Celebrity Fund Managers can be an Achilles Heel

Relying on Celebrity Fund Managers can be risky even for the most prominent Fund Management House. Recent changes at Pimco are just the latest in a series of defections by high-profile managers.

Banking Stress Tests of limited value

Every bank can be shown to fail under certain assumptions. For example a 50 percent drop in property and/or share prices, a steep increase in interest rates etc. So you can always design stress tests that result in a positive or negative result, depending on the scenario you choose.

Succession Planning often neglected

A new study released by Stanford Business School highlights the cavalier attitude that many organisations take when planning for the eventual replacement of their executives. While we are happy to assist any client in his search for alternatives we think that the first stop in any well-managed company should be their own pool of seasoned and well-trained managers.

Monitoring Employee behaviour - a tricky problem

Despite the rapidly rising number of compliance officers and the tide of regulatory legislation the age-old problem of supervising employee behaviour keeps posing serious challenges to top management of banks and fund management firms. Surely the solution cannot be to put one compliance officer behind each and every trader or fund manager. And who would oversee these compliance officers? and so on....
Only management and an enterprise culture that are dedicated to maintain high standards of conduct can assure that incidents such as this one at are prevented. All-too often management is too far removed from the front line business, occupied with internal politics or simply not stable enough due to constant re-organisation (aided by clueless and inexperienced 'Consultants').

Superbanks - too large to fail, and too large to manage?

Bank managements often argue that losses in far-away subsidiaries could not easily have been foreseen by top management. Such may be the case when Citigroup tries to explain loan losses that may have occurred in its business in Mexico. But is this really a valid excuse? A loss of $ 400 million is quite substantial, even when measured against the bank's total assets of approximately $1.9 trillion. The loss/exposure admittedly is only 0.2 percent of total assets but seen in a different way this would mean that the bank has about 4500 loans (if they would all be the same size). Any organisation should be able to set up a management structure that can cope with this number of transactions. The management pyramid would only about three layers if each senior loan officer is in charge of about 50 loans. Impossible in this age of instant communication? Not in my opinion, one would not even need (expensive) MBA's or PhD's, just honest hardworking employees with a good pinch of common sense.