CFI.co Meets the CEO of Cyprus Cooperative Bank: Nicholas Hadjiyiannis

[caption id="attachment_12311" align="alignright" width="300"] CEO: Nicholas Hadjiyiannis[/caption]

Nicholas Hadjiyiannis holds a degree in Quantity Surveying from the University of Reading, UK, and a Master’s in Shipping Trade and Finance from City University Business School in London.

He holds more than twenty years of extensive international banking and financial professional experience, starting his career in 1995 as an investment analyst in London. He moved into the field of investment advisory and private banking with Bank of Cyprus, Athens, for two years, continuing thereafter with a ten-year career at Merrill Lynch, in both Athens and London, and BNP Paribas in Cyprus and Geneva. He returned to Cyprus with his family in 2007 to take up a job with Cyprus Popular Bank, leaving in the summer of 2013 from a position of divisional manager Wealth Management.

Mr Hadjiyiannis moved into the private sector in the field of family office services for international private clients while in November 2013 he was appointed member of the board of directors of the Cooperative Central Bank (CCB) Cyprus. He was elected chairman of the board serving successfully for two years. In December 2015, he was appointed CEO of the bank.

He is a fellow member of the Royal Institute of Chartered Surveyors (FRICS) UK and was certified by the UK Financial Services Authority (FSA) and the New York Stock Exchange (NYSE). He also holds professional investment advising licenses from the Cyprus Securities and Exchange Commission (CySEC).

Mr Hadjiyiannis lectured on the topics of finance and investments at the American College in Athens, the University of Nicosia, and the European University in Cyprus. He is a member of the board of directors of the Cyprus Employers and Industrialists Federation, President of the Cyprus Institute of Financial Services, an executive member of the board of directors of the European Association of Cooperative Banks in Brussels, and vice chairman of the Cyprus Banks Association. He is a member of the advisory board of Postgraduate Studies at the Costas Grammenos Centre for Shipping, Trade, and Finance of City University Business School in London.

Mr Hadjiyiannis said that, “We are trying to build on the traditional values of the Cyprus Cooperative Bank, which actually are the traditional values of our society, in order to stay close to the people and try to respond to their needs regarding banking services. So, we are looking to offer holistic banking services in a simple and responsible way. We are transforming this 108 years of cooperative history and culture into a modern, local, competitive and, responsible bank.”

Commenting the NPL issue, Mr Hadjiyiannis said: “We set up a strategic cooperation with Altamira Asset Management, one of the biggest players in the Eurozone. It is a specialized NPL service company that has worked alongside the Spanish Banco Santander, BBVA, and others in dealing with this problem. We created Altamira Asset Management (Cyprus) to take over the management of the NPLs.”

“We are confident that through this strategic cooperation we will on-board international expertise and practices from more developed banking systems and economies that dealt successfully with these challenges. This will allow us to set aside legacy issues and step forward with a clean balance sheet, focusing exclusively with growing the bank, funding the economy, and providing an attractive return on equity to our shareholders. This will assist in unlocking our potential as the biggest retail bank in the country supporting our move into mainstream retail banking.”


FMO: Unlocking Scale Potential of  Green Bonds in India - Lessons from Global Markets

[caption id="attachment_12331" align="alignright" width="300"] Chief Investment Officer: Linda Broekhuizen[/caption]

The global green bonds market has gone from strength to strength in recent years, with issuance for 2017 already exceeding $100bn, some $20bn more than the total issuance in 2016 and the first time this benchmark has been breached.

According to the Climate Bonds Initiative (CBI) State of the Market report 2017, “the climate-aligned bond universe now stands at $895bn outstanding – a jump of $201bn from the 2016 figure. This total is comprised of unlabelled climate-aligned bonds at $674bn and labelled green bonds at $221bn.”

This is an impressive figure but pales into insignificance compared to the $90tn total worth of global bond markets. And the $100bn annual issuance also needs to be measured against the OECD’s estimate that to keep average temperature rises below 2°C, $800bn must be invested every year to 2020 in renewable energy, energy efficiency, and low-emission vehicles alone.

Green bonds are debt instruments whose proceeds are being used to finance low carbon and climate resilient infrastructure/assets. They will be a crucial tool in financing the decarbonisation of the global economy that will be necessary to meet the targets of the Paris Accord and limit average temperature rises to well below 2°C. Of the green bonds issued so far, 80% of the proceeds have gone to the transport and energy sectors.

The first issuers were multilateral development banks such as the World Bank, the International Finance Corporation, the European Investment Bank, and the Asian Development Bank. They continue to be the largest issuers, but they have been joined by issuers from countries including the USA, China, a number of European nations, India, and Brazil. France recently became the second nation to issue a sovereign green bond, after Poland and Fiji became the first emerging market sovereigns to do so. Nigeria is expected to become the first African sovereign issuer before the end of 2017.

"Green bonds will be a key tool for financing climate resilient infrastructure in cities, more of which are expected to implement green bond programmes in future."

Sub-sovereign bond issuers such as New York City and Cape Town have also joined the party. Some 70% of global greenhouse gas emissions come from cities, and many of the world’s most populated cities sit on coastlines, rivers and flood plains. For this reason, they are particularly vulnerable to negative impacts from a changing climate. Green bonds will be a key tool for financing climate resilient infrastructure in cities, more of which are expected to implement green bond programmes in future.

At the same time, issuance from corporates and commercial banks has grown. Many banks are stepping up to the challenge – banks such as HSBC, Barclays, and Bank of America have all made $1bn-plus commitments to issue green bonds. These commitments often fit into wider green financing programmes – JPMorgan Chase, for example, said this year that it wants to facilitate $200bn of green financing by 2025, while Goldman Sachs, Bank of America, and Citi have pledged to invest $150bn, $125bn and $100bn respectively.

Watch the video here:

https://www.youtube.com/watch?v=Wly2isNLv1I

Room to Grow

However, says the CBI, when it comes to green bonds, the market has fantastic growth potential because demand from institutional investors continues to outstrip supply. “There is significant headroom for more quality green issuance, particularly from banks and corporates. Increasing bank-based and corporate issuance is now a vital component in meeting climate finance targets & country climate plans.” Corporate issuance is growing – S&P Global Ratings reports that the sector tripled last year to $28bn and the CBI says $32.6bn of corporate green bonds were issued in the year to the end of October.

In September 2017, State Bank of India announced that it planned to take advantage of this demand by raising up to $3bn in the country’s biggest overseas green bond issue.

FMO’s Experience

FMO is the Dutch development bank and has been investing in the private sector in developing countries and emerging markets for almost half a century. With a committed portfolio of €9.0bn, FMO is one of the larger bilateral private sector development banks globally, with investments in more than 85 countries. FMO has strongly embraced green and sets ambitious annual targets to grow the green asset base. FMO partners with institutions like India’s YES Bank, who have also embedded the theme in their core strategy and contribute strongly to a greater awareness of the topic and its business potential.

In May 2017, FMO successfully priced its third EUR Sustainability Bond, a 6-year €500m transaction that attracted more than fifty investors. The proceeds will fund projects aimed at climate change mitigation (renewable energy and energy efficiency) and climate change adaptation, as well as inclusive finance projects (microfinance and SME financing). It followed a debut €0500m issue in 2013 and a second one for the same amount in 2015. More than a third (36%) of FMO’s eligible asset portfolio is in Asia, with India the biggest market at 13% of this portfolio. Most of FMO’s renewable energy investments in the country are in wind and solar power projects.

India’s Market Ripe for Expansion

India is one of the top ten global green bond markets and, according to the CBI, “to date, Indian issuers have been leaders in demonstrating best practice by having most labelled green bonds receive a review or certification from an external body”. Having bonds certified by external parties has been instrumental in ensuring international investor confidence in the green credentials of the Indian green bond market.

As banks’ balance sheets are becoming increasingly constrained by sector exposure limits and capital ratio requirements, we expect capital markets to play a bigger role with the investments of $2.5tn required to meet India’s 2030 climate change mitigation targets, of which around half from the private sector. “There are many bond issuers who could easily be issuing green bonds,” says the CBI. “For example, India rail bonds would qualify. Investor demand for green products is growing, the potential now exists for India to attract significant international capital via a robust green bond market to meet national climate and development goals.”

However, the market remains in its infancy, with both issuers and investors still unsure of the benefits of green bonds, says Linda Broekhuizen, FMO’s chief investment officer. The market is also held back by the lack of a local currency market – just a small fraction of the market is denominated in rupees, in part because local investors have yet to embrace green bonds and in part, because many potential foreign investors are not able to take rupee exposures. It appears that local investors do not have any meaningful green targets yet. If such targets were to be put in place, this could significantly boost green bond issuances and ultimately the greening of the economy.

