Being a 'Global' Bank brings extra Risks

One has to wonder if being a 'Global' Bank is really an intelligent business proposition. It requires Superman/woman to manage far-flung empires and activities that can span more disciplines than any normal human can realistically be expected to fully understand. And a particular risk factor are differences in business culture that senior management - be it located in New York, London, Frankfurt, Zurich or Tokyo - can hardly be expected to appreciate to the extent that would be required. Deutsche Bank lending money to build another hotel/casino in Las Vegas? Citigroup lending money secured by warehouse receipts in Chinese Ports? An Austrian Bank lending money to a steel business in Russia? Do these activities make sense or would concentration on a geographical area one understands and is familiar with be more profitable in the long run?

Succession planning at Santander - an example to follow

Yesterday's announcement of the death of Emilio Botin, the man behind the immense growth of Banco Santander over the past decades, highlights the need to prepare for the smooth handover of leadership. While Santander may appear to be a special case - the succession is clarified on the next day - every business should be able to replace key personnel without delay. This applies not only to CEO roles but all managerial positions in the organisation. Internal promotions should be the rule as they boost morale and team spirit and usually are cheaper and quicker to realise.

Regulators know no shame when they are after taxpayer's money

European Commission to investigate possibility of levy to fund EIOPA (IPE)The EU is particulary shameless as there is no proper supervision by any real government and the pretend-parliament is just a resting place for party hacks.

7-Yr Bonus Clawback? You must be joking!

That is what a former Wimbledon Champion would probably say to the psychopathic politicians and regulators (including reckless Bank of England officials busy stealing from Savers). How anyone can be expected to work for seven long years and not be sure that the hard-earned money will be his for good is beyond me. Anyone contemplating a career in banking in the UK should have his head examined. Meanwhile our politicians are busy cleaning up the problems they or their predecessors created, safe in the knowledge that however big the waste of money they will NEVER be asked to compensate the taxpayer.

Why UK's new bonus regime could be the world's toughest (CNBC)

Regulatory Nightmare is here and now!

I quite often said that the control freaks in charge of our lives - i.e. psychopathic politicians - will not be satisfied with extending ever-more intrusive regulation into all aspects of society. In the realm of banking and finance that would mean that - in addition of the armies of 'compliance' staff that is an expensive millstone around the necks of savers and investors - there would ultimately have to be one 'Kommissar' next to each productive employee. Ultimately the whole economic system would atrophy under this burden - the direction is clear for anyone who has seen the 'success' of the Cuban economic model.
U.S. Seeks Eyes Inside Banks' Offices (Wall Street Journal)

European Bond Markets have come full Circle

A few years ago (2005) we warned that anyone continuing to hold Italian government bonds yielding a measly 15 basis points more then German Bunds would be reckless. Now it is time to put out the warning again. While conditions may not yet be as extreme as in those days it is only prudent to consider an exit and take what is effectively a free option. Unless you believe in full political and fiscal union in the Eurozone this prepares you for the next (inevitable?) economic and financial storm.

TLTRO - a can of worms

Last week's announcement by the head of the ECB, Don Draghi, that the Eurocrats will pump up to € 400 billion into a 'targetted' long-term refinancing operation immediately makes me curious about how exactly this new bureaucratic monster is supposed to operate.
Leaving aside the question whether or not this new confetti money will do much good to the real economy in the Eurozone area there is a number of problems even a cursory look at the scheme brings to mind. So when one member of the Commentariat calls the TLTRO the "Star of the Show" (Gilles Moec, Deutsche Bank) we would warn him to be less star-struck and more dispassionate. But maybe his employer really does need this shot in the arm (or gift from heaven, maybe that is the star Moec refers to)?
So I cannot wait for the full details to be published. A few critical points that need answers: Who shall be the beneficiaries of the additional lending? Giant Buy-out funds speculating on ever-rising share prices certainly will not be among them though there is a displacement effect as banks may well use the TLTRO money to fund one group of clients and therefore have more money available to property, buy-out groups and companies seeking to finance M+A deals.
And what exactly counts as a small (and possibly mid-sized) borrower? And who is going to monitor that the TLTRO money really goes into ADDITIONAL lending to this privileged group of clients. And what if most or all of the lending is done in 'stable' economies such as Germany or Austria?
One thing is certain - programs such as these will inevitably lead to additional jobs for the boys and increase the ever-expanding number of bureaucrats working for the ECB, the local Central Banks and favored 'Consultants' charging exorbitant fees that are ultimately paid by savers and taxpayers who as usual have no say in these dirigist extravaganzas.

Bond business - down but not out

My prognosis for interest rates, esp bond rates, for the next few years gives a high probability that rates will meander around a relatively low base level. So the view that the bond trading business will be less profitable from now on is quite justified. But one has to remember that volumes during the previous 5-10 years were abnormally high. Declining and/or volatile interest rates are manna for bond traders. In addition, many innovations - some useful, some less so - in the bond market created new business opportunities. But there are no new products on the horizon, and some 'innovations' turned out to be duds. But taking all this into consideration, given the enormous volume of outstanding bonds and the large number of investors and issuers in a globalised bond market one can expect a good but down-sized bond market business from now on.

US blackmails banks - EU useless

The US 'authorities' (if you can name them as such as the country becomes more and more ruled by out-of-control lobbies and zealots) prepare another drive-by shooting aimed at a foreign bank. This time it is the turn of French BNP-Paribas. The 'crime' was that the bank supposedly conducted business with a peaceful country as that is the only way one can describe Iran. Or can anyone point to an occasion where the country has been the aggressor and not the victim (do I need to mention BP, or Mossadegh?). So it is with growing anger that one watches the spectacle of a useless Eurocracy that drowns Europe in more and more intrusive and expensive regulation but is afraid (incapable? lazy?) to put a serious warning shot in the direction of the United States demanding that the extra-territorial reach of its 'laws' be stopped immediately. Europe - or at least its citizens - have no quarrel with Iran and do no longer want to support unaccountable lobbies and the policies they have imposed on the US government.
PS: Cleptocrats in the US have just upped the ante - $10 billion, and rising? Basically it is the behavior of the typical criminal, grab what you can get away with, only this time it is the government (or the shady lobbies that push idiotic and counterproductive foreign policies on a hapless majority).

QE ineffectual and criminal