British Airways: Bring On the Competition

[caption id="attachment_12137" align="alignright" width="245"] CEO: Alex Cruz[/caption]

How to manage an apparent paradox – and make a profit while doing so. It is a challenge well suited to British Airways CEO Alex Cruz, the eminently likable Spaniard who transformed Vueling from a struggling low-cost carrier into a vibrant, successful airline, carefully plotting a course midway between the no-frills low-cost model of Ryanair and company and the uninspiring model pursued by most legacy carriers. In fact, some industry experts credit Mr Cruz with the shaping of the centre ground – home to economy-plus airlines where cheap fares and high yield passengers meet.  It is where the batter for heart, minds and wallets of many passengers will unfold.  However, Mr Cruz is committed to a new model “Despite the entrance of many new operating models, British Airways is committed to being a full service premium airline”.

Still a visiting lecturer at EISE business school of the University of Navarra which offers one of the world’s most sought-after MBA programmes, Mr Cruz’ titled a recent class The End of Low Cost Fundamentalism. “Working major business routes from primary airports, offering, say, five daily flights between Amsterdam Schiphol and Dublin exposes low cost carriers to high-yield passengers who usually book on short notice and don’t mind paying a bit more. They do, however, expect better service. On the other end of the spectrum we see legacy carriers going after low-yield passengers. This is what, effectively, creates the mid-market.”

Since his arrival at British Airways in 2016, Mr Cruz has been looking for ways to increase the number of lower fares whilst maintaining a premium service. He admits that to compete with some of the long-haul low-cost providers, changes have had to be made: “Already before I arrived, British Airways realised the need for changes to its cost structure. At Gatwick, we now have nearly achieved what we wanted. British Airway is thoroughly refurbishing its Gatwick-based fleet of Boeing 777s. The aircraft will include a smaller business class, a fairly large premium economy section, and a large economy cabin – a layout not unlike those used by Emirates, Etihad, and many other airlines. This configuration, combined with many other improvements at Gatwick, puts us in an interesting competitive position vis-à-vis Norwegian, WestJet, and other carriers that are playing the price game.” A similar strategy is likely to be implemented at Heathrow.

“In the longer term, the mid-market is likely to become the real fighting ground.”

- Alex Cruz, CEO

Mr Cruz is adamant that the barebones low-cost model is not one British Airways will emulate: “It is not the British Airways model.” British Airways, Mr Cruz explains, is determined to connect with consumers and offer every customer a premium experience and the absolute best short haul product in the business.

“A large proportion of our premium customers is also regularly travelling economy – there are, in fact, only very few customers who exclusively fly premium class. So it is up to us to offer excellence in every cabin.” In January, British Airways introduced a buy-on-board meal service. In line with its determination to stand out on excellence, the company engaged the likewise quintessentially British retailer Marks & Spencer to provide an on-board gourmet experience. BA is also in the process of equipping its fleet with ultra-fast wireless internet – a mammoth job that started earlier this year: “This represents nothing less than a major revolution. At the moment, there is no airline in Europe offering a WiFi connection that supports video streaming. We are quite excited that British Airways will be the first carrier to offer this service.”

Under Mr Cruz, BA has rediscovered its British pluck: “We do not lose time or expend any effort in fighting the competition on legal grounds or complaining about the way they are structured. From our side there is no lobbying going on to restrict access or otherwise impede their operations. We just do not care. However, we do pay close attention and consider strong competition a prime motivator for becoming a better airline year after year.”

[caption id="attachment_12144" align="aligncenter" width="1012"] BA Boeing 777-300[/caption]

Whilst the nimble flag carriers from the Middle East managed to capture a significant share of the medium and long haul markets by offering a remarkable quality/price proposition that took Europe’s flag carriers – including BA – off guard, British Airways was the first of the majors to respond in kind: “The Mideast carriers are a tremendous force in today’s aviation market. They also helped create untold thousands of jobs in Europe by their wholesale ordering of Airbus planes. At BA, we welcome the competition, rather than complain about it. We just have to be as good, or better, as they are. Everything they do, adds to British Airways determination to become better yet.”

Mr Cruz recognises that the Mideast carriers are well-run: “They had us rethink our own model and made us realise that in order to succeed British Airways needed to equal or better the lavishness these airlines offer both on board and in their airport lounges. And, I’m happy to report that we are succeeding. The effort is bearing fruit. Now, premium passengers arriving at Heathrow with tight connections are met at the aircraft by a beautiful Jaguar which whisks them in supreme comfort to their onward flight. You wouldn’t expect that kind of service at LHR from a carrier such as BA. Yet, we are learning from the competition and, more importantly, we are delivering.”

 “British Airways has now entered a new phase of investing in the customer experience. Last year, we committed £400m and over the next few weeks we’ll unveil additional investment plans. This way, we are showing our passengers that the unique spirit they may have experienced flying British Airways some years ago is coming back with tremendous strength.” Mr Cruz concludes by emphasising that British Airways is so much more than just another carrier. In a sense, the CEO has utilised the best bits of the company’s legacy – those things and feelings its competitors cannot equal – to forge an airline ready to take on any and all comers in the market of its own choosing.

Recently, Mr Cruz granted CFI.co an exclusive interview.


Lord Waverley on Sanctions: The United Kingdom Acts

[caption id="attachment_12151" align="alignright" width="300"] UK: Parliament[/caption]

The United Kingdom Government has introduced the Sanctions and Anti-Money Laundering Bill to Parliament.  Provisions for continuity of current sanctions arrangements post BREXIT have become necessary. Failure to do so would put the United Kingdom in breach of its international obligations.

Whilst the United Kingdom has long played a leading role on the global stage in tackling threats to international peace and security, one method of influence increasingly used by the international community is the imposition of sanctions. Sanctions encompass a range of measures, such as travel bans, asset freezes, trade restrictions and broader economic measures.

In recent years they have been employed in relation to Russia’s invasion of Ukraine and the conflict in Syria, and to put pressure on Iran to come to the negotiating table. Anti-money laundering regulations are also increasingly important in this globalised world and vital if the international community is to continue to protect itself from financial crime. The effectiveness of these measures depends on the consistent enforcement of technical and procedural controls mandated by the Financial Action Task Force, an international organisation of which the United Kingdom is a founder member.

Flexibility to allow differing components would be helpful. Whilst travel bans, asset freezes, trade restrictions and broader economic measures are specified, any mechanism however to specifically place more emphasis on removing corruption from the world stage, alongside that on money laundering, would be propitious for inclusion in future sanctionable objectives. Defining corruption can be a nebulous challenge, but it often extends to poor governance. It is essential to exert pressure to improve governance where needed, particularly in relation to the recipients of UK aid funds.

The use of sanctions for economic or regime change purposes, or targeted sanctions on individuals for human rights abuses—a mechanism short of more drastic measures—is on the increase. Understanding how best to measure those sanctions against their intended purpose and ensure that the unintended do not suffer disproportionally, and when expedient how to allow leaders on the receiving end to save face, are all challenges. The need is sometimes to allow or provide an assured exit route for those facing international justice or a route back to a state of peace and reconciliation for conflicted peoples.

I would welcome a global review of sanction processes. Knowing when and how to instigate sanctions as a tool of policy does not require multilateral-level consideration by a body such as the United Nations. More effectively, it should be introduced by smaller and more coherent regional or economic groupings, such as the G7 and European Union members. Regional fora to discuss and implement sanctions have the benefit of speedier action without as much compromise on principles compared with the UN. Many crises require more timely responses while UN bodies conduct their reviews and investigations.

On another note, regional groupings carry more weight in terms of “who is in the right”, as typically those in regional groupings are neighbours. For example, African Union sanctions on African states could carry more moral weight, as it would not be seen as a group of western nations punishing a poor African state. I took note of the general theme of ‘Africa for Africans by Africans’ whilst chairing vehement remarks made recently by HE the President of Namibia.

The underpinning of sanctions as a transatlantic set of initiatives is also fundamental. This might serve also as a brake on occasional future excesses by the United States. We must all be in step. If in step however, what should be done about the effects of extraterritorial components unilaterally instigated by others—for example, the US Helms-Burton legislation, a United States federal law which strengthens the United States embargo against Cuba? Whether it be Cuba or elsewhere, it is often western banks and companies which, against their individual corporate interests and without consultation, shoulder considerable burden.

[caption id="attachment_12152" align="alignleft" width="242"] Author: Lord Waverley[/caption]

However, the overall balance must be got right. We are headed possibly towards a differing geopolitical and geo-economic world. Care needs to be exercised for sanctions not to become a “them and us” circumstance. Some suggest possible future axes in the making by those to the East standing between themselves and the ideals of the West.

While a clear set of objectives exist we should be mindful of states not being boxed into a corner or blind alley with little or no exit strategy. Any possible reciprocal sanctions programmes might have dramatic and untoward long-term adverse repercussions. If sanctions become a wedge between differing ideals, certain eastern economic powers might decide they are more in kilter with those in the East than the West. Presumed groupings and informal alliances are much more variable than we might think. So, sanctions achieving their end, and not beyond, are crucial.

A recent comment from a UK Foreign Minister encapsulates one aspect of the challenges. He noted that we live, “not in a world where isolation works”. I concur.

Lord Waverley (JD) (Member, House of Lords, London) is the founder & CEO of SupplyFinder.com.


Banco Nacional de Angola: Prevention of Money Laundering and Terrorism Financing

[caption id="attachment_10767" align="alignright" width="300"] National Bank of Angola[/caption]

January 12, 2016, Luanda, Angola: The National Bank of Angola (BNA) today announced that it is implementing a series of actions to strengthen anti-money -laundering (AML) compliance and combat the financing of terrorism (FT) in the Angolan financial system.