One concern investors may have is that by buying into a green bond they will be sacrificing yield, but that is a misplaced fear, Mrs Broekhuizen adds. “While in certain smaller markets, concessional funding may go to green investments and drive overall pricing/yield down, the Indian market is too big for such an effect. With international investors focusing more heavily on green issues, it is likely that more and more funding will flow towards green bonds, which should then lead to pricing efficiencies for the issuers in the future.”

But for the Indian green bonds market to grow, it needs a favourable environment, with the right regulations and incentives in place, along with transparent rules and principles, she explains.

Green bonds currently face restrictions that do not apply to project financing, for example, while foreign investors face additional hurdles if they want to invest in India. To illustrate, currently foreign investors need to go through an auction in order to get an investment limit allocated. Whether or not a limit will be available and at which price, leads to a high level of uncertainty. If this specific barrier, and others, were reduced or removed altogether for green bonds, it would boost investment in the green bond sector significantly.

Mrs Broekhuizen further adds that green should not be misconceived as being restricted to renewable energy. The scope can be, and is, much larger and extends to green vehicles, energy efficient offices, household equipment, and so on. The opportunities are out there.

Lessons from China?

A comparison with China is instructive – CBI ranks it as the top “climate-aligned bond” country, responsible for more than 80% of green bonds in Asia, with issuance of more than $300bn compared to less than $25bn for India. Growth has come quickly – the country issued a negligible amount in 2015 yet is the joint leading green bond issuer for 2017, alongside France and the US.

Much of this comes down to strong government backing linked to the country’s commitment to peak CO2 emissions by 2030 at the latest, lower the carbon intensity of GDP by 60%–65% below 2005 levels by 2030 and increase clean energy to around 20% of the total.

“There is a strong government programme to invest in green initiatives, specifically via the larger state-owned banks,” says Mrs Broekhuizen. The private sector can build-on the groundwork laid down by such public programmes, she adds.

India has its own ambitious targets to cut emissions and decarbonise its economy, and green bonds can play a huge part in meeting those goals. The sustainable investor base is slowly but surely expanding, and investor appetite will increase further if India aligns its financial sector more with international best practice.

In this regard, there are already encouraging signs of progress. The Indian Green Bonds Council was formed in 2016 and this year the Securities Exchange Board of India (SEBI), the corporate regulator, released guidelines for listing green bonds that will bring greater transparency and certainty to the Indian green bond market.

With the imperative of tackling climate change, air pollution, and other sustainability issues, a positive policy environment and strong government support, India’s green bond market is well-placed to thrive in years to come.

FMO: Pushing the Green Envelope

Based on an interview with Linda Broekhuizen

[caption id="attachment_12336" align="aligncenter" width="878"] Linda Broekhuizen, CIO of FMO, at FMO headquarters in The Hague, Netherlands[/caption]

Its name – Platform Carbon Accounting Financials (PCAF) – lacks a certain je ne sais quoi, but its intentions are beyond reproach. For the first time, twelve banks have agreed to a single methodology for measuring the carbon footprint of their investments and loans. It took two years to hammer out the formula which is deemed crucial for gauging the environmental impact of financial services providers and for determining trends. The data also allow banks to fine-tune their policies and develop more effective strategies.

PCAF is an initiative of twelve Dutch banks, pension funds, insurers, and asset managers. The platform originates from the Dutch Carbon Pledge signed at the 2015 Paris Climate Change Conference and is open to new members. The investment management arm of insurance company Achmea joined last year. PCAF enables financial services providers to set targets and monitor compliance and progress. The measurement of the financials’ carbon footprint is, however, merely a means to an end: the decarbonisation of investment and loan portfolios in line with the Paris Cop 21 Agreements on Climate Change.

In its first report, released in early-December, the platform presented an enhanced measuring model that includes government-issued bonds, project finance, mortgages, listed equities, and corporate financing. The method assigns the carbon emissions of any given undertaking proportionally to stakeholders.

PCAF expects its methodology and data to set industry-wide benchmarks. The platform hopes to engage the country’s large pension funds – jointly managing a staggering €1.7tn in assets – which have been slow in developing carbon accounting practices. PCAF differs markedly from other initiatives to assess the role of financials in climate change inasmuch as the platform measures impact only and does not quantify risk.

One of the largest private sector bilateral development banks in the world, MFO (Netherlands Development Finance Company) is a founding member of the PCAF and enjoys a reputation for pushing the green envelope. The bank has been doing so for half a century. FMO sustains some €9bn in investments in 85 countries and was one of the first to decisively move towards the greening of its portfolio. Last year the bank issued its third sustainability bond, attracting over fifty investors who put in €500m. The funds raised are earmarked for climate mitigation and adaptation projects. Part of the resources will also be leveraged to support financial inclusion initiatives.

Over a third of FMO’s investment portfolio is deployed in Asia with India representing the bank’s largest market. FMO has partnered with YES Bank to promote environmental awareness and explore green business opportunities.

Whilst India needs around €2tn in investments if the country is to meet its 2030 climate change targets, the market has not yet reached maturity, according to FMO Chief Investment Officer Linda Broekhuizen: “Local investors have not yet embraced green targets and foreign investors are not comfortable, or able, to take on rupee exposure. Once gwreen targets are put in place, and a transparent legal framework has been erected, green bonds will become much more common in India.”

Mrs Broekhuizen is, however, adamant that green bonds do not sacrifice yield: “While in certain smaller markets, concessional funding may go to green investments and drive overall pricing/yield down, the Indian market is too big for such an effect. With international investors focusing more heavily on green issues, it is likely that more and more funding will flow towards green bonds, which should then lead to pricing efficiencies for the issuers in the future.”

About the FMO

FMO is the Dutch development bank. As a leading impact investor FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs.By reaching out to underserved markets, we invest in some of the world’s most challenging business environments. The countries that we work in often have a fragile private sector, little job security and high poverty rates. FMO believes that a strong private sector leads to economic and social development, and has a more than 45-year proven track record of empowering people to employ their skills and improve their quality of life. FMO focuses on three sectors that have high development impact: financial institutions, energy, and agribusiness, food & water. With a committed portfolio of EUR 9.0 billion spanning over 92 countries, FMO is one of the larger bilateral private sector developments banks globally. For more information please visit www.fmo.nl. This article has previously been published in CFO Insights.


<br>British Airways: Best Premium Travel Experience Global

Unveiling a major investment drive to upgrade its long-haul business and premium economy class services, British Airways aims to reassert its transatlantic dominance and nibble away at the increasingly fierce competition. The changes will first be implemented on BA’s flagship London Heathrow to New York JFK route before being rolled out across the airline’s global network. BA is also working on the introduction of direct aisle access seats in its Club World – the airline’s business class.

On the ground, British Airways is busy renovating its business lounges at Heathrow and Gatwick airports. The company’s premier travel facilities in the US are slated to undergo a £88m makeover. In order to lessen travel-related stress, BA now offers its Gold Executive Club members direct access to the First lounge in Heathrow Terminal 5 via The First Wing, which has a dedicated security channel.

On board, BA is set to debut Europe’s first 4G inflight network and improved Wi-Fi connectivity. The airline aims to have 90% of its fleet equipped with high-speed Internet by 2019. Travellers may use their own devices to surf the web.

Whilst BA’s corporate policy squarely states that the airline’s focus remains on premium passengers, the company has also introduced added-value services for price-conscious travellers. However, British Airways’ management assured that the company will decline to lower its service level to compete with low-cost carriers.

The CFI.co judging panel commends BA on its dedication to excellence. The judges are pleased to offer British Airways the 2017 Best premium Travel Experience Global Award.


Blue Lagoon: An Otherworldly Experience

Originally founded to unlock the extraordinary benefits of geothermal seawater, Blue Lagoon integrates science, sustainability, nature, and design — creating experiences that take the mind and body to new dimensions of wellbeing. In April of 2018, the company will open the Retreat at Blue Lagoon Iceland — a place in the mineral-rich waters and moss-covered lava fields where hospitality, rejuvenation, fine dining, and exploration will be the hallmarks of a unique journey.

Chosen in 2012 as one of National Geographic’s 25 Wonders of the World, the Blue Lagoon is a place where the interplay of architecture, design, and geothermal seawater brings forth a world of wonder and wellness.

[gallery columns="2" size="medium" link="none" ids="26053,26054,26049,26055"]

The water’s unique powers were first discovered in the early 1980s when local residents began to bathe in the warm blue reservoir that had formed in the lava field beside the Svartsengi Resource Park – a geothermal power plant producing green energy. Engineers at the facility had expected the water to seep through the lava and return to the earth’s volcanic aquifers. However, owing to the precipitation of silica in the fluid, proper drainage did not occur and a beautiful body of water took shape.

Some people came to the water for healing. Others for pleasure. But all who came, left with a profound sense of wonder.

