Thursday 13th December 2018
Mobile operator EE has said it will activate the UK’s first live 5G trial network in London’s Tech City in October –The UK government says organisations that are aiming to establish themselves or expand as Public Service Mutuals can now apply for a share of £1 million in funding -- India’s central bank raised its benchmark interest rate for the first time since 2014 to curb rising price pressures and calm financial markets as policy tightening in the US rattles emerging markets – A new report from South Africa's Reserve Bank (SARB) contains exception results for a trial of its blockchain-based system for interbank clearance and settlement. According to a release yesterday SARB says it has completed a 14-week "realistic" proof-of-concept that managed to settle the country's typical 70,000 daily payment transactions within two hours, taking an average of 1–2 seconds for each transaction while preserving full anonymity. Absa, Capitec, Discovery Bank, FirstRand, Investec, Nedbank and Standard Bank are among a slew of banks that participated in the exercise. Even so, despite the success claims, SARB says its proof-of-concept doesn't mean it plans to replace the existing real-time gross settlement (RTGS) system with a live blockchain implementation, yet – According to Mickhail Shlemov, VTB’s Capital’s head of research today, “With the demerger of Bank of Georgia Group’s investment business to Georgia Capital PLC, we have revised our forecasts for Bank of Georgia Group so that they now include only the banking business. We expect the bank to benefit from this demerger amid an acceleration in corporate loan growth (although retail lending is likely to decelerate), with the total loan book expanding at a CAGR of 11% in 2017-21F. However, NIM performance headwinds are likely to stay intact. Management has reiterated its strategic targets, and we also expect the bank to show ROE of more than 20% in the next three years, with a 40% dividend payout ratio. As a result, our new 12-month Target Price is GBp 2,300/share. This implies an ETR of only 14% (the stock is up 10% since demerger day).” On May 29th, Bank of Georgia Group (BOGG) announced the completion of the demerger of the Group’s investment business to Georgia Capital PLC. As a part of the process, the bank has issued 9.8mn shares (up to 19.9% of the total share count) to Georgia Capital. Yet the capital will also be diminished by a special dividend payment of some GEL 120mn (GEL 3.10/share), similar to the proposed BGEO Group payment – Reuters reports that European parliament member Danuta Huebner says that London’s call for EU access after Brexit under mutual recognition will not work. Equivalence would let the EU set the rules – Scott Eaton, the former chief operating chief for Europe at MarketAxess has been appointed CEO of Algomi following the departure of co-founder Stu Taylor earlier this year. Eaton has taken over the role with immediate effect and will focus on developing Algomi’s fixed income services, including data aggregation and the Algomi ALFA market surveillance tool – The FCPA Blog notes today that banking giant Credit Suisse Group has agreed to pay a $47m penalty to the US Justice Department to end an FCPA investigation into hiring practices in Asia -- The Securities and Exchange Commission (SEC) voted Tuesday to approve a proposal to modify the Volcker rule, the last of the five agencies responsible for the rule to do so. The proposal is now open to a 60-day public comment period. Treasury Secretary Steven Mnuchin called the move "an important first step" and noted Treasury's support for "better tailoring the application of the rule, preserving liquidity during periods of stress, decreasing unintended compliance burdens and encouraging capital formation." --

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Thursday, 27 October 2016

Has monetary policy reached its limit?

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In Japan and the eurozone, it increasingly appears that monetary policy easing is effectively at its limits, thinks Kathleen Hughes, head of European Institutional Sales, Goldman Sachs Asset Management

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During previous eurozone crises, economists and political commentators invariably called for both France and Germany to spearhead any contingency planning – a theme that has resurfaced since the UK endorsed a vote to leave the European Union (EU).

 

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Friday, 30 September 2016

The hidden cost of consulting projects

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In a similar vein to my last blog on ‘Certification or experience?’, one of the other consequences of the attempt by some asset management firms’ to reduce their short-term costs has been to recruit independent consultants to work on a variety of operational projects.

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Thursday, 29 September 2016

The hidden cost of consulting projects

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In a similar vein to my last blog on ‘Certification or experience?’, one of the other consequences of the attempt by some asset management firms’ to reduce their short-term costs has been to recruit independent consultants to work on a variety of operational projects.

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Thursday, 29 September 2016

Finding opportunity in market disruption

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Kathleen Hughes, head of European Institutional Sales, GSAM writes that disruption is often associated with a breakthrough technology that challenges existing business models. The same connotations exist in investing and a wide variety of disruptive forces are at work in equity markets today. We are constantly sizing up changes and competitive threats that could create new winners and losers and recognise that in times of change, sentiment and valuations can overshoot in either direction, creating a wealth of opportunities. An understanding of how disruption plays out across sectors is central to identifying the best investment opportunities.  Three sectors that could feel great pressure from disruptive new entrants are: Technology, Financials and Real Estate Investment Trusts.

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I often hear about asset management firms that are undertaking major projects, such as implementing a key new software system. Often the firm does not have suitable or available resources to manage the programme and to lead the team they are forming, so they go out and hire an independent project management expert. Too often this will be someone with strong general skills and a project management qualification.

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In terms of the automation of processes, most of the focus for the private wealth market is in the front office as firms look to improve their customer interaction. 

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Post-Brexit, it is difficult to envisage the UK enjoying the same unfettered access to the EU’s single market it enjoys today. Should the UK’s market access become restricted after its departure, a period of decreased output can be expected, with two prevailing consequences. The first, a British pursuit of a highly aggressive expansionary monetary and fiscal policy in order to attract direct investment is likely. The second, a co-ordinated response from both the ECB and the remaining EU members – the ‘EU-27’ – to ensure Europe’s economic growth isn’t hindered by a British comeback.

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The relationship between financial institutions and their technology vendors is increasingly critical. A small number of smart firms work more closely with vendors, encouraging and sponsoring innovation, but this is not currently the mainstream.

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It really is an interesting time just now in the fintech space, particularly in the asset management arena.

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