Responding to the policies and recommendations of the FATF / GAFI (Financial Action Task Force), the BNA has successfully implemented a series of procedures and new legislation. These include highlighting policy reforms, developing training materials and guidelines for BNA regulated institutions, ongoing monitoring of the financial system and penalising offending institutions that are not fully compliant with the codes and conduct laid out by BNA.

The BNA indicated that suspicious transactions will be referred to the Financial Intelligence Unit (FIU). The FIU is entitled to freeze funds and the economic resources of persons, groups or entities designated that come under suspicion of conducting fraudulent activities The BNA earlier determined that all institutions under its supervision should submit audited reports by end of the year 2015. These reports will be checked for completeness and transparency. The BNA has published guidelines on the practical implementation of AML and FT programmes. The Bank has also conducted AML prevention and awareness workshops.

"The BNA is committed to maintaining the financial stability of Angola, to guarantee social development and sustainable economic progress, seeking an increase in FDI (foreign direct investment) in the country."

Moreover, the BNA has an ongoing financial literacy programme called "ABC of Financial Education", which addresses various topics around the prevention of money laundering and terrorist financing. This educational initiative raises awareness in the financial community around AML/FT measures thus bringing stability within the Angolan Financial System (AFS) and leading to customer protection. The initiative targeted at AFS’s financial clients will be relayed via series of TV and radio programmes providing information about the prevention of AML / FT and its impact on the Angolan financial ecosystem. To strengthen its monitoring actions, the BNA has issued self-assessment questionnaires around AML / FT requirements for bank and non-bank financial institutions.

According to the governor of the BNA, José Pedro de Morais, “Angola has made considerable progress in adopting more stringent requirements for the prevention of money laundering and terrorist financing. We have enacted legislation and implemented policy reforms. As part of our efforts to strengthen appropriate and effective supervision, the BNA issues guidelines reflected in the standards and recommendations of the FATF / GAFI. We are confident that these measures will assist financial institutions to meet their legal and regulatory requirements efficiently. By ensuring this success, the BNA will promote the integrity of the Angolan financial system by placing it in a strong position worldwide.”

Since 2010, Angola has made a high-level government commitment to work with FATF and regional bodies to address gaps in the country’s financial infrastructure and has taken significant steps towards aligning itself with FATF standards and policies. The BNA has adopted all of the FATF recommended initiatives:

Joining the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG)

Enacting laws to provide a legal basis for freezing, seizing and confiscating the proceeds of money laundering and terror financing

Amending the law to criminalise terrorism financing

Enacting regulations and procedural arrangements to implement the obligations set out by the United Nations Security Council Resolution (UNSCR)

Establishing a fully operational and effectively functioning Financial Intelligence Unit

Protecting the Financial Intelligence Unit’s operational independence and autonomy

Improving Customer Due Diligence (CDD) measures

In the first half of 2016, significant development will be witnessed in the Angola financial system, with regard to compliance relating to AML/FT, ensuring the authenticity and full compatibility of all financial assets of the country.

The Governor concluded, "The BNA is committed to maintaining the financial stability of Angola, to guarantee social development and sustainable economic progress, seeking an increase in FDI (foreign direct investment) in the country. Our aim is to continue to implement structural reforms in order to strengthen the Angolan financial system and mitigate potential money laundering and terrorist financing risks.”


Kristalina Georgieva

The little blue Audi TT with its stick shift had to be sacrificed to a small electric VW: “I need to go electric. We all have this responsibility.” The commute may be slightly less exciting, World Bank CEO Kristalina Georgieva is at her desk at 7:30 am sharp to put in twelve hours or more. A workaholic, perhaps, Mrs Georgieva wouldn’t have it any other way. Hers is a job that includes finding solutions to some of the world’s most intractable challenges – how to lift millions out of poverty without destroying the global habitat in the process.

Mrs Georgieva arrived at the World Bank Group (WBG) from the European Commission where she managed a €161bn budget and an almost 30,000-strong staff as vice-president for Budget and Human Resources between 2014 and 2016. Prior to that, she led the EC commissariat for International Cooperation, Humanitarian Aid, and Crisis Response. Mrs Georgieva, who gained a solid reputation as an effective administrator, is not a stranger to the World Bank Group. Between 1993 and 2010, she held a number of jobs at the Washington-based institution, including director of Sustainable Development and vice president. In the latter role she served as a vital link between the bank’s shareholder states, its board, and its senior management.

Though the CEO position is newly created, Mrs Georgieva effectively replaced World Bank Managing Director and Chief Operating Officer Sri Mulyani Indrawati who was appointed Indonesian finance minister in July 2016.

Brought on board by WBG president Jim Yong Kim after an administrative shake-up that aimed to improve the bank’s efficiency in fighting extreme poverty, Mrs Georgieva is to spearhead a concerted effort to increase the institution’s effectiveness and agility – measuring actual project outcomes against a set of well-established benchmarks.

Born in Sofia, Bulgaria, Mrs Georgieva holds a PhD in Economic Science and an MA in Political Economy and Sociology from the University of National and World Economy. She was an associate professor at her alma mater between 1977 and 1991.

Consolidating a shift in culture, Mrs Georgieva has managed to make inroads into the WBG’s stratified bureaucracy, halving the frequency of regular meetings, and insisting on a significantly reduced wordcount for policy paper and project documents whilst limiting the attached comment section. Instead, Mrs Georgieva wants to break down silos and see more collaboration between different parts of the group in order to make better use of the WBG’s undeniably large reservoirs of knowhow. The effort, a gargantuan one, aims to make the World Bank more result-oriented and thus deliver – in plain English – a better bang for the development buck.

Responsible for the World Bank’s two large lending entities, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), Mrs Georgieva’s job is to implement the strategy outlined in the Forward Look – A Vision for the World Bank Group to raise to incomes of the poorest 40% of the world population by 2030, reducing the incidence of extreme poverty to less than 5% (versus 14.5% in 2011).

With only thirteen years left to go, a flexible, highly responsible, and original approach is called for. Mrs Georgieva moved quickly to give her full support to the Agile Bank Programme, initiated just a few months before her arrival in Washington. The programme selects nine “agile fellows” from different parts of the World Bank Group to spend a year brainstorming on how to streamline the institution and make it more nimble, innovative, and responsive.

The agile fellows have already come up with a set of flexible lending guidelines to adjust funding levels as development projects take shape, dynamically responding to possible changes on the ground. Mrs Georgieva reported that the Agile Bank Programme was welcomed by WBG staff, almost going viral with staff questioning established procedure and embracing out-of-the-box thinking. And that is precisely what WBG CEO Kristalina Georgieva requires – a new and more effective approach to development finance and eradicating poverty.


Waldemar Januszczak: Art for the Millions

The BBC needs a David Attenborough of the arts and Waldemar Januszczak (63) may answer the call. Arguably Britain’s best loved art critic, Mr Januszczak managed to illuminate the Dark Ages without causing viewers to zap elsewhere – a considerable tour de force by any standard. Mr Januszczak is not at all best pleased that television viewers tune in by the millions to gawk at the reproductive antics of some miniscule frog in the depths of the Amazon rainforest while they could be admiring the unsurpassed grandeur of High Renaissance painters and architects. Frog or Florence shouldn’t be a contest.

Mr Januszczak equates watching BBC arts programmes to “homework”: a rather disagreeably dry and mostly uninspiring pursuit: “The Beeb has a lot to answer for. They’ve created this image that art is a kind of homework, that needs to do you good.” Mr Januszczak get quite upset over the low ratings achieved by arts programmes: “It is not that hard to spice things up just a little without detracting from overall quality.”

His Renaissance Unchained series that aired last year proved his point by arguing that its reading by established history is flawed and possibly misleading. Though an epoch of fabulous splendour, Mr Januszczak showed the Renaissance not as a rebirth of something lost to the rigours of the Dark Ages, but as an era of innovation and experimentation, bordering on madness. He also sought to correct conventional wisdom by placing its epicentre in the Low Countries and Germany rather than Italy. “As I see it, the Renaissance has nothing to do with a return to classical values. It was much more a time of over-the-top religious passions and human emotions.”

The son of a milkmaid and a janitor, Waldemar Januszczak is a passionate advocate for excellence in public services and education in particular – it allowed him to become an art historian and critic. He publicly deplored the recent decision by the AQA exam board to drop art history from it’s a-level syllabus – the last one to do so in the UK. The board justified its decision by stating it had been unable to find “sufficiently experienced” examiners. Feeling generous in his assessment, Mr Januszczak considered the explanation baloney: “Ha! There are enough experienced art historians living within a couple of miles of me in North London to mark the nation’s art history papers ten times over. I probably have enough of them on speed dial.”

Mr Januszczak suspects the real reason for axing art history from the curriculum has more to do with “a ghastly mindset” prevalent amongst educators who consider the subject a mere distraction from more worthwhile (read: lucrative) academic pursuits. “Only toffs go for art history. It is seen as a dead-end career and may not even lead to a job.”

In Mr Januszczak case, a job was secured upon graduation from the University of Manchester with The Guardian from where he moved in 1990 to Channel 4 television as head of arts. Two years later, he became an art critic for The Times, a position he holds to this day. No stranger to courting controversy – Mr Januszczak famously defended the figurative paintings of London-based artist Stella Vine when she was ruthlessly decimated by most critics – he insists on ushering art out of the rarefied atmosphere of the well-heeled and into everyday life. “Art saved my life, if you must know. Art history lifted me out of a dark immigrant’s existence. I was eight months old when my father was run over by a train in Basingstoke. I never knew him. I couldn’t speak any English till I was six. But I could look at paintings, at sculpture, at books full of pictures of beautiful things, at all the glorious art-historical evidence that survives from the story of humanity, and I could enjoy it and learn from it.”