The lagoon eventually became the focus of intense scientific study, giving birth in 1992 to Blue Lagoon Limited, a company dedicated to the research and development of the water’s primary elements: silica, algae, and minerals.

In 1995, with research confirming the healing properties of Blue Lagoon geothermal seawater, Blue Lagoon Ltd launched a renowned line of skin care products. This was followed in 1999 with the opening of the modern-day spa facility and, in 2005, a clinic hotel for the treatment of psoriasis.

Today, many decades after the first inquisitive souls began venturing into the water, the Blue Lagoon has blossomed from a humble curiosity into a wonder of the world. Indeed, the story of the Blue Lagoon continues to be written with every guest who enters the water.

The dynamic, sustainable relationship between man and nature is the cornerstone of Blue Lagoon's philosophy. This relationship informs every aspect of the guest experience. From the healing water that fills the lagoon to the electricity that lights the complex, every coordinate of the visitor journey draws its power from the earth’s geothermal resources. In short, wellness at Blue Lagoon is inseparable from the wellspring of renewable energy brought forth at the Svartsengi Resource Park.

Located on Iceland's Reykjanes Peninsula in the heart of the Reykjanes UNESCO Global Geopark, Blue Lagoon is surrounded by a vast array of volcanic phenomena: craters, fissures, mud pools, steam vents, hot springs, and moss-covered lava flows. The company strives to preserve the sanctity of this precious environment and thus cultivates, in all its endeavours, a harmonic relationship with nature. Environmental impact is minimised while architecture is designed to merge with the land – integrating the forms, shapes, and materials of the terrain. This intrinsic respect for nature can also be seen in the walkways that have been built through the lava fields. These paths allow guests to wander through the centuries-old moss, experiencing its aesthetic vitality without damaging it.

Blue Lagoon's connection with nature is encapsulated by its motto: a society without waste. During the course of the company’s evolution, the aspirations embedded in this phrase have spawned countless initiatives that foster both societal wellbeing and environmental balance.

[gallery columns="2" size="large" link="none" ids="26056,26052"]

To engender a healthier society, Blue Lagoon funds a broad spectrum of philanthropic causes in the areas of youth sports, the arts, health, and fitness – contributing to the wellbeing of the communities on the Reykjanes Peninsula.

Environmental balance is manifest in the closed eco-cycle from which most of Blue Lagoon's resources – geothermal seawater, electricity, heating, hot water – are derived. In the extraction and use of geothermal energy, nothing is wasted, while greenhouse gas emissions from the power plant are incorporated into the production of methane, a clean gas. More recently, scientists at Blue Lagoon’s R&D centre have discovered ways to cultivate algae with CO2—a significant step in the company’s goal to eliminate its carbon footprint and generate a sustainable future.

In the arena of corporate social responsibility, the company places the wellbeing of its employees and guests at the centre of its operations. Enjoyment and relaxation are key, but safety is paramount. This truth reverberates through the company’s four brand values, which were chosen by the staff: We respect; We care; We bring joy; and We create memories.

But these have become more than linguistic assertions. They are the guiding lights that animate Blue Lagoon’s existence, inspiring the company and each of its employees to continually reach for higher ground.

Built into an 800-year-old lava flow, the Retreat at Blue Lagoon Iceland was conceived and created to expand the horizons of the Blue Lagoon experience. It encompasses a subterranean spa, a luxury hotel, a mineral-rich lagoon, and a restaurant that honours and reinvents Iceland’s culinary traditions.

Covering more than 4,000 square metres and descending three metres into the lava, the Retreat Spa was designed to give guests the ability to commune with the natural wonders of geothermal seawater in a tranquil, luxurious environment.

The Retreat Lagoon is sourced from the same volcanic aquifer as the Blue Lagoon. With its lava walls, hidden corridors, waterfall, and terraced concourse, this mineral-rich expanse creates an elevated experience of the powers of the Blue Lagoon.

The Retreat Hotel encompasses 62 suites ranging in size from 40 to 220 square metres. Encircled by the otherworldly waters of the Retreat Lagoon, each space was conceived to erase the boundary between interior design and exterior enchantment, bringing guests into harmony with nature while catalysing a sense of wonder.

The Retreat’s signature dining establishment, Moss Restaurant, occupies the highest point at Blue Lagoon, endowing guests with remarkable perspectives on the volcanic horizon. With a la carte and set menus that move effortlessly from the mountains, to the farmlands, to the rivers, to the oceans, each dish opens the door to the living heritage and diverse delights of Icelandic cuisine.

Aspiring to create transformative wellness experiences, the Retreat at Blue Lagoon Iceland represents a bold new milestone for a company that was born from a humble body of blue water on the Reykjanes Peninsula.

[caption id="attachment_26050" align="aligncenter" width="1000"] Founder and CEO: Grímur Sæmundsen[/caption]

Born in 1955, Grímur Sæmundsen is a doctor of Medicine (MD) by education. As the founder and CEO of Blue Lagoon Iceland, he has led the company’s growth and development since 1992, orchestrating its transformation from an entity focused on health and wellness into a dynamic enterprise that also encompasses travel, leisure, skin care, research & development, and sustainability.

Sæmundsen earned his MD from the University of Iceland in 1981 and later received a degree in sports medicine from London Hospital College. In 1990, he left his medical practice, becoming both a pioneer and entrepreneur in Iceland’s healthcare and pharmaceuticals industries. During the course of his career, Mr Sæmundsen has established multiple companies and spearheaded a host of innovative projects and initiatives in the public and private sectors. He has also been a leading figure in the Icelandic business community – particularly in the travel industry. His most notable endeavour is Iceland’s renowned Blue Lagoon, a site that brings together all of his passions for health, nature, sustainability, and science.

With the opening of the Retreat in 2018, Sæmundsen’s original vision for the Blue Lagoon as a centre of sustainability, health, and wellbeing galvanised by the riches of geothermal seawater will take on an extraordinary new dimension.


“The real purpose of the scientific method is to make sure nature hasn’t misled you into thinking you know something you actually don’t know.”

Want to fix something, anything? Get hold of this book. Rather than a shop or repair manual, Robert Pirsig (86) proposes a philosophical way of approaching any given issue – technical or otherwise. Gain an understanding of what a defective device or derailed process is meant to do or establish, and work backward from there to locate the failure and correct it.

With its sister book Lila: An Inquiry into Morals, Zen and the Art of Motor Cycle Maintenance aims to find common ground between the romantic and rational world views, fusing irrational sources of wisdom (Zen) and science, reason, and technology (the recalcitrant bike).

Mr Pirsig argues that adepts of gestalt philosophy may experience great frustration when things go awry – as they inevitable must as per Murphy’s Law. A reluctance to embrace rational analysis, and thus study the inner workings of faulty kit or methods, runs counter to the quest for inner peace that romantics pursue.

While technology, and the dehumanised world it helps shape, may appear ugly and repulsive to the romantic, a slight adjustment in attitude is all it takes to transform a Luddite into a nerd – albeit one with a deep appreciation for the wonders of life and nature.

Though a work of philosophy, Zen and the Art of Motor Cycle Maintenance may well be used as a generic shop manual. Most any mechanical or electrical malfunction can be reduced to the bare essentials that – when approached in a Zen-like manner and properly understood – ensure a remedy may be found. In fact, no aspiring computer programmer should embark on his/her career without first consulting this how-to.

Title
Zen and the Art of Motorcycle Maintenance: An Inquiry into Values

Author
Robert M Pirsig

ISBN
978-0-0605-8946-2

link
http://www.amazon.com/gp/search?index=books&field-isbn=9780060589462


Postwar: A History of Europe Since 1945

CFI Must-Reads

Title
Postwar: A History of Europe Since 1945

Author
Tony Judt

ISBN
978-0-1430-3775-0

link
http://www.amazon.com/gp/search?index=books&field-isbn=9780143037750

“Post-national, welfare-state, cooperative, pacific Europe was not born of the optimistic, ambitious, forward-looking project imagined in fond retrospect by today's Euro-idealists. It was the insecure child of anxiety.”

Wisdom is the product of time and experience. A Marxist/Zionist as a young man, British historian and essayist Tony Judt (1948-2010) became a self-described “universalist social-democrat” only later in life. Not one to obfuscate the knowledge gained by progressive insight, Mr Judt seldom failed to surprise. After a stint at a kibbutz during the 1967 Six-Day War, Mr Judt started to question the premise of the Zionist enterprise. He caused an uproar in 2003 with an essay published in the New York Review of Books that described Israel as “a belligerently intolerant, faith-driven ethno state.”

Nonetheless the voice of reason for an entire generation, Mr Judt remained a teacher of history first. The writing of books, essays, and commentaries appeared further down the list of priorities. Originally a specialist in French history, Mr Judt’s broadened the scope of his research and in 2005 produced Postwar: A History of Europe Since 1945 which was promptly branded a masterwork. The book, of encyclopaedic proportions, traces the rise of the European Union and the demise of communism. In this, Mr Judt offers the readers a narrative that includes both halves of the previously divided continent and includes coverage of key events in the oft-overlooked minor powers.

