with the emergence of new players and innovative sources of funding. In the current transition phase that could prove to be challenging for corporate borrowers, we believe such innovation may well influence the development of the capital markets."
From the treasury blog post Great Analysis of Basel III by S&P
It's Time for a Radical Rethink
03 Dec 2011
We have introduced this
new page where providers of new models for financial services firms are listed as they appear. The first firm is Corporate Funding Association (CFA) in Paris.
Connected through peers Susanna and I met with Philippe Roca of
Corporate Funding Association (CFA). CFA is a project aiming to build a bank only focusing on corporate lending to counteract the regulatory actions to force the banks from corporate lending. The Basel III framework is very aggressively and consistently acting towards corporate activity and most likely it will be implemented to its full extent only in Europe since other regions will probably not let their corporate community suffer from lack of corporate funding.
The CFA is looking for more members joining so contact them if interested. Contact details and more information
here.
From the treasury blog post It's Time for a Radical Rethink