World Bank: Infrastructure Financing Options - Bankable Projects for Private Investors

Strategic investment funds have emerged as a way of addressing gaps in the infrastructure investment lifecycle. These funds are wholly or partially owned by governments or other public institutions, and are designed to mobilise private investment to key economic sectors.

Governments the world over are struggling to finance essential infrastructure, including projects for clean energy and other green developments. For emerging markets, estimates of the infrastructure financing gap over the next decade range from $500bn to more than $1tn a year. At the same time, institutional investors, operating in a low-yield environment after the financial crisis, are looking to invest in real assets but struggle to find attractive projects.

Private investment in infrastructure last year hit a record $413bn – 14% higher than the previous year. However, the number of deals has remained steady at between 1,700 and 1,800 a year since 2013, according to the data-provider Prequin. The lack of growth suggests that many projects are abandoned somewhere between early-stage project planning, generally undertaken by governments, and the de-risked, operational stage considered bankable for institutional investors. Amongst institutional investors, interest in infrastructure assets has been focused almost entirely on projects in developed economies that are already delivering a steady income stream. The costly project development and construction phases tend to be characterised by a dearth of investment capital.

Mobilising Private Investment

In this context, a new type of public-private investor – the category of strategic investment funds – has emerged as one of the mechanisms to address gaps in the infrastructure investment lifecycle. SIFs are special-purpose investment funds that are wholly or partially owned by governments, or by government-owned global or regional financial institutions. They act as commercial investors while also seeking to achieve defined policy goals, and are designed to mobilise private investment to key economic sectors.

Currently, thirty SIFs have been established, in countries as diverse as France, India, Ireland, Italy, Mexico, Morocco, the Philippines, and several Gulf states, as well as Nigeria and Senegal. Most have emerged over the past ten years, and another twelve are being planned. Several, particularly those in emerging markets and developing economies, concentrate on infrastructure. Some, including several multinational SIFs that focus on green infrastructure, as well as national funds such as Senegal’s Fonds Souverain d’Investissements Stratégiques, have taken on the role of infrastructure venture funds. They lead the financial structuring of new projects and take cornerstone equity stakes to reduce early-stage risk for private investors.

At their best, SIFs are professional financial intermediaries, operating at arm’s length from government, and well placed to take advantage of their strategic position between the state and the market.

SIFs as Vehicles for Green Investment

Institutional investors generally have a low allocation to infrastructure, including green projects. This is illustrated by the limited role in green finance of sovereign wealth funds. According to preliminary estimates by the World Bank Group, based on data from the Sovereign Wealth Fund Institute, between 2006-16 green investments represented 0.7% of the value of all reported sovereign wealth fund deals and 3.6% of infrastructure, energy, and utility investments. The figures for 2016 are higher at 3.5% and 13.4%. However, this rise is driven by a small number of large deals and could be just temporary. Overall, sovereign wealth funds’ involvement in green finance remains low.

[caption id="attachment_12200" align="aligncenter" width="886"] Figure 1: Growth in the number of strategic investment funds. Source: World Bank Group.[/caption]

Institutional investors are significant sources of capital. The global amount of assets under management for pension funds stands at around $26tn; for sovereign wealth funds, it is around $7.5tn. Infrastructure, with predictable long-term cash flows and with a low correlation to other assets, is generally considered to be a good fit for institutional investors. This is reflected in their competition for operational infrastructure assets. In combination with the reduced cost of leverage resulting from low interest rates, and the limited supply of investable projects, this competition has exerted upward pressure on valuations.

Green energy projects last year represented 42% of infrastructure deal volume, an increase from 39% in 2015 and 37% in 2013, according to data compiled by Prequin. Increased allocation to infrastructure by institutional investors can be expected to imply a greening of their portfolios.

Taking on Risks too High for Private Investors

In a market where infrastructure assets have become more valuable relative to other assets, but where supply remains insufficient, there is a case for intermediation to solve market failures. SIFs aim to provide such intermediation by taking on risks that are marginally too high for private investors. Well-managed SIFs seek to identify and target weak points and bottlenecks in the infrastructure investment lifecycle. SIFs that operate as infrastructure venture funds can seek returns on commercial terms by retaining stakes in completed projects or by divesting these stakes when de-risked, operational projects are sold.

[caption id="attachment_12201" align="aligncenter" width="589"] Graph 2: Green investments by SWFs (as a percentage of total investment).
Source: Sovereign Wealth Fund Institute Transaction Database; internal World Bank Group analysis. *Preliminary estimate.[/caption]

Well-performing SIFs have been successful in crowding in additional private capital for investment in clean energy and other infrastructure sectors, while providing positive financial returns. There are, however, a number of challenges that need to be taken into account by governments and other public sponsors of SIFs, as well as by their private-sector partners, when establishing operations. These are: securing the right staff, attracting private sector investment, sourcing investable projects, and balancing commercial and policy objectives. Successful SIFs have built investment teams by recruiting experienced professionals from global financial centres. They have been able to attract private sector investment by operating as independent organisations, with clear financial targets, within their policy-defined mandate.

These SIFs have managed to become credible investment partners by asserting their operational independence from political interference, through their mandate, structure, governance, investment policy and operational framework. In that capacity, SIFs are likely to continue asserting their role in bringing projects to market in a format appropriate for institutional investors.

This article first appeard in GPI.

About the Author

Håvard Halland is a senior economist at the World Bank’s Finance & Markets Global Practice, Investment Funds Group. His research and advisory work focus on sovereign wealth funds and strategic investment funds. His main interests include fund mandates, governance and operational frameworks, as well as the economic and policy implications of sovereign funds’ domestic investment. Recently, he has worked on the role of strategic investment funds in mobilizing private capital for green finance. He is an editor, lead author, or joint author of several books published by the World Bank; has published academic and policy research papers, book chapters, magazine articles and blogs; and regularly presents at international conferences and seminars. He earned a PhD in Economics from the University of Cambridge.


MiFID II: The Impact on Finance Sector Comms

[caption id="attachment_12210" align="alignright" width="300"] Author: Alex Tebbs[/caption]

MiFID II is a change to the regulations informing the finance sector’s conduct and aims to improve transparency and safety in the financial markets. That means that, by January 2018, affected finance businesses must be fully compliant, or face fines of up to €5 million or 10% of global turnover.

The updates to the regulations are complex and wide reaching, affecting many of the ways finance companies will do business and conduct themselves during interactions with customers and potential clients.

While there isn’t much time left until the compliance deadline, communications are one area in which finance businesses can find a relatively straightforward solution - which is an important factor in MiFID II.

What are the communications requirements of MiFID II?

MiFID II is a regulation update with many facets, one being the requirement for businesses to record their communications in any instance where that conversation results in, or intended to result in, a transaction.

Those communications must be retained - and be accessible when called upon - for five years after the event.

Practically speaking, this means a review of all communications platforms within a finance business. And there are complexities to overcome.

"While there isn’t much time left until the compliance deadline, communications are one area in which finance businesses can find a relatively straightforward solution – which is an important factor in MiFID II."

In the days of working from one location and with one telephone system to communicate, compliance would be relatively straightforward. But in today’s multi-device, flexible working environment, teams in the finance sector could be communicating with their clients in a wide variety of ways, across a wide variety of devices - including telephone, mobile, Skype and instant messaging.

Those teams aren’t necessarily all even in the same place, and may be working remotely from home, or on the road. With BYOD (bring-your-own-device) a growing trend, the devices used to communicate may not even belong to the company they’re working for, but to the individual using them - meaning that part of the compliance efforts will be a change to the contractual obligations of BYOD.

How to be communications compliant

So how can you move toward communications compliance ahead of the MiFID II January deadline?

The best place to start is with a review of your existing communications plan as a business. You’ll need to work out what platforms and devices are used to communicate, and make a record of all of those, as they will need to be included in your recording strategy. Be aware that this mightn’t be as straightforward as it sounds, and it’s likely to take time to uncover all the comms platforms in use.

The next step is then to work out how best to record those communications. On a landline, this would require hardware such as a microphone plugged into the handset. There are various apps that make it possible to record calls on a smartphone or via clients like Skype.

An alternative to this somewhat clunky process is to invest in a unified communications platform (also known as UC). This brings all your communication tools - smartphones, landlines, Skype, instant messaging, text - onto one platform which can be easily controlled from one portal, making recording and keeping those conversations a much easier, quicker process.

However, you choose to manage your communications, one thing is clear; you will need to be able to both record, and keep, those conversations from January when MiFID II comes into play.

Considering security in MiFID II compliance

Beyond MiFID II, many of you will be aware of another regulation change due to come into play in 2018; GDPR.

This update to the data protection regulation is still up in the air to an extent, in that Britain’s place in the EU means that we will still be adopting this European regulation, but with our own additions and updates - which are yet to be fully agreed.

There’s no doubt that security will be an essential consideration of MiFID II, particularly when it comes to recording communications.

There are various ways to achieve security in communications to ensure that recordings are GDPR ready. The most universally relevant and powerful is that of end-to-end encryption; with the main risk of unsecured comms being that communications could be intercepted en route, end-to-end encryption removes this risk by making the information, even when intercepted, entirely useless.

For those businesses using a unified communications platform, encryption and many other security considerations are included as standard, with large investments being made by those companies into stress testing their platforms and removing any vulnerabilities as soon as they are considered as a potential risk factor. For those using separate communications channels, a strict security testing strategy will need to be in place to ensure all communications are safe and private.