Mr Judt warns that if World War II indeed holds moral lessons, these “need to be taught afresh with each passing generation.” He further argues, convincingly, that the European Union may indeed be an answer to history, but cannot ever be a substitute for it.


The Grapes of Wrath

“Man, unlike any other thing organic or inorganic in the universe, grows beyond his work, walks up the stairs of his concepts, and emerges ahead of his accomplishments.”

First published in 1939, The Grapes of Wrath still offers a savage read. In its depiction of the despair and cruelty brought on by misfortune this book has lost none of its power. In fact, the tragedy that befell the Joad family is eerily similar to the sufferings sustained in contemporary times by many of those insisting – or resigned – to derive a living from an honest day’s work without the benefit of an honest day’s pay. In the US, flipping burgers, stuffing shelves, waiting on tables, picking fruit and countless other jobs no longer pay a living wage.

One of only a few books to gain near-universal acclaim as a Great American Novel, The Grapes of Wrath angrily exposes the corporate moguls who caused the depression of the early and mid-1930s and exacerbated its social effects by conspiring against reform and relief. After finishing the novel, John Steinbeck explained that he wanted to “put a tag of shame on the greedy bastards responsible for this [the Great Depression].”

Arriving in the wake of literary gems such as In Dubious Battle and Of Mice and Men, The Grapes of Wrath firmly established Mr Steinbeck’s reputation as the writer of choice on the many inequities rampant in the Land of the Free. He also became the conscience of a troubled generation. Fêted as a socialist by the struggling American left, Mr Steinbeck was, however, first and foremost an individualist. In fact, he despised socialism as “just another religion and thus delusional.” According to Steinbeck biographer Jay Parini, East of Eden (1952) reads like a “hymn to individualism.”

The Grapes of Wrath earned its writer the 1962 Nobel Prize of Literature and the 1940 Pulitzer Prize. Upon its release, the novel caused an outrage in the US and triggered a lively national debate. Copies were burned and banned from school libraries. The Associated Farmers of California was incensed at Steinbeck’s depiction of the sorry plight of farmhands and labelled the book “communist propaganda.” However, the book was mostly read: it sold well over 430,000 copies in its first year and since then has never been out of print.

The Grapes of Wrath remains required reading for high school students in most Anglophone countries. However, for all its raw power the book failed to change the world. The optimism with which Clifton Fadiman welcomed the novel in The New Yorker proved unfounded: “If only a couple of million over-comfortable people can be brought to read it, John Steinbeck’s The Grapes of Wrath may actually effect something like a revolution in their minds and hearts.”

Title
The Grapes of Wrath

Author
John Steinbeck

ISBN
978-0-1430-3943-3

link
http://www.amazon.com/gp/search?index=books&field-isbn=9780143039433


CFI.co Meets the Group CEO of KBC: Johan Thijs

[caption id="attachment_17074" align="alignright" width="300"] KBC Group CEO: Johan Thijs[/caption]

KBC Group barrelled ahead in the wake of the financial crisis and hasn’t looked back since. What explains your remarkable success as a bank and a creator of shareholder value?

There are a multitude of reasons. One of the main drivers is the focus is on the fulfilment of financial needs of our customers. That mindset is really at the centre of our business and operational model. Paramount in that approach is our bank-insurance model which creates a one stop shopping opportunity for our customers. More from a technical side, our income diversification is now really up to speed.

KBC is one of the few institutions in Europe to have been working very hard for many years on the implementation of an income diversification strategy, both through insurance (non-life and life insurance business) and asset-management (which is boosting our fee and commission business). This pays off in terms of profitability and in terms of return on equity.

Another important driver is our focus on cost and on how we run our business in the most efficient manner. That obviously helps our profitability to rise as well.

Apart from these technical drivers, we have since 2012 a group-wide corporate culture called PEARL. PEARL is an acronym. It stands for Performance, Empowerment, Accountability, Responsiveness and Local embeddedness, and it has been an important factor in achieving strong results and a driver for innovation in our group. All of KBC’s approximately 43,000 employees “breathe” PEARL. They are “Team Blue”, not just individual employees. This common force and joint attitude is an important steering factor for our company as we are convinced that our people really can make the difference in becoming the reference in our industry.

Under this PEARL umbrella, we introduced a uniform way of steering the whole group – every country, every entity, every type of business line – along the same lines. Not only financial parameters are commonly shared, but also the way of working and mindset. The metrics we use to follow up this PEARL approach may be different for each country, but the parameters are the same. These metrics are followed up, country by country, entity by entity. Every local CEO is accountable for his results. That has been in place for the last five years. And I can assure you it drives the whole group towards the same mindset; towards the same drive for performance and customer centricity.

Our success is also driven by our group strategy, consisting of two parts. The first is “more of the same”, referring to what has made KBC so successful over the last five years: a bank-insurance company, focused on sustainable growth, putting the customer at the centre of its attention and, in doing so, picking up its role in society. That strategy remains the same.

The second part, “but differently”, refers to what is becoming different: the way how we are going to achieve this success. We are facing a change in customer behaviour which we observe as a pattern in all types of industry. Customer behaviour today is heavily influenced by digital change, by the fact that everything is always and immediately accessible and available through the digital channels. Our customers are used to convenience, to ease of use, to 24/7 availability in all consumer industries. And they expect the financial sector to do exactly the same. They want a convenient, easy-to-use, 24/7 bank-insurance availability. This is something which is easily said, but not necessarily easily implemented because it requires a fundamental change in the mindset of all of our staff members. As a matter of fact, this not only about the fancy front-office applications like smartphone or tablet banking, or internet solutions. It also means a fundamental change for our back-office systems and applications.

KBC reduced its core operating markets by half, from twelve to six. Are you ready to increase this number?

As a matter of fact, we substantially reduced our geographic scope as part of the strategic reorientation agreed with the European Commission after the financial crisis of 2008. At the same time, some thirty subsidiaries, entities, and business lines were sold or wound down, which wasn’t evident under the then prevailing market circumstances. We decided to focus on bank-insurance in five core countries (Belgium, Czech Republic, Slovakia, Bulgaria, and Hungary) and to maintain our banking activity in Ireland. This deliberate focus hasn’t changed since and still forms the heart of our strategy.

In 2017, Ireland was relabelled into “core country”. There are plenty of elements which were driving that decision. One of the main drivers is the digital revolution all over Europe, which is clearly taking place in Ireland. Ireland is one of the most advanced countries in terms of smartphone usage, internet penetration, etc. It also has a very young population, and perhaps that’s one of the reasons that they are potentially among the most advanced in terms of digital savviness. Another element was the fact that the economy in Ireland is recovering fast from the crisis years and the forecast for the next coming years remains extremely positive. If you combine these elements, Ireland becomes very attractive to build a new type of digital frontrunner bank.

In Bulgaria, we acquired UBB and merged it with CIBANK, our Bulgarian banking entity since 2007. Together with DZI, our local insurance franchise, KBC today is the largest bank-insurance group in the country. Now we can really deploy fully our bank-insurance model.

How do you envision future growth - organic or via acquisitions?

Both are possible and pursued. Organic growth in all our core countries comes first. Strengthening our market share in a sustainable manner is paramount to us because it helps us to become a relevant player in each and every market in which we currently are present.

Growth through acquisitions is another option. If an asset becomes available in one of our core markets we will always look into it. However, we impose ourselves strict financial and strategic criteria. Any acquisition clearly needs to fit our strategy and has to be perfectly aligned with our financial targets. If it doesn’t add value in the mid- and the long-term in terms of return on equity, the answer will be no. To make it more specific: in Bulgaria, we recently acquired UBB and its UBB-MetLife joint venture, while in Ireland we look for organic growth. These are the two examples of how we strengthen our position with respect for our core strategy. This strict approach also means we exclude growth in other countries than our six core markets, or in other financial business models like investment banking.

How do you leverage advances in fintech - and possible disruptors in the financial services industry?

The main disruptor to our business in the coming years will not be technology. Digitisation is only an instrument. The main driver for disruption today and tomorrow will be the changing customer behaviour. This fundamental change affects our future business model and the way we deal with customers. Banking customers expect a 24/7 availability and instant response to their financial needs. Just as they are used to the same kind of convenience in e-commerce. Our underlying processes will have to be able to provide that convenience, requiring substantial investments in redesigning not only our core systems but especially the mindset of all our employees.

At the same time, we are going to compete with completely new competitors. Today, someone may be inventing in his garage something which tomorrow will be a disruptive technology that completely changes our world. This uncertainty makes the future very challenging for the banking sector. To cope with this, KBC heavily invests in innovation, both internally as through collaboration with promising fintechs. Rather than fighting innovation, you’d better embrace it and integrate it in your business model. That is your best guarantee to stay relevant.

Reviewing the present state of financial services industry, what are the trends to watch out for?

We are underestimating the immense impact artificial intelligence will have on our society. Any type of cognitive and repetitive work can essentially be handled by machines. This means that many jobs in the industry will be partially or fully impacted. It will also create new opportunities, new tasks, and new jobs. Therefore, we constantly have to retrain and reallocate our employees to the new normal. And let’s be aware, we will need today people to build and maintain those ground-breaking new systems.

What also worries me is the hype around cryptocurrencies. Although I marvel at the underlying blockchain technology, prudence is called for. The whole Bitcoin craze reminds me a little of a pyramid scheme. You get a small group of people at the controls, creating artificial scarcity not backed by any reference framework. Next thing you know, everyone wants a piece of the action, and you’ve got prices going through the roof. And in the opposite direction, eventually.

I am also convinced that customers will judge us more and more on our degree of sustainability. This is why sustainability is embedded in our business strategy. It ensures that our sustainability principles are incorporated into all our activities and grounded in every part of the organisation. The fact that sustainability parameters are part of our remuneration policy up to the executive level, clearly illustrates this. But sustainability also means that, as a bank-insurer, we can enhance the positive impact our day-to-day operations have on society. To us, corporate sustainability primarily means being able to respond autonomously to the expectations of all our stakeholders, not only today but also going forward. That is a much broader interpretation than the traditional approach, which is usually based on the environment, philanthropy, and corporate governance. We seek at all times to achieve the right balance between business objectives and sustainability targets. This approach is fully in line with our position as an all-round bank-insurer which aims to play a prominent economic role for its private individual, SME, and mid-cap client base.


CFI.co Meets the EY Germany Management Team: Hubert Barth & Julie Linn Teigland

Hubert Barth

[caption id="attachment_17078" align="aligncenter" width="900"] Country Managing Partner EY Germany: Hubert Barth[/caption]

Country Managing Partner EY Germany
Hubert Barth (49) has over 25 years of experience in the professional services industry, mainly in accounting and transaction advisory services. He started his career after earning a degree in business administration at the University of Tübingen in 1992 at PwC in Frankfurt and has lived in Berlin, New York, and Munich.

In 1998, Mr Barth qualified as a German public auditor and German tax advisor. In 2003, he switched to Allianz Global Investors as head of Financial Management and Risk Control. He joined EY as a partner in the Financial Services Organisation in 2006. At EY, he has held various leadership positions in the European and German organisation. For a number of years, he has led the Bavarian practice and coordinated EY’s market activities across Germany on the basis of the objectives of the firm’s current corporate strategy – Global Vision 2020.

Effective as of July 1, 2016, Ernst & Young GmbH’s supervisory board appointed Hubert Barth as Country managing partner of EY Germany. He is also responsible for the assurance business in Germany, Switzerland, and Austria.

Throughout his career, Mr Barth has audited well-known companies in the industrial and financial sectors and supported numerous company transactions. Furthermore, Mr Barth is specialised in the valuation of financial services institutions. He has given advice in numerous projects with regard to regulatory issues, financial accounting, credit portfolios, risk management, and financial instruments.

In addition to his work at EY, he lectures at the Munich Business School. Mr Barth is married and has three children. His hobbies include reading, skiing, and taking part in triathlons.

Julie Linn Teigland

[caption id="attachment_17079" align="aligncenter" width="900"] Managing Partner EY Germany, Switzerland, and Austria (GSA): Julie Linn Teigland[/caption]

Managing Partner EY Germany, Switzerland, and Austria (GSA)
Julie Linn Teigland (48) was born in Michigan, USA, and has been living in Germany for around thirty years. Her career began at Arthur Andersen, where she turned her knowledge of both sides of the Atlantic into specialisations, focusing first on accounting and subsequently on tax (under US and German tax law). She advised real-estate investment funds on international transactions before becoming head of the finance and accounting department of the international project developer Tishman Speyer Properties in 1998.

In 2001, Mrs Teigland joined EY where she built up human capital services in Mannheim and took on responsibility for EY’s strategic growth portfolio for Europe, the Middle East, India, and Africa (EMEIA). From 2002 onward, she focused her time in assurance, advising, and auditing many growth companies and serving large international clients with an increasing focus on life sciences. Prior to her current role, Mrs Teigland held various leadership positions within EY such as EMEIA strategic growth markets leader, managing partner for EMEIA markets, and has been a member of the area executive committee for EMEIA since 2012. In 2016, Mrs Teigland was appointed managing partner of EY in Germany, Switzerland, and Austria.

With over 28 years of experience in professional services, Mrs Teigland is leading one of the largest EY regions in EMEIA and has clearly prioritised EY’s market organisation and digital transformation. She is a strong advocate of digital solutions and is deeply connected to the central European network of tech leaders. She is equally recognised as a leader in progressing parity issues across the globe. Mrs Teigland is a prominent voice of the W20 global agenda and is a member of the UN EQUALS advisory board connecting the public and private sector in the advancement of digital equality.

Julie Linn Teigland lives with her husband and four children in Heidelberg.


EY Germany: Champion in Professional Services

[caption id="attachment_17083" align="alignright" width="300"] Berlin: EY Germany[/caption]

When a company with over 10,000 employees is soon celebrating its 100th birthday, it doesn’t really run the risk of being considered hip and unconventional. And if assurance services play a major role on top of that, well then the start-up scene coolness that’s all the rage with Generation Y seems to fade far into the distance. Managers in grey suits? Auditors, tax consultants and advisors with no sense of fun? Traditional old economy business with files, figures, and facts?

If this is what comes to mind, then you will be surprised to discover one of “Germany’s Top Employers 2017.” So what makes EY Germany special? What can a globally integrated assurance and advisory company offer in the age of blockchain and big data? How digital is its business and how does it help clients master this transformation?

Let’s start with the files. The days in which auditors carried tonnes of folders around with them are long gone. Similar to other industries, EY and particularly assurance services are becoming increasingly digital.

This benefits clients, since it means greater transparency and security, and also benefits employees, due to the fact that they will be able to fully concentrate on activities that demand specialised knowledge and outstanding judgment.

To make the auditing process more efficient and transparent, EY continuously incorporates innovative technologies into its work. Process mining, data analytics, robotics, and artificial intelligence are the digital revolution’s magic words, and show where the future is taking the company. As a result, the quality of audits will become better and better – where auditors used to only be able to conduct random spot checks, they will now be able to analyse entire quantities of data and make more well-founded risk assessments.
But it isn’t just their audits that are digital. EY’s consultants from advisory and tax are also busy integrating new technologies into their traditional value chain. Wherever data needs to be analysed, protected, and secured, value chains managed in the cloud, or production and sales become interconnected as a result of Industry 4.0, digital technologies are vital to meeting clients’ requirements.

Cybersecurity, for instance, is one of the prime examples that demonstrates how the company is using the tools of digitisation to avoid the risks being created by digitisation.

In the field of tax consulting, today digital technologies also help EY identify risks, handle rapidly growing quantities of data, and use them in a beneficial manner. This is why the company is also expanding its teams in this area to include data scientists, in order to marry classic know-how and IT expertise and develop new solutions together with its clients.
Old economy? Not a trace. On the contrary – this disruptive change is turning the world upside down, and anyone that wants to play a role in the digital economy of the future needs to be actively driving this transformation or risk being driven and ultimately pushed out of the way.

This revolution is hitting every industry – established business models, production processes, and sales channels are under pressure and forcing basically every company today to reinvent themselves. And as a leader in transaction advisory services EY Germany is well positioned in helping to reshape its clients.

But this transformation isn’t just affecting EY’s clients, but the company as well. As an auditing and advisory firm, this means two things: on the one hand, an opportunity, since its clients have a significant need for guidance and expect it to prepare them for the digital future. But on the other hand, a challenge, since the company also needs to realign its own business strategy and change from an operative, technological, and cultural perspective.

And even with almost 100 years under its belt, EY Germany still is a champion in reinventing itself and improve anywhere it offers new services. To achieve this, it has recently acquired three renowned consulting firms – the strategy advisors OC&C Strategy Consultants, the digital specialists etventure, and Kivala HR, a consultancy firm that specialises in the digitisation of human resources. As a result of these acquisitions, the company has rounded out its portfolio of consulting services and can offer its clients an entire package of services from one source – from strategic development to transforming operative business models to the digitisation of human resources, IT architecture, risk management, finance, taxes, and legal.

The objective is clear – EY wants to be the preferred partner of companies in all industries when it comes to their transition into the digital economy. Regardless of whether for auditing, tax advice, or transaction and management consulting – the company offers the right solution for every aspect of the transformation process along the entire value chain.