In terms of retaining those recorded conversations, security is a concern once again. Secure servers and storage areas are a must; also consider who has access to these recordings, and ensure they have a signed agreement in place that complies with data protection rules, and that your business’ data protection processes are up to date - especially as GDPR hits in May 2018.


The Future Arrives in the Gulf as the Future Cities Show Season Kicks Off

The region is expected to see the launch of new, futuristic technologies at the Future Cities Show, to be held from April 9-11, 2018, that will change the way people live and work in urban environment.

The second edition of the Future Cities Show, that will take place in Dubai, UAE, from April 9-11, 2018, will set the tone for smart cities through the three pillars – sustainability, innovation, happiness and showcase the future of urban life. With a theme of achieving sustainability through innovations, the show will showcase the cities of the future by highlighting the latest and the most innovative technologies that will change the future.

As the worldwide smart cities movement gains momentum, Future Cities Show reflects and also presents the transformation of urban societies, infrastructure and environment that currently hosts more than 54 per cent of the 7.5 billion people and uses 75 per cent of the power generated.

A recent white paper, Evolution of Smart Cities and Connected Communities, co-sponsored by the Consumer Technology Association and the United Parcel Service (UPS), says, market value of smart cities is expected to jump from $14.85 billion in 2015 to $34.35 billion by 2020, representing a compound annual growth rate of over 18 per cent.

The white paper found that a key driver of smart cities growth is the ongoing trend of global urbanisation. “With 70 per cent of the World’s population forecast to live in cities by 2050, the need for sustainable, liveable world cities is essential for a prosperous future,” said the report.

More than 250 smart city projects are currently underway across 178 cities around the world, according to a new report from market research company Navigant Research, while hundred other cities are preparing to join the smart city movement.

Future Cities Show focuses on education, wellbeing, knowledge sharing, collaboration among government-private-universities-society, user-driven innovation, livability discussions, sustainable energy solutions, sustainable economic development and sustainable societal development to drive the wellbeing of all nations.

The three-day event, takes place within six months of the UAE’s announcement of the launch of a new cabinet portfolio – the Ministry of Artificial Intelligence and Saudi Arabia’s granting of ‘citizenship’ to Sofiya – a robot – the first country to make this move.

Earlier, Dubai set up the World’s first functional 3-D printed office in front of the Emirates Towers Hotel – marking the beginning of Dubai city’s journey towards becoming a smart city. The emirate will host the Museum of the Future by 2019 that will offer a glimpse of future technologies and products.

On top of these milestones, the introduction of electric vehicles, testing of driverless cars and the testing of the first flying taxi in Dubai marks the beginning of a new journey towards reinforcing & strengthening Dubai’s status as the smartest city in the world.

Soon, Dubai might become the first city in the Middle East to allow flying taxis to carry passengers from one point to the other – that could influence architects and engineers design buildings with multiple landing balconies or landing pads for flying taxis and transport regulators to design safe air routes for flying taxis to avoid head-on collisions.

Future Cities Show will be full of activities that include an exhibition that showcases innovative technologies and sustainable solutions as well as a conference that will discuss future technologies and how cities will be retrofitted with new sensors, energy saving systems, processes and change management.

Dawood Shezawi, Chairman of the Organising Committee of the Future Cities Show – says, “The testing and introduction of robots, drones and flying cars indicate one thing – the future has arrived. We will see unprecedented changes, disruptions and challenges as well as innovative solutions emerging that will create a completely new urban environment where technologies will dictate our life, work and activities.

“Future Cities Show will display, test, demonstrate and discuss future technology, Internet of Things and how they change the urban environment, systems and processes and help all stakeholders including – urban planners, architects, master-planners, engineers, scientists as well as consumers – see the future unfolding in front of their eyes.

“As we witness the unfolding of the Fourth Industrial Revolution (Industries 4.0) in front of our eyes that is fast disrupting traditional industries, systems and processes and paving way for internet, artificial intelligence, virtual reality, augmented reality and cloud-based solutions, it is important to understand how the future cities will shape up and more importantly, how lives will evolve in the smart or future cities.

Future Cities Show activities are based on the 17 Sustainable Development Goals (SDGs) set by the United Nations and adopted by 193 countries in September 2015. The show also incorporates the 10X Dubai directives which were set by His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai. This is a radical programme that seeks to establish “X Labs” in every government entity and position Dubai 10 years ahead of the rest of the World.


African Governments Invest in Skills in Sciences, Engineering, and Technology

President Macky Sall of Senegal launches a new Regional Scholarship and Innovative Fund in Johannesburg, South Africa, in June 2015.

$5 million committed by African governments and African Business Champions for Science to award 10,000 PhDs scholarships over ten years.

The Fund is an initiative under the World Bank’s ‘Partnership for Skills in Applied Sciences, Engineering and Technology (PASET)’ program.

A high-level gathering including H.E. President Macky Sall of Senegal and government and business representatives from several African countries, met to discuss greater support for Africa’s skills needs.

President Sall officially launched the Regional Scholarship and Innovative fund on June 13, 2015, with initial seed money of US$5 million contributed by African governments. The Fund is a key initiative under the Partnership for Skills in Applied Sciences, Engineering and Technology (PASET), which is facilitated by the World Bank Group.

“Increasingly, Africa sees the need to depend on science and technology to increase industrial and agricultural productivity, guarantee food security, tackle diseases, ensure a safe water supply, and reduce the energy deficit,” said President Sall.

The three founding member countries of PASET were represented at the event by Senegal’s Minister of Education and Research, Mary Teuw Niane, Rwanda’s Minister of Foreign Affairs, Louise Mushikiwabo, and Ethiopia’s Minister of Education, Shiferaw Shigutie.

Helping to bridge Africa’s skills gap

Today, Africa faces a dire deficit in skilled workers in the applied sciences, engineering and technology (ASET) fields. There is one or less scientist or engineer per 10,000 people, compared with 20 to 50 in industrialized countries.

“Increasingly, Africa sees the need to depend on science and technology to increase industrial and agricultural productivity, guarantee food security, tackle diseases, ensure a safe water supply, and reduce the energy deficit.”

- Macky Sall, President of Senegal

African business leaders have long been concerned about the skills mismatch in the labor force. Due to a lack of the relevant expertise and skills, African businesses have preferred to invest outside of the region, and external investors in Africa continue to import skilled workers.

Emerging economies including China, Brazil, India and South Korea faced similar challenges in their early years until they invested heavily in science and technology education and research.

$5 million seed fund to help train 10,000 PhDs over 10 years

The $5 million pledged by African governments is an initial contribution to seed the Regional Scholarship and Innovation Fund, which will  train 10,000 PhDs, building research capacity  in African universities and promoting innovation and entrepreneurship in ASET fields in Africa, over a period of 10 years.  Leaders agreed to operationalize the Fund by June 2016, with a transparent, accountable and results-focused governance structure.

Sub-Saharan Africa needs an innovative ASET workforce that can provide sustainable solutions to Africa’s challenges in priority sectors, such as agriculture, energy, construction, manufacturing, transport, financial services, tourism and health. This would develop new knowledge, products and processes and adapt existing technology into marketable goods and services customized the African context. Creating this workforce requires improvements in the quality of university faculty and the development of relevant and quality curricula that encourage innovation, and investment in research capacity building.

Dr. Álvaro Sobrinho, Chairman of the African Business Champions for Science and founder of Planet Earth Institute, said: “As Africa continues to make great strides forward, we must also continue to recognize the importance of investing in our future generations. This investment must go beyond access and enrolment to develop excellence, too, especially in science and technology. Excellence in science and technology will equip Africa with a workforce ready to compete in the 21stcentury, where we can lead the world as scientists, engineers and innovators.”

On the cusp of socio-economic transformation

Africa is on the cusp of a socio-economic transformation. To accelerate this transformation requires a paradigm shift in three respects: a regional approach which complements individual country efforts in specific areas of development; public and private sector partnerships; and strong ownership and leadership of the change process by African stakeholders.

The launch of the Fund was a simple but very unique gathering that exemplified this paradigm shift.  A few champions took the initiative to build a critical mass of highly skilled scientists and technologists. Using a regional effort which pools public and private resources to build capacity on the continent, they invited other African governments and business leaders to make similar commitments.

As this Fund and its parent initiative, PASET, take deeper roots within sub-Saharan Africa, it is hoped that many other African governments, business leaders, and partner institutions will take up the challenge and support the partnership.

The World Bank Group’s contribution was to bring the key players together and provide technical assistance and global knowledge, which resulted in a strong ownership and commitment from both the African Heads of State and the business leaders. Source


UNCTAD: Africa Rising

[caption id="attachment_11257" align="alignright" width="300"] South Africa[/caption]

Africa needs investment to advance sustainable development and see the continent prosper. James Zhan, Astrit Sulstarova and Mathabo le Roux argue that the nature and volume of foreign investment flows into the continent over the past fifteen years show Africa is firmly on the development track.

Global foreign direct investment (FDI) in recent years has been anaemic. In four of the seven years since the global financial crisis, growth has been negative, and on the occasion that it swung into positive territory the level of growth has been unremarkable.

The trend seems incongruous in the face of historically high levels of corporate cash on balance sheets. It is estimated that multinational corporations are flush with more than a collective $5 trillion in cash, yet they have little inclination to spend their cash. The reluctance is explained by the convergence of a set of risk-propelling factors.

“On the whole the data therefore gives little cause for optimism.”