EY uses its services to help its clients master digital transformation and remain successful in their market. By doing so, it is simultaneously securing its own business success – in the previous fiscal year, EY Germany grew by more than 16% and further expanded its market position as the second-largest auditing and consulting firm.

In this context, focusing on key industries is one of the aspects driving this growth. This is why the company provides consulting services across all sectors, from life sciences and the automotive industry, to major retailers, or the financial sector. In almost all of EY’s projects, the focus is on the transformation of business models and business processes. This also increasingly applies to assurance, as auditing and transformation go hand in hand – if a client’s business model or regulatory requirements change, this also has an effect on the company’s finances. And the additional major auditing contracts it was recently awarded also confirm that clients view the company as the right partner for their financial transformation.

For example, the year-end audit of Commerzbank’s financial statements was another contract EY was awarded from a company listed on Germany’s DAX stock index. As a result of winning three other major banking clients, it is now the auditor of five of the ten largest banking groups in Germany. Furthermore, last year it maintained its position as the leading auditor and advisor to medium-sized companies and was awarded numerous new audits. As a globally integrated company, EY is the preferred auditor and advisor to Germany’s Mittelstand (SMEs) – and will help its clients successfully master the challenges of digital transformation.

To do so, the company isn’t only investing heavily in technology, but also in talented individuals. As such, last year it hired more than 1,500 new employees. In addition to classic professions like auditor, tax advisor, and management consultant, it now also employs mathematicians, medical scientists, architects, and engineers. Transformation consulting is a service that particularly requires multidisciplinary teams with a variety of different skills. This means its clients’ transformation and that of the company itself are taking place simultaneously – in order to guide its clients down this path in the best possible way, it needs to travel down and master this path itself.

EY Germany isn’t showing any signs of slowing down; it is on top of professional services. The fact that the company is closing in on the proud old age of 100 is exactly why it’s never too early to begin reinventing itself. i


The Gonzo Papers Anthology

“Absolute truth is a very rare and dangerous commodity in the context of professional journalism.”

For a meticulous dissection of the latter part of the 20th century, without undue embellishment or unwarranted literary liberties, The Gonzo Papers Anthology may be hard to beat. The emphasis is decidedly on beat: Hunter S Thompson (1937-2005) would have been the first to acknowledge his debt to Jack Kerouac and his beat generation of adventurous free souls. Without the inspiration offered – and example set – by On the Road and Big Sur, Hunter S Thompson would probably not have moved far beyond the fringes of the literary establishment.

As it happened, Hunter S Thompson would come to redefine journalism, infusing a generation of reporters brought up with the AP Stylebook – as revered as it is boring – with some much-needed literary flair. After all, if Victorian times could produce a Charles Dickens, and the fin-de-siècle a Jack London; why would contemporary reporting be solely entrusted to newspaper hacks?

With a little help from Tom Wolfe – who coined the term New Journalism – Truman Capote (In Cold Blood), Joan Didion (Slouching towards Jerusalem), and Norman Mailer (Miami and the Siege of Chicago), Hunter S Thompson painstakingly examined the people and politics of his time in books and regular contributions to Rolling Stone Magazine of all-the-news-that-fits fame.

The many highlights of Mr Thompson’s vast oeuvre are presented in the four volumes of The Gonzo Papers Anthology. Gonzo refers to the irreverent journalistic style Mr Thompson developed including first-person narrative and partisanship. The anthology shows Mr Thompson as a budding stringer for local papers and as he savours his first taste of fame with the publication in 1967 of Hell’s Angels: The Strange and Terrible Saga of the Outlaw Motorcycle Gangs for which he lived and rode with the bikers during a year.

The Gonzo Papers Anthology also contains sections of Mr Thompson’s landmark Fear and Loathing in Las Vegas: A Savage Journey into the Heart of the American Dream – his most remembered work which mercilessly exposes the utter failure of the 1960s counterculture movement. The fourth volume of The Gonzo Papers encompasses Mr Thompson’s later work – a collection of rather haphazard submissions to Rolling Stone on the 1992 presidential campaign (Bush – Clinton – Perot).

Jann Wenner, publisher of Rolling Stone, is quoted in a 2008 documentary on Thompson’s life saying that after a trip to Africa in 1974, “Hunter just couldn’t write. He just couldn’t piece it together.”

Mr Thompson went to Kinshasa in then-Zaire to cover the now legendary World Heavyweight Championship fight between George Foreman and Muhammad Ali – a clash that went down history as The Rumble in the Jungle. However, instead of chasing the scoop, Hunter S Thompson spent his time in Kinshasa cooped up in a hotel room, severely intoxicated.

This episode is, if anything, typical in as much that its protagonist was never inclined to follow the beaten path, convention, or indeed authority, however benevolent or soft its nature. His (honourable) discharge papers from the Air Force – which he left an Airman First Class in 1958 after three rather challenging years – conclude: “In summary, this airman, although talented, will not be guided by policy.”

Though not at his best in the latter stages of his writing career, Mr Thompson remains quite peerless an astute observer of his era. Lucky, perhaps, to be caught out on the fault lines of a paradigm shift in societal attitudes, Hunter S Thompson made the most of it across all available dimensions: “I hate to advocate drugs, alcohol, violence, or insanity to anyone, but they've always worked for me.”

Title
The Gonzo Papers Anthology

Author
Hunter S Thompson

ISBN
978-0-330-51073-8

link
http://www.amazon.com/gp/search?index=books&field-isbn=9780330510738


SIACI Saint Honore's Pierre Donnersberg: Vying for a Top Spot in the Global Insurance Market

[caption id="attachment_18989" align="alignright" width="300"] SIACI Saint Honore's Chairman: Pierre Donnersberg[/caption]

SIACI Saint Honore Group is one of the leading providers of brokerage and consulting services in the French insurance market, supporting large and mid-cap companies in the management of their property and personal insurance risks in France and around the world. The group designs and develops customised solutions for its corporate clients in property and casualty, marine and cargo, employee benefits, retirement, HR strategy, and total rewards. The group also has a notable presence in international mobility through its main affiliate, MSH International.

The company services cover the entire value chain from risk management consulting to the management of insurance plans. The firm currently has more than 2,500 employees worldwide, insures 2.5 million individuals, and reported a turnover of €350 million in 2017.

SIACI Saint Honore offers its clients 360° coverage of their risks by offering global solutions and insurance packages to internationally-mobile individuals, expatriates, and employees as well as to large industrial risks.

In Europe, SIACI Saint Honore maintains operations in France, Luxembourg, Switzerland, and Germany. Elsewhere, it is present in Canada, United Arab Emirates, Saudi Arabia, Singapore, and China. A lot of its business focuses on expatriates and internationally-mobile employees. As a result, one of its current challenges is to develop property and casualty, and marine solutions in these countries.

The company is growing rapidly in each of its markets. This growth is supported by a continued dedication to excellence in the delivery of services - an exciting challenge for its teams. To meet this challenge - one which is both human and technological – all the requirements are being met to acquire new skills and invest in innovation.

SIACI Saint Honore's Chairman: Pierre Donnersberg

“Our ambition, to become a global player and the European leader in our sector, is sustained by strongly-held values which are shared by our teams all over the world. Our added value lies in the excellence of our teams, forged through impeccable technical ability, availability at all times, and real entrepreneurial enthusiasm. We have made the quality of working life and the involvement of our employees into the drivers of our success. This has been made possible by a human resources policy which cares about the performance and well-being of each and every one of our staff members,” says Pierre Donnersberg, chairman of the SIACI Saint Honore Group.

The group’s expansion globally, and across all of its markets, is built on talented men and women who are recognised experts in their fields. Every day, they assist thousands of companies in the protection of their human capital and the coverage of their risks. SIACI Saint Honore will continue to invest heavily to guarantee a world-class quality of service and to earn and keep the trust of our 3,500 corporate clients.

To ensure sustainable and strong growth, SIACI Saint Honore strives to develop a culture of excellence at all levels of its business. The group is dedicated to the creation of value for its clients, employees, partners, and shareholders. Through trust and affinity, it builds a personalised relationship with each of its clients and offers services and solutions tailored to suit their needs. With the enthusiasm of its employees and their role as shareholders, the group creates the human and material conditions required to be available and attentive to the needs of its clients at all times. Since its beginnings, the group has placed independence at the core of its organisation to defend the clients’ interests and safeguard their economic and social performance in all circumstances. This culture of innovation is rooted in the company’s DNA and helps the company to anticipate changes in markets and risks, and to find solutions which guarantee the security and development of its clients. This culture of excellence is above all a state of mind.

[gallery columns="2" size="large" link="file" ids="18990,18991"]

Photo credit: Adrien Daste


Jean-Claude Juncker: Gives as Good as He Gets

He is the man eurosceptics, and quite a few others, love to hate – the embodiment of all that is wrong with the European Union and the face of the “faceless bureaucrats” who rule from Brussels. Jean-Claude Juncker (62), a former prime minister of Luxembourg and in public office since 1984, is known – and much feared – as a shrewd political operator; it is how he got the top job at the European Commission which effectively runs the EU as its executive branch.

For a man sitting on such a lofty perch, Mr Juncker is unusually blunt and rarely holds back when describing the inner workings of the union, his take on politics, or any other pursuit. At the
height of the Greek banking crisis, Mr Juncker flatly denied that the long-suffering country was about to get kicked out of the Eurozone for misbehaviour. When it transpired that European finance ministers had entertained precisely that scenario in his presence, he memorably explained: “When it becomes serious, you have to lie.”
Equally unforgettable was Mr Juncker’s comment on the 2005 referendum in France over the proposed EU constitution, which was ultimately rejected: “If it’s a yes, we will say, ‘on we go’, and if it’s a no, we will say, ‘let’s continue’.”

Perhaps a bit disconcerting, Mr Juncker just loves to taunt the British – since long the union’s most reluctant member and now the first one to flirt with departure. Last May in Florence, he delivered a speech in French, coyly explaining – to roaring applause – that English is “slowly and surely” losing its importance on the continent. A gratuitous, and untrue, comment made only to pique the British.
Such antics have provided British tabloids with ample fodder to attack the man they singled out as their main enemy. However, Mr Juncker gives like for like, is not easily intimidated, and has a famously thick skin. Even so, he does find the criticism levelled at the EU increasingly tiresome, arguing, not without reason, that the union has become the preferred scapegoat for failing domestic policies, not just in the UK but elsewhere too.

Calling the upcoming Brexit both a failure and a tragedy, Mr Juncker is passionate in his defence of the union: “It is the UK that wants to leave the union, not the other way around. The failure resides in the fact that British voters have not been properly informed and were handed lies and half-truths instead.”
At times acerbic and always on the verge of losing his patience, though never quite getting there, Mr Juncker has managed to hold Europe together, doing a much better job than his often rather hapless predecessors in explaining the achievements of Europe and pointing out the importance of keeping the fractured continent together in an increasingly hostile world dominated by large blocs.

"Not above mischief, Jean-Claude Juncker is nonetheless a force to be reckoned with: he is a passionate advocate for European unity, strongly believes in cross border cooperation, and embraces humanistic values."

Mr Juncker understands that in order to create internal cohesion, the EU needs to better explain the outside forces that conspire against the project – quite possibly the largest peaceful nation-building exercise in history. Though perhaps not particularly brilliant at geopolitics, Mr Juncker does grasp the importance of turning a threat into an opportunity. The increased hostility towards a united Europe as expressed in the Anglophone world represents a belated clash of worldviews – laissez faire vs social democracy (or the Chicago vs the Freiburg schools of economic thought) – which can be used to create a sharper distinction that adds to a sense of European identity – the holy grail of the European Union.

Condemned for his reportedly excessive fondness for cognac and cigars, Mr Juncker remains quite unapologetic of his Burgundian lifestyle, dismissing critics as puritans who adhere to a misplaced sense of gravitas. If anything, Mr Juncker prefers a bit of swagger, kissing a diminutive Belgian prime minister on his bald head, patting another Belgian minister on his rotund tummy, and jovially welcoming Premier Viktor Orbán of Hungary with a vigorous handshake and a slap on the cheek, introducing the notoriously sour leader as “the apprentice dictator from Budapest”, all the while keeping a broad smile.

 A pragmatist above all, Mr Juncker knows that principled inflexibility is of no practical value in a multilateral setting such as the European Union. A politician who honed his now formidable skills in one of the EU’s smallest member states, he realises that wheeling and dealing is part of the game. Now wielding considerable power a president of the European Commission, Mr Juncker deploys his almost peerless dexterity in deal-making to forge an ever closer union of the peoples of Europe – as per the 1957 Treaty of Rome on which the entire EU edifice was erected. Ignore him at your peril – he dispatches self-described “tough” prime ministers for breakfast. With a shot of cognac on the side.


UNCDF: Bringing New Parties to the Table - Engaging the Private Sector to Drive Investment into Least Developed Countries

[caption id="attachment_12408" align="alignright" width="327"] Author: Esther Pan Sloane[/caption]

It is widely understood that the world is falling far short of the funding flows required to achieve the Sustainable Development Goals, particularly in the world’s 47 poorest countries, known as Least Developed Countries. The financing gap is estimated at $2.5 trillion. A key part of this gap is foreign direct investment (FDI). FDI is important for developing countries where it is the largest and most consistent external source of financing, ahead of portfolio investments, remittances, and official development assistance (ODA). But, for LDCs foreign direct investment is essential. They also remain highly dependent on ODA and are vulnerable to external factors, including exchange rate fluctuations and weak commodity prices.

Overall, the trends for FDI to the poorest countries are not positive. In 2016, FDI flows to the least developed countries fell by 13% to $38 billion. Flows to small island developing states were only $3.5 billion (a decline of 6%), while landlocked developing countries saw FDI stay stable at $24 billion. For developing economies overall, FDI declined 14% to $646 billion. This amount was not divided equally: of the 79 developing economies in the African, Caribbean, and Pacific group of states, the top ten recipients accounted for 65% of FDI inward stock in 2016, with the Pacific subgroup receiving the smallest share of inflows.

"The challenge is clear: how can we direct more of the estimated $78 trillion held in portfolio and other investments worldwide to the poorest countries to support their sustainable development?"

Some studies on the effect of capital inflows on domestic investment in developing countries from 1978-1995 show that increases in capital inflows were associated with a corresponding increase in domestic investment. The United Nations Capital Development Fund (UNCDF) found that its involvement in co-financing deals in LDCs with grants or loans, as well as support provided through technical assistance, is a key factor in convincing domestic banks to invest in deals in their country’s poorest and most remote regions.

Other studies have found that FDI allows technology transfer, training, and capacity building of local employees, and increased corporate tax revenues in host countries.

According to UNCTAD, global FDI flows are expected to increase by about 5% in 2017 to almost $1.8 trillion, and reach $1.85 trillion in 2018 – still below the 2007 peak. Karl Savant, resident senior fellow at the Columbia Center on Sustainable Investment of Columbia University, estimates that FDI flows need to reach a level of four or five trillion USD annually in order to meet the investment needs of the future.

[caption id="attachment_12409" align="aligncenter" width="887"] Figure 1: FDI inflows, global and by group of economies, 2005-2016, and projections, 2017-2018. (Billions of dollars and per cent).
Source: © UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics).[/caption]

The challenge is clear: how can we direct more of the estimated $78 trillion held in portfolio and other investments worldwide to the poorest countries to support their sustainable development? Peter O’Driscoll, a partner at Orrick, Herrington, and Sutcliffe and head of the Emerging Markets Group, wrote in ImpactAlpha on June 2017 that a new model for driving impact-driven growth capital equity investment in the world’s poorest countries could be a large private fund, of between $600 million and $1 billion, run by a manager focused on growth capital equity across the 23 poorest countries in the world. Growth capital equity to support small and medium enterprises, early stage companies and start-ups must complement the existing investments by development finance institutions in areas such as microfinance. Mr O’Driscoll points out that there are currently only five local private equity funds across the 23 poorest countries – two in Afghanistan and one each in Central African Republic, Democratic Republic of the Congo, and Ethiopia.

Creating viable private investment vehicles to direct more foreign direct investment to LDCs would have a significant and lasting impact on the sustainable development of those countries.

Many impact investors raise three issues as particular barriers to investing in LDCs: unfriendly regulatory environments, complex regulations, and a perception of political and financial risk.

Agenda 2030 and the Addis Ababa Action Agenda both stress the importance of creating the right “enabling environment” for investment and the growth of the private sector. This includes rule of law, enforcement of contracts, and a commitment to fighting corruption. Mr Sauvant argues for a concerted international effort to help developing countries, particularly LDCs, improve their FDI regulatory frameworks and investment promotion capacities through an International Aid for Investment Initiative or a Sustainable Investment Facilitation Understanding.

These efforts could help developing countries define “sustainable foreign direct investment for sustainable development” – that is, viable commercial investments that make a contribution to the economic, social, and environmental development of the host country. Other impact investors have also called for reform of the international investment law and policy regime, particularly in LDCs, to standardise central bank approaches to investment regulations and create a supportive environment for investors.

UNCDF’s own experience with regulations around digital finance – convening governments and private sector stakeholders to identify blockages to the expansion of digital financial inclusion, then helping the government to pass regulations easing those barriers – can have a significant impact on the willingness of private sector actors to move into certain industries in LDCs.