On the economic side, the end of the commodities super-cycle, market volatility and weak demand in mature markets are throttling investor confidence, while heightened geopolitical risk, security concerns and the migration crisis are reinforcing political insecurity, adding to the gloom. This sclerosis has raised the spectre that cross-border investment flows may well consolidate at levels that are structurally lower than those before the crisis creating a perfect storm for the global economy.

Fresh figures showing strong FDI growth for 2015 therefore brought welcome respite. UNCTAD’ Global Investment Trends Monitor provisional data for 2015, released at the end of January, show global FDI flows surged 36 per cent – a pace last seen in 2007 – to an estimated $1.7 trillion. While the level stays shy of volumes scaled pre-crisis it is welcome diversion from the course investment has been on for most of the past decade.

On closer scrutiny, however, last year’s rise in FDI flows did not translate into equivalent expansion in productive capacity because cross-border merger and acquisitions (M&As) accounted for the lion’s share of the increase, rather than greenfield investments in new productive assets.

The Wrong Kind of FDI Growth

Cross-border M&As rose 61%, the highest value since 2007, with multinationals taking advantage of their record cash positions, as well as exceptional global liquidity conditions to scoop up prized assets. By contrast, greenfield project announcements, which are indicative of MNEs’ capital expenditure intentions, remained largely flat. And in developing regions where the need for expanded productive capacity is particularly pressing, project announcements in fact declined sharply, notably in Africa (-19%), and Latin America and the Caribbean (-23%).

Another worrying phenomenon is the sizeable part of FDI flows last year that was related to so-called inversion deals – a strategy by which firms acquire a foreign company and the latter is transformed into new headquarters, with the aim to lower the tax burden – and to reconfigurations of corporate structures. This generally results in large movements of capital showing up in the financial account of the balance of payment but with little movement in actual resources.

[caption id="attachment_11255" align="aligncenter" width="599"] Graph 1: Africa Inward FDI stock and its share of GDP, 1995-2014. Source: UNCTAD[/caption]

On the whole the data therefore gives little cause for optimism. The circular character of the predominant part of current investment is particularly troubling given the enormous financing needs for sustainable development, highlighted in UNCTAD’s World Investment Report 2014.

The report quantified the annual investment shortfall in developing countries at $2.5 trillion – a gap that can only reasonably be plugged by private sector FDI. In seeking to catalyse this kind of investment UNCTAD has been driving public-private sector dialogue through its World Investment Forum. This year takes the Forum to Africa, the continent where development needs are particularly acute, beckoning the question how the continent has fared in the investment stakes.

Investment Sharply Down Where Most Needed

Africa has been something of a shining star on the economic front in recent years, but in 2015 investment went off course. Inflows fell dramatically, by 31%, to an estimated $38 billion, largely spurred by an investment slump in Sub-Saharan Africa. Central Africa and Southern Africa saw the largest declines in large part as a result of falling demand and rock-bottom commodity prices. Flows into gas-rich Mozambique were down 21% to $3.8 billion. Nigeria saw its FDI decline by 27% to an estimated $3.4 billion as the country was hit by the drop in oil prices. FDI into South Africa fell precipitously, down 74% to $1.5 billion.

Coming in the very year the international community announced the agenda that will direct development ambitions over the next fifteen years, the slump in developing country investment figures signals bleak prospects for its delivery in regions where needs are greatest. Yet, an analysis of the longer-term investment trends on the continent discloses a more encouraging picture with pockets of real progress, giving rise for optimism.

Not All Doon and Gloom

According to UNCTAD data foreign investment in Africa over the past fifteen has increased more than fivefold, reaching $54 billion in 2014 compared to an underwhelming $10 billion in 2000. This has hiked Africa’s share of global flows to 4.4%, which while still modest, is a handsome improvement on the 0.7% in 2000. With more than $700 billion worth of FDI stock, Africa’s FDI performance has, in fact, outpaced its economic expansion, growing by 5% relative to its GDP between 2000 (at 24% of GDP) to 2014 (29%).

While the biggest beneficiaries of FDI historically have tended to be large economies with considerable mineral resources, in recent years, more vulnerable economies, such as Tanzania, Uganda, Madagascar, and Ethiopia, have seen investment flowing in, with intra-regional FDI a particularly significant source of foreign capital in these countries. The senders of FDI to Africa are similarly evolving.

Most FDI stock on the continent are still held by developed country-based parents, but developing country multinationals have had their appetites whetted by Africa, resulting in a spate of investments by Asian emerging economies – notably China, Singapore, Malaysia and India – on the continent in recent years. These new players now largely target assets relinquished by developed country MNEs, as the latter continue their exit from Africa.

Going At It Alone

An even more arresting development has been the acceleration of intra-regional FDI, which lends concrete support to African leaders’ efforts to achieve deeper regional integration. The rapid economic growth of the last decade has underpinned the rising dynamism of African firms on the continent, both on the trade and investment front. Intra-African investments have been fast rising, spurred mostly by the growing expansion of South African firms into the continent. And since 2008 Kenyan, Nigerian, and North African firms have also started venturing cross-border. In fact, between 2009 and 2014, the share of cross-border greenfield investment projects originating from within Africa rose to 19% of the total, from less than 10% in the period 2003 - 2008.

But by far the most encouraging development over the past fifteen years has been the increasingly diverse nature of the investment going into Africa. A growing chorus has been urging Africa to move beyond the mere export of raw materials pointing that manufacturing ability and technology can facilitate high value-added trade for African countries. Not only would this help create employment and raise incomes; it would also help shield developing countries better against cyclical downturns, as witnessed by the current commodity slump, which is wreaking havoc in commodity-dependent developing country markets.

The good news is that FDI into Africa now is helping to drive that transition. Investment into the continent is now more diverse than ever before, driven by demographic developments, high urbanisation rates, improved macroeconomic management, and greater interest from developing economy investors.

Services Up

Services — which increased fourfold between 2001 and 2012 — now constitute the largest part of African FDI stock (48%). Another bright spot is manufacturing. The sharp increase in the number of Asian manufacturers engaging in Africa, as well as new investments from North America and Europe in R&D and consumer industries, gives impetus for the development of regional value chains and the diversification of domestic economies. And, confirming that Africa is truly on the rise, consumer-oriented sectors are now beginning to drive FDI growth.

Expectations for further sustained economic and population growth underlie investors’ continued interest in consumer market-oriented sectors that target the rising middle-class population. This group is estimated to have expanded 30% over the past decade, reaching 120 million people. Targeted industries include consumer products such as food, information technology, tourism, finance and retail. Similarly, driven by growing trade and consumer markets, infrastructure FDI have seen robust increases in information and communication technology and in transport.

Prospects for the continent are muted in the mid-term — as can only be expected in view of the current commodity downturn and a consequent depression in commodity-seeking FDI. But what has been built up over the past fifteen years will not be undone by the downturn, and the continent can expect to continue building economic muscle. Akin to the rise of Asia, which released of millions of people from the poverty trap over the time frame of the Millennium Development Goals, the aspiration is to similarly set Africa on a growth path that will deliver commensurate benefits for its population. The best way to ensure this happens, is to encourage the growth of deeper, and pro-development investment on the continent. i

About the Authors

James Zhan is director of Investment and Enterprise at the United Nations Conference on Trade and Development (UNCTAD) and leads the team that produces the World Investment Report

Astrit Sulstarova is chief of the division’s Investment Trends and Data Section.

Mathabo le Roux is economic officer in the Office of the Director.


Zaha Hadid (1950-2016): “I Don’t Design Nice Buildings”

Zaha Hadid orphaned this world on March 31 and left it waiting for great works that now will never be. Architects bloom late in life and, while a prodigy, Ms Hadid was widely expected to pique in the years ahead. The Iraqi-born architect, credited with demolishing geometry, passed away, aged 65, in Miami.

Ms Hadid led a double life as a gifted painter, drawing inspiration from the Russian Suprematist School famous for celebrating art as an emotion rather than a way of depicting people or objects. Much like her buildings, Ms Hadid’s paintings defy gravity and convention with floating skyscrapers and other suspended objects hovering over cityscapes. As an architect, Ms Hadid confessed to a manifest lack of interest for engineering, producing curvaceous designs that were deemed impossible to erect – and often were.

For almost two decades, Ms Hadid was known as a paper architect, gaining a reputation as a diva impossible to work with and liable to throw a tantrum of magnificent proportions when challenged. In 1996, her fate seemed sealed when she was summarily dismissed as the lead designer of the new opera house in Cardiff.

An impromptu coalition of the bored and boring – assorted politicians, commentators, and other dullards – conspired against what would undoubtedly have become the most radical and compelling building in Britain. It was never built. In its place an adorned rock was erected which now goes by the name of Wales Millennium Centre. However, Ms Hadid did enjoy the last laugh, when her “double pebble” design for Cardiff saw light in China as the Guangzhou Opera House – hailed by the New York Times’ art critic Nicolai Ouroussoff the “most alluring opera house built anywhere in the world in decades.” That is what vindication looks like.

As a structurally ambitious architect endowed with a geometrically fractious tendency, Ms Hadid followed in the footsteps of Brazil’s Oscar Niemeyer who was one of the first to become a sculptor of monuments. Attracted to free-flowing sensual curves, shunning the hard and inflexible of straight lines and sharp angles, Ms Hadid happily straddled the frontier that separates genius from madness. Quite unapologetic, she stuck to her riotous ways and before long build up a practice with over 400 staff working on close to a thousand projects in 44 countries.

Not without her detractors – Guardian columnist Simon Jenkins thought her buildings more suited to deserts than urban settings – Ms Hadid in 2004 went on to bag the Pritzker Prize, architecture’s most prestigious award. In 2011, she received the Stirling Prize for her design of the Evelyn Grace Academy in Brixton. Earlier this year, Ms Hadid was presented with the Royal Gold Medal awarded annually by the Royal Institute of British Architects.

To her remaining critics she answered, “as a woman, I’m expected to want everything to be nice, and to be nice myself. A very English thing. I don’t design nice buildings. I don’t like them.

I like architecture to have some raw, vital, earthy quality.” Funny, frank, and outrageous to a fault, Ms Hadid was hard not to like – she made sure of that, and if failed, would usually walk out. Last September, Ms Hadid exited the Today show prematurely after the presenter suggested her design for the Tokyo 2020 Olympic Stadium had been cancelled because of cost overruns – in the process re-establishing herself as the lovable diva of architecture.

Always provided with an unmistakable wow-factor, Ms Hadid’s designs became the stock in trade for any city ambitious enough to make a splash. Frank Gehry unwittingly started that trend with his design for the Guggenheim Museum which not only turned into an instant landmark but also placed Bilbao on the map. Ms Hadid refined her trade at the Office of Metropolitan Architecture – the famed Rotterdam studio founded in 1975 by Rem Koolhaas, the Dutch architect who famously managed to transform a police station into an objet d’art (Almere 1982-1985).

Ms Hadid caught on quickly and answered in 1993 with her now iconic fire station on the grounds of the Vitra furniture factory in Weil am Rhein in Germany. The structure, made of the cast concrete and glass walls favoured by the modernists of yore, is of a shape also found in many of her Peak Club Paintings – one of forceful fracture.

Finding herself in way out front of even the most daring avant-garde did not cause Ms Hadid any discomfort; she relished not just the limelight, but also being uniquely different and – why not? – courageous. That, in fact, became her hallmark.

Ms Hadid’s photogenic work attracted patrons who were less interested in substance and functionality than in high profile and impacts. Subtlety was just not her thing. However, Ms Hadid had eye for detail: the curves and breaks of her designs anticipated the visitor’s or user’s visual experience – her buildings aim towards the generation of a self-image.

A lifetime of globetrotting, sleep deprivation, chain smoking, and a volatile temperament ultimately took its toll. While recovering from bronchitis at a Miami hospital, Zaha Hadid suffered a heart attack. She left just as she had become venerable, being able to pick and choose the best offers from the jobs submitted. Just as Oscar Niemeyer did before her, Ms Hadid reminded the world that modern architecture can afford to be close; to belong to a place rather than impose on it. For imparting that lesson, Ms Hadid is owed a debt of gratitude.


New Business-Registration Portal Goes Global

[caption id="attachment_9613" align="alignright" width="325"] Ann Low at AIM 2015 Copyright CFI.co[/caption]

A new web portal has been launched to help companies directly access, and assess the user-friendliness of, business registration websites around the world.

Global Enterprise Registration or www.ger.co is the brainchild of Ann Low, Deputy Director of the Office of Investment Affairs, at the US Department of State, who presented it at the 2015 Annual Investment Meeting in Dubai (30th March to 1st April).

She explained that GER.co's key aim is to simplify business registration processes on a global scale. The easier it is for an entrepreneur to register his business, the more likely he is to do so. The newly registered businesses become taxpayers, which increases the resources to finance sustainable development.

"In many developing countries, over 50 percent of economic activity is conducted by unregistered businesses. This means that those businesses don't have bank accounts, so can't take out loans to grow, and don’t have access to health or social insurance. An illness can cause a business to fail. By making registration easier, businesses quickly get the necessary documentation to apply for bank loans and access to social services."

"In many developing countries, over 50 percent of economic activity is conducted by unregistered businesses."

- Ann Low, Deputy Director of the Office of Investment Affairs, US Department of State

“GER.co aims to be the first stop for business registration anywhere in the world. The site uses a simple green dot rating system to alert an entrepreneur to the complexity of the business registration process in different countries. This information saves the entrepreneur time since he knows what to expect. GER.co also reduces corruption by encouraging governments to put their processes online, increasing transparency and predictability."

In order to be listed on the GER website, a country needs to have either a "single window" website allowing simultaneous online registration with at least two agencies, or an "information portal," describing the mandatory registration processes with at least two public agencies. At present, only 26 countries in the world have single windows (including one in the UAE), and 126 countries have information portals. According to Ms. Low, “presenting links to all the world’s online business registration sites in one location enables governments to identify best practices. They can see how to make their administrative procedures more user-friendly and be inspired to make such improvements a priority. It's an exciting area, because there is a lot of room for improvement globally.”

“This has already happened in Guatemala, which went from 172 in the 2013 Doing Business ranking ("Starting a business" indicator) to 98 in 2015, thanks to improved administrative procedures in its new Minegocio.gt business registration website.” Ms. Low adds that user-friendly business registration websites are also vital for attracting Foreign Direct Investment (FDI) by small and medium-sized enterprises (SMEs), which can see complex, opaque procedures as an insurmountable barrier to foreign investment.

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“One of the obstacles to FDI success is when a country’s laws and regulations aren’t that transparent. If you’re a one- or two-person start-up, you don’t have the time or energy to work out complicated licensing and registration systems, so lots of businesses just don’t bother. Governments can create a more attractive environment for FDI from SMEs by simplifying their registration procedures and putting them online. These same actions will help spur domestic entrepreneurship and innovation."

The GER is a joint initiative by the United Nations Conference on Trade and Development (UNCTAD), the Kauffman Foundation’s Global Entrepreneurship Network (GEN) and the U.S. Department of State.  In February 2015, The White House Summit to Counter Violent Extremism identified GER as a community-led solution to address extremism by facilitating economic opportunity through entrepreneurship, and good governance (http://www.state.gov/r/pa/prs/ps/2015/02/237647.htm, point 9).

GER.co was presented at this year’s 5th edition of the Annual Investment Meeting, which runs from March 30th to April 1st on the theme of ”Sustainable Development Through FDI-Induced Innovation and Technology Transfer.” Organised under the patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President of the United Arab Emirates, Prime Minister and Ruler of Dubai, this year’s Meeting has attracted no less than 68 Ministers from around the world, plus thousands of delegations, officials and businessmen and women from more than 140 countries.

For further information, please see GER Brochure


Containers Printers: Premier Packaging Solutions Provider

[caption id="attachment_12232" align="alignright" width="280"] CEO: Amy Chung[/caption]

At Containers Printers quality and sustainability sit at the very core of an approach to business that has delivered consistent growth and transformed the Singapore company into a trusted partner of industry. The package solutions provider was founded in 1981 to meet the pent-up local and international demand for superior metal and flexible packaging and the associated branding. Right from the start, the company adhered to a holistic business approach enabling clients to concentrate on the contents.

Containers Printers CEO Amy Chung, on a recent visit to Europe, emphasised that the company has recently broadened its offerings to incorporate, amongst others, design and artwork. To that end, Containers Printers hired a number of experienced graphic artists to produce eye-catching designs that dovetail seamlessly with client requirements for branding and demographics.

“At Containers Printers we aim to offer total packaging solutions as a business-to-business service provider. Over the past three decades, the company has decisively moved up the value chain to meet industry requirements and branch out into new segments of the market,” says Chung who reiterates that the company she leads dedicates significant resources to the fine-tuning and further development of its processes and products. “As a progressive company, Containers Printers continuously updates and upgrades its facilities in order to maintain its leading edge with machinery that uses state-of-the-art technology. This is a dynamic market, subject to constant change, which requires us to keep evolving”.

Chung emphasises the importance of continuity and dependability as well: “As a partner to industry, we need to keep our end of the bargain without fail in order not to perturb or derail carefully designed supply chain. Thankfully, Containers Printers enjoys a stellar reputation which is, perhaps, the company’s greatest asset.”

"Containers Printers was also an early-adopter of solid corporate governance principles, valuing transparency, corporate social responsibility, and health and safety as risk critical mitigation strategies – and as ways to underpin sustainable growth."

With a domestic market of limited size, Containers Printers needs to strike out overseas for growth. To that end, the company maintains a number of strategic partnerships whilst ensuring its products are competitive in the global marketplace. It has successfully applied for, and obtained, certification by global entities for international standards which enables the company to cement partnerships with leading brands in the nutrition, pharmaceutical and lifestyle sectors, amongst others.

Containers Printers was also an early-adopter of solid corporate governance principles, valuing transparency, corporate social responsibility, and health and safety as risk critical mitigation strategies – and as ways to underpin sustainable growth. The company takes pride in its strong after-sales support trouble-shooting any issues that may arise and proactively striving for perfection. “Containers Printers is mindful of quickly responding to global trends such as the concern for the environment. We design our products for minimal environmental impact. The same holds true for our production processes that not only needs to ensure cleanliness but also must comply with all relevant standards. We have been able to exceed those, adding to the satisfaction of our clients,” says Chung.

Containers Printers offers clients a comprehensive range of packaging products such as flexible laminates, metal packaging, and aerosol components. The company exports its products to over thirty countries in Europe, Asia, Australia, and the Middle East.


Werner Hoyer, President of the European Investment Bank (EIB): A Mostly Unseen Hand

In late-December, President Werner Hoyer of the European Investment Bank shared his experiences and insights with CFI.co.

[caption id="attachment_12239" align="alignright" width="300"] President: Werner Hoyer[/caption]

He leads an institution more than twice as large as the World Bank, yet remains virtually unknown outside financial circles. Werner Hoyer (66) started his second six-year term as president of the European Investment Bank Group, comprising the European Investment Bank (EIB) and the European Investment Fund, on the first of January. A powerful financial tool for implementing EU policy initiatives as formulated by the European Council, the EIB is the only bank owned by the EU member states and, as such, represents the long-term interests of the European Union. During his first tenure, Mr Hoyer managed to increase the Group´s annual financing volume from €55bn in 2012 to €84bn last year with a corresponding jump in supported investments to €287bn.