[caption id="attachment_12410" align="aligncenter" width="898"] Figure 2: FDI inows by region, 2014–2016 (Billions of dollars). Source: © UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics).[/caption]

There is also growing support across the UN system for LDCs to access the legal and other expertise they need. The International Development Law Organization and the UN Office of the High Representative for Least Developed Countries, Landlocked Developing Countries, and Small Island Developing States have created a programme to support investment to LDCs. The Investment Support Programme for the LDCs was launched in September 2016 and provides on-demand legal and professional assistance to both LDC governments and under-resourced private sector firms in LDCs to help support them in investment-related negotiations and dispute settlement. The programme’s objective is to establish an international scheme for legal aid and expert assistance.
Measures like this will help build the capacity of both governments and private sector companies to develop the expertise they need to manage sophisticated investment regimes in the future.

UNCDF also has a long history of “de-risking” both public and private sector investments by using ODA funding to catalyse other resources, public and private, mainly from domestic banks. As Anders Berlin wrote in this magazine’s Autumn 2017 issue, UNCDF is currently creating an investment fund for LDCs to blend public and private sources of funding and invest them through loans and guarantees into promising investments in LDCs. This fund will direct more private debt and portfolio equity – what Mr O’Driscoll identified as what is most needed – to LDCs, whilst also targeting smaller transaction sizes and higher risk tolerances than most active investors are currently considering. The hope is to continue UNCDF’s tradition of demonstrating a viable market, proving the success of the concept, and then crowding-in additional financing. If this and the other ambitious models discussed above work, they will help to achieve the shared goal of supporting the LDCs to grow, prosper, and achieve their sustainable development goals.

About the Author

Esther Pan Sloane, a U.S. national, joined UNCDF as the Head of the Partnerships, Policy and Communications in October 2016.

Prior to joining UNCDF, Esther was a U.S. diplomat for 10 years. As Adviser at the Permanent Mission of the United States to the United Nations in New York, she was on the U.S. team that negotiated the 2030 Agenda and the Sustainable Development Goals. She also served on the Executive Boards of UNDP, UNICEF, UNOPS, and UNFPA, pushing the agencies to become more efficient, effective, and accountable for results.

Esther previously served as a U.S. diplomat in China and the United Kingdom, as well as at the State Department Operations Center in Washington.

Prior to joining the U.S. Foreign Service, Esther worked as a journalist in print, radio, and magazines. Esther graduated from Stanford University with a BA with honors in English and International Relations and earned an MA in Theater and Performance from the University of Cape Town, which she attended on a Fulbright Fellowship.


EY: Argentina - Aspects of the Labour & Social Security Reform

A labour and social security reform bill has been recently sent to the Argentine Congress. In general, proposed amendments represent material changes to current regulations and introduce new concepts. Although the government has the support of the main labour unions, the bill will surely be amended after the discussions and debates to be held at committee level and in the chambers.

The purpose of this article is to mention the most significant aspects of the imminent reform for the business sector.

The bill establishes an amnesty programme for taxpayers who disclose hidden labour relationships. Employers disclosing unregistered or poorly registered labour relationships shall benefit from the following legal effects:

Termination of criminal persecution and a release from penalties and fines.

Remission of principal and interest due from social security contributions, except for those due to the statutory health care organisation and the workers compensation insurance company.

Deregistration from the local list of employers with labour penalties, including labour and/or social security infringers.

In order to have access to these benefits, labour relationships should be registered within 360 calendar days from the effective date of the administrative order.

"As from the first half of 2018, a salary threshold is set whereby private and public nongovernment employers shall be exempt from paying social security taxes."

Employers registering labour relationships within the first 180 days from the effective date of the administrative order shall be remitted 100% of the principal, interest, fines, and punitive interest due, while those doing so after 180 calendar days shall be remitted 70% of those charges.

According to the bill, if the existence of any unregistered or unduly registered personnel is verified after applying for this amnesty, the benefits granted shall be forfeited and the employers shall be required to pay the remitted debt proportionately, plus interest and the penalties imposed by current regulations.

According to current labour regulations, employers failing to register their employees are subject to a numbers of fines. At present, depending on the type of infringement, those fines are equal to 25% of compensation accrued from the date of the infringement. Upon imposing these fines, labour judges adjust the accrued compensation to the value of the compensation at the time of litigation, which causes fines to be very significant. At present, these fines are collected by the employee.

With the reform, the federal government proposes setting those penalties at 50% of the adjustable minimum sustenance salary effective in each period that was not registered and/or was unduly registered. In addition, the fines would now collected by the social security agencies instead of the employee.

The bill also proposes abrogating the regulations imposing fines to employers in favour of the employee if the latter has to bring a legal action to collect the compensation claimed or if, after the employee demands the employer to amend his/her labour relationship, the employer dismisses the employee.

As from the first half of 2018, a salary threshold is set whereby private and public nongovernment employers shall be exempt from paying social security taxes. The salary threshold shall be adjusted once a year until it reaches ARS 12,000 in 2022 ($680).

There are currently two payroll tax rates that the companies may use to calculate their social security contributions, depending on the activity and the total amount of annual sales: 21% and 17%.

Through this reform, the government proposes unifying the rate of employer contributions from 2018 through 2022, setting as from that period a general 19.5% rate for all employers.

The current social security payroll tax rate is the same for all employers, regardless of whether they are self-employed professionals with staff in charge, SMEs, or large corporations.

In order to reduce the tax burden of the owners of microenterprises, the reform allows independent workers relying on the cooperation of up to four independent workers to apply for a special unified system establishing for the latter the individual contribution of a monthly payment for social security system and statutory health care organisation purposes. This means that the owners of microenterprises shall no longer pay social security taxes by applying a rate defined for that purpose; instead, they will pay a monthly fee to meet those obligations.

Dismissals

Under current regulations, the items entailing the largest impact in case of unjustified dismissals are:

Severance pay based on years of service: pay equal to one month’s worth of salary for every year of service or period exceeding three months.

Severance pay in lieu of prior notice: pay equal to two months’ worth of salary when the worker’s years of service exceed five and one month’s worth of salary when they are shorter than 5 (five).

Through the reform, business associations and labour unions entering into collective bargaining agreements shall be able to create a sector-based employment termination fund in order to replace the length-of-service severance pay and the severance pay in lieu of prior notice.
In order to create that fund, employers are required to make a monthly contribution that will be obtained from a percentage to be calculated on the basis of the worker’s monthly pay.

As indicated at the beginning, the bill will surely be subject to several changes in future congressional debates. However, there is clear position by the executive to promote employment and registered labour, reducing labour costs and labour-related litigation, as well as promote productivity-based employment and increase competitiveness.

About the Authors

[caption id="attachment_12416" align="aligncenter" width="893"] Authors: Sergio Caveggia, Flavia Cimalando and Laura Escande[/caption]

Sergio Caveggia is a tax partner currently in charge of the Transaction Tax Area in Argentina. He joined EY Argentina in 1994 and has developed strong expertise over 23 years in international taxation and mergers and acquisition matters. Mr Caveggia is highly experienced in acquisition structures for inbound and outbound investments, buy side, sell side, and restructuring services within the transaction tax area.

Flavia Cimalando is a senior manager within the Transaction Tax practice of EY Argentina. She joined EY in 2010. Mrs Manteiga has thirteen years’ experience in labour, human resources, and social security issues. As social security manager, she has performed several due diligence processes in connection with numerous business transactions. She actively participates in social security audits for large number of companies in several industries. Mrs Manteiga has developed strong expertise in social security and labour advisory services in due diligence for local and international companies.

Laura Escande is a Manager within the Transaction Tax Area of EY Argentina. She joined EY in 2011. Mrs. Escande has more than 10 years´ experience in labor, human resources and social security issues. As Social Security Manager, she has performed several due diligence processes in connection with different business transactions. She actively participates in labor and social security audits for transactions in several industries.


Otaviano Canuto, World Bank: Can Services Replace Manufacturing as an Engine for Development?

[caption id="attachment_12440" align="alignright" width="300"] Manufacturing[/caption]

Manufacturing expansion has been a vehicle for job creation, productivity increases, and growth in non-advanced economies since the second half of the last century. First in Latin America, followed by Asia, and a renewal of production systems in Eastern Europe, rising manufacturing levels served as a channel to transfer labour from low-productivity occupations to activities using more modern technologies coming from abroad.

This was facilitated by the easier cross-border transferability of manufacturing technologies relative to other sectors, particularly of labour-intensive segments in the recent era of production fragmentation and value chains. Once certain minimum local conditions were in place, convergence toward productivity levels in frontier countries was relatively faster than in other sectors.

Two issues are now casting a shadow over possibilities of replicating or deepening such a process. First, the very same “footloose” nature of manufacturing also leads to its high sensitivity to minor