A significant part of that growth stems from the European Commission’s Investment Plan for Europe (IPE) – colloquially known as the Juncker Plan – which so far saw the EIB Group approve €51bn in co-financing for investments totalling €256bn. The Juncker Plan’s stated aim – “to get Europe back to work” – is largely on track to be achieved in the three-year period envisioned at the time of its unveiling in November 2014.

The job, however, is not yet done. It never quite is. The bank now stands ready to, amongst other initiatives, offer substantial support to countries most likely to be seriously affected by the UK’s impending exit from the union – such as Ireland.

In September, the EIB launched a €300m midcap lending programme specifically directed at Irish companies, thereby offering direct support to businesses. In 2017, the EIB provided around €1bn worth of financing in Ireland – a record volume for the country. The new programme aims to close the funding gap that existed for mid-sized companies seeking between €7.5m to €50m in investments. Up to now, the EIB provided direct financing to large corporations and channelled funds earmarked for SMEs via privately-owned banks, leaving midcaps largely out of the picture.

“Whilst our growth has been tremendous, it is not the prime metric that motivates us as a bank.”

“Whilst our growth has been tremendous, it is not the prime metric that motivates us as a bank,” says Werner Hoyer: “Our mandate calls for the bank to support EU policy and help foster the cohesion of the internal market. The bank’s professionals are as competitive and experienced as their peers at commercial banks but operate on a slightly different premise which does not necessarily include ever-growing balance sheets.”

Mr Hoyer, a native from Wuppertal, Germany, explains that the EIB’s priorities mirror those of the European Council and include climate change action, improving SME access to financing, and encouraging technological innovation, amongst others: “These are key areas that supplement the bank’s historic mission to help finance infrastructure development – the basis of the bank when it was set up sixty years ago.”

Stepping Up to the Plate

The EIB came into its own as the 2008/9 financial crisis crossed the Atlantic to strike Europe. “During the first phase of the crisis, the EIB’s job was to protect European companies and ensure their continued access to finance. The bank rallied to the cause and leveraged its own capital towards that end. However, by the time I arrived, towards the end of 2011, the balance sheet had reached its limit.”

“In order to implement the second phase of the response to the crisis – the one that called for growth and job creation – the EIB needed, and was granted, a capital injection which allowed the bank to act in a counter-cyclical manner and become a driver of growth. In a unique move, the member states for the first time ever approved a €10bn pay-in increase in the bank’s capital. It was a truly amazing and significant moment. Since its founding in 1958, EU member states had contributed just €14bn in actual cash towards the EIB’s capital.”

The EIB’s own funds, currently just shy of €70bn, represent around 12% of the bank’s approximately €580bn balance sheet total. As multilaterals go, EIB numbers are unusually big. Annually, the bank places anywhere from €60bn to €90bn in bonds on the world’s capital markets. “At any given time, there is about €500bn in EIB bonds floating around. This level of borrowing requires us to maintain a highly competitive and rigorous orientation in order to keep the trust of investors.”

In effect, the EIB benefits, albeit perhaps indirectly, from the European Central Bank’s hawkish approach to crisis management and solution as defined by its president’s now (in)famous 2012 intervention. Mario Draghi’s unequivocal assurance that the ECB will do “whatever it takes” to save the euro, fundamentally changed the course of events. Those three words almost instantly calmed jittery markets and provided a solid backbone for the European Union’s determination to tackle the crisis. The EIB has never drawn upon its credit lines with the ECB but the mere fact that they exist and are vast is enough to make the bank into the proverbial 800-pound gorilla ready to deal with any, and all challenges.

In a show of its force, the EIB set out to leverage its €10bn capital injection to generate, within three years, €180bn or so of investments. “We managed to reach that goal nine months early, which constituted a major success”, says Mr Hoyer. The remarkable achievement did not remain unnoticed in Brussels. It also piqued the interest of Jean-Claude Juncker who, at the time, was preparing his – ultimately successful – bid for the presidency of the European Commission. Mr Juncker turned to the EIB for inspiration and asked Mr Hoyer to help him devise a comprehensive plan to kick-start the then mostly flat-lining European economy.

New Reality

“By 2014, the situation had changed for the better. There was ample liquidity and interest rates were near zero. Moreover, there was no shortage of good, solid, and much-needed projects that required financing. However, all that liquidity was not flowing into these projects, perhaps because of reluctant investors, a malfunctioning of markets, or a more generalised aversion to risk. Mr Juncker then took the very courageous decision, together with Budget and Human Resources Commissioner Kristalina Georgieva [now CEO of the Word Bank], to convince the European Parliament to take €16bn out of the EU budget, money earmarked for subsidies and grants, and put those funds in a guarantee facility [European Fund for Strategic Investments – EFSI] with a €5bn top-up in EIB cash, for a grand total of €21bn. To this sum, we can then add a multiplier effect of fifteen for a €315bn impact on the European economy. So that was, in a nutshell, the big adventure we entered into a few years ago.”

The Juncker Plan delivered on its promise. With around 80% of the funds committed, a preliminary impact analysis has found that the plan added at least 0.7% to the union’s collective GDP and – even more importantly – created over 690,000 jobs. The plan also unlocked credit to around 540,000 SMEs. “Impressive though these numbers are, this is just the short-term effect of the Juncker Plan. Over the longer-term the question becomes what the initiative means for Europe’s productivity levels, its competitiveness, and its position in the world. It would be fair to conclude that the plan’s impact is cumulative and will produce much higher figures over the next ten years or so.”

Mr Hoyer attaches significance to the Juncker Plan’s medium to long-term effects. He notes that, during the financial crisis Europe turned inward in order to put its house in order: “Meanwhile our main competitors in Asia and North America moved forwards in terms of competitiveness. We must catch up now that the need of counter-cyclical action and intervention has diminished. Economies are back on track, growth has returned, and jobs are being created: we can now concentrate our efforts on addressing the structural weaknesses of European industry.”

In this, Mr Hoyer cautions against competing on labour cost. He proposes to invest in technology, research, innovation, and education instead: “The education of the future workforce is the key to growth, yet is often ignored. Just a few member states manage to meet he education and research targets set by the European Council. We have to boost our competitiveness by investing in education and research.”

Philosophical Shift

The largest of the three pillars sustaining the Juncker Plan – the European Fund for Strategic Investments – represents a shift in philosophy as it moves private investments into higher-risk projects previously underwritten by public funds. “As such, it represents a much more effective way of allocating the EU’s resources. It also does away with the subsidies-and-grants mentality and ensures a higher impact of EU policy initiatives.”

Mr Hoyer makes no excuses as he bluntly concludes that the EU has not yet fully developed its tremendous potential. “It has done a particularly poor job in telling the true European story as it relates to politics, business, culture, and other fields. However, my own convictions have not suffered as a result and I fully believe that after the horror year of 2016, with Brexit and the uncertainty in the US, Europe will bounce back. In fact, that bounce is already happening right now, attesting to the resilience of our common project.”

Brexit

Twice minister of state at the German Foreign Office – in the fifth cabinet of Chancellor Helmet Kohl (1994-1998) and in the second cabinet of Chancellor Angela Merkel (2009-2012), Werner Hoyer was intimately involved with the drafting and redrafting of European treaties and the complex negotiations resulting from those efforts. Mr Hoyer enjoys a reputation as an ardent advocate of the European project and is not usually lost for words when addressing its detractors or critics. In 2011, still at the Foreign Office and in charge of German-French relations, he chastised Denmark for mulling the reintroduction of border controls in words not normally heard from a top diplomat.

The UK’s decision to exit the European Union is not one Mr Hoyer cheers: “It is not only a terrible mistake, but hurts the British people and all member states of the European Union as well. It is a sad thing and a defeat for us all. Unfortunately, the hit will be felt hardest by the British people themselves. However, it also affects the EIB. Remember that member states have only paid in just above €20bn. That modest sum has a huge multiplier effect as previously described. Now, you take out part of that paid-in capital and the leverage works in reverse. The UK owns 16% of the bank’s shares and we must now see how we can mitigate this loss. We are, however, quite optimistic as the remaining member states are fully behind the bank. In fact, the president of the European Council, Donald Tusk stated at the end of the last summit that ‘the EU is committed to preserving the financing activity of the EIB Group and its business model throughout and after Brexit’.”

The Unknown Behemoth

The European Investment Bank is the world’s largest multilateral lender – by far – with 2.5 times the financial firepower of the much better-known World Bank. It is not a bank that conducts its business with fanfare. Its mostly unseen hand helped reshape European markets and create new ones such as those for project finance and green bonds. In 2007, the EIB introduced the world’s first-ever climate-aligned bond, effectively creating a new asset class that has now ballooned into a €600bn global market. In 2015, the bank put in a repeat performance with Tera Neva, a climate-awareness bond that allows investors to align their financial and energy transition goals. The bond is linked to the Ethical Europe Climate Care Equity Index and has already received €500m from institutional investors.

An innovator par excellence, albeit more of a silent partner than a rambunctious one, the EIB’s own trajectory closely matches the ascendancy of the European Union from a group of six founding members in the late 1950s to a collective spanning the continent. The bank has outgrown its original mission to provide infrastructure funding and is now situated at the cutting edge of EU policy, successfully deploying its financial might to implement the shared vision of the union’s member states. It is, as such, the largest multilateral bank many Europeans have never heard of.


CFI.co Meets the Director General of Wafacash: Samira Khamlichi

[caption id="attachment_12255" align="alignright" width="322"] Director General Samira Khamlichi (left) and Commercial Development & Partnerships Director Samira Lazraq (right).[/caption]

Bridging worlds and bringing people together: there is more to the remittance business than just shuffling cash across borders. In Morocco, Wafacash has been pushing the envelope for over a quarter century tapping into both its domestic market and the country’s estimated 3.5 million-strong diaspora. The company, a wholly-owned subsidiary of the Attijariwafa Bank Group, the fourth-largest financial services provider on the African continent.

Wafacash managing director Samira Khamlichi explains that the industry is highly dynamic and constantly undergoing change as new technologies mature and open new possibilities: “We are in a growth market as more and more people leave their home country in search of opportunity elsewhere. It is only logical that, once abroad, these people will want to send part of their earning home to support family members left behind. Moroccans, in particular, are keen to preserve close family ties wherever they are in the world. That specifically includes sharing their newfound wealth.”

With its large diaspora, Morocco derives significant benefits from incoming remittances which add more to the economy than the entire tourism sector. No surprise then that the country’s cash transfer industry is amongst the most sophisticated in the world, setting new global performance standards.

All the big names of the business are present in the country – from Western Union and MoneyGram to disruptive newcomers – and the competition is exceptionally fierce. However, Wafacash remains the undisputed leader, setting the pace of the overall market and benefiting from the synergies created by belonging to the country’s largest financial services group.

Thanks to its size and reach – Wafacash maintains a nationwide network of well over 1,700 service points and agents – the company is the preferred partner of global players such as Western Union who wish to unlock and gain access to Morocco’s outsized remittances market.

Already present in over 400 cities and towns in Morocco, Wafacash established a number of strategic partnerships to extend its own global reach, offer additional products, and maintain proximity to the more than five million people that regularly use its services. The company maintains a presence in 24 countries and whilst tilting towards Europe, where the largest Moroccan diaspora is concentrated, also maintains offices in North American and countries of the Middle East – new destinations for Moroccans seeking opportunity.

Mrs Khamlichi emphasises Wafacash’ client-centric approach: “we do not just sit and wait for people to make use of our services, but go out into communities here in Morocco and abroad to showcase the many ways Wafacash can help maintain families together over great distances and add convenience to sending and receiving remittances.”

The business has changed considerably from its early days: “In the 1990s, sending cash often involved cumbersome and time-consuming procedures. Wafacash has been at the forefront of a drive towards simplification and convenience. Today’s technology allows cash to be sent in a number of novel ways – think: web-based and mobile services – and that progress has not reached its end-point.”

Wafacash has established subsidiaries in Senegal and Cameroon in order to replicate its successful formula and tap into new markets. Interestingly, the company enjoys a stellar reputation as a driver of financial inclusion. Mrs Khamlichi: “The promotion of financial inclusion is part of our corporate DNA. We offer a range of services specifically designed to meet the needs of people who are as of yet unbanked such as no-frills current accounts, mobile accounts, debit cards, and consumer credit products that add convenience to life and allow people shunned by traditional commercial banks access to services they were previously denied.”

Mrs Khamlichi explains that Wafacash long-standing outreach initiatives – whereby company reps venture into communities to ascertain needs, aspirations, and challenges and gauge response – pays off when it comes to designing products: “We want to know our customers and adjust our offerings to best serve their needs so that we can say: we here you and, even more importantly, we are here for you.”

Wafachash’ success in furthering financial inclusion has led a number of central banks in Africa to invite the company to share its knowledge and experience. “Being part of a large bank, enables Wafacash to expand beyond the basic payment services offered by mobile network operators. We have a well-established track record for increasing the banking rate and are now ready to deploy that experience in new markets in West Africa and Sub-Saharan Africa.”


Davos: Till We Meet Again - Bankers Packing Up

[caption id="attachment_11475" align="alignright" width="300"] Theresa May[/caption]

Dutch Finance Minister and President of the Eurogroup Jeroen Dijsselbloem is worried that the increased insularity of thought displayed by Prime Minister Theresa May will prove near-fatal for the United Kingdom: “We’ll probably meet again twenty years from now. By then, I’m afraid the UK will have become a marginalised and impoverished country suffering high unemployment and high inflation – not quite unlike the 1970s.”

In Davos for the 2017 annual meeting of the World Economic Forum (WEF), Mr Dijsselbloem – famous for his hawkish attitude towards crisis-ridden Greece – dismissed Prime Minister May’s threat to walk out of negotiations should the UK fail to get a fair deal: “I don’t think it is in the UK’s interest to become a pariah subsisting on the margins of Europe. That is probably not the way to go.”

While critical of PM May’s isolationism, Mr Dijsselbloem is upbeat about the incoming Trump Administration: “While the new US president can sometimes come across as rather blunt, the protectionism he touts has a few positive sides as well. It is necessary to remind corporates of their social responsibilities and the dangers of focusing purely on lowering labour costs. Though I may disagree with Mr Trump on many issues; on this one he has my full support.”

This year, The Netherlands has sent a large delegation to Davos headed by Prime Minister Mark Rutte and Queen Maxima. Some forty captains of industry plus four cabinet ministers are also in attendance. Mr Dijsselbloem partook in a lengthy panel discussion on tax avoidance by multinationals and admitted to feeling slightly uncomfortable: “It is a touchy issue for us to talk about. I recognise that as one of the world’s largest corporate tax havens, The Netherlands is quite vulnerable on this particular point. Still, the topic needs to be broached openly and frankly in order to progress towards a more equitable global tax framework.”

"I don’t think it is in the UK’s interest to become a pariah subsisting on the margins of Europe. That is probably not the way to go."

- Jeroen Dijsselbloem

UK Prime Minister Theresa May, also present in Davos, assured that her country remains committed to free trade, free markets, and globalisation. PM May lavished praised on British voters who, she said, made a brave decision to create a “truly global Great Britain”. Mrs May deplored the unease felt by her country’s European partners and their “fear” of the UK’s departure from the EU: “The Brexit vote aims to increase the control over the nation’s affairs in order to make it “still more international and global”.

In a speech to bankers at the WEF meeting, PM May yesterday reiterated her government’s intention to reach a free trade deal with the EU27 whilst also looking for FTAs elsewhere. She revealed that some of the Gulf states have already expressed an interest in signing agreements with the UK. In order to fight political polarisation, Mrs May appealed to businesses, especially those that operate in multiple jurisdictions, to play by the same rules as others: “CEOs of the corporations have a duty to pay their fair share of taxes and properly compensate workers. They must take the interests of all stakeholders into account.”

Also speaking in Davos, albeit less tacitly, Chancellor of the Exchequer Philip Hammond warned Europeans not to plot political retribution for Brexit, saying that such an attitude will benefit no-one: “We will do whatever is necessary. That's not a threat, it is statement of the bleeding obvious.”

Equally obvious were the remarks by the CEOs of JP Morgan, HSBC, and UBS who in unison confirmed that Mrs May’s intention to take her country out of the single market will have major implications for their UK operations.

JP Morgan CEO Jamie Dimon, who met the prime minister while in Davos, said the impact will be larger than expected: “It looks like there will be more job movement than we hoped for. We don’t want to – it is not a threat – it is just a fact that we will simply have to accommodate the new requirements.” Mr Dimon told Bloomberg Television on Tuesday that he expects to move anywhere from 4,000 to 16,000 JP Morgan jobs out of London.

Also speaking with Bloomberg Television, HSBC CEO Stuart Gulliver said that staff generating about 20% of the bank’s revenue will have to be relocated to the European mainland – in all likelihood Paris. Meanwhile, Lloyds Banking Group is opting for Frankfurt as its post-Brexit European hub. Britain’s largest mortgage lender has unveiled plans to upgrade its small Frankfurt branch into a full subsidiary and is said to be preparing for an extension to its banking license.

According to industry insiders cited by the German business newspaper Handelsblatt, Goldman Sachs is working on a contingency plan that also includes a significant boost to its presence in Frankfurt with up to a thousand jobs transferred to Germany and another two thousand or so moving to New York. In Davos, Huw Jenkins, vice chairman of Brazil’s BTG Pactual Group, seemed discouraged by PM May’s hard Brexit policy: “It’s very difficult to make the investment case for the UK until you see how these negotiations come out.”

The CEOs of other large banks such as UBS Group, Sumitomo Mitsui Financial Group, and Citigroup also confirmed they are working on structural changes to adjust to post-Brexit realities. While in Davos, Prime Minister May met the concerned bankers on Thursday to detail her plans.

Meanwhile, Germany’s Finance Minister Wolfgang Schäuble weighed in on the discussion warning the UK against becoming a corporate tax haven and not use the taxation of companies as an instrument for competition. Referring to the agreement on tax cooperation reached during the 2015 G20 summit in Antalya, Turkey, Minister Schäuble said that he fully expects the UK to stick to what has been approved.

Last week, Philip Hammond – his British counterpart and never one to mince words – threatened to “rip up European-style taxation systems” in order to become “something different” and “regain competitiveness”. Mr Schäuble pointed out that Mr Hammond’s apparent disrespect for decisions made at global forums such as the G20 is at odds with the prime minister’s repeated assurances that the UK is to become a truly global economy.

While Mrs May’s speech was generally well received in Davos, delegates to the meeting expressed surprise at the lack of detail. Others remarked that the prime minister had not once mentioned migration – one of the main stumbling blocks between the UK and the EU, and – arguably – the reason for a slim majority of British voters to opt for leaving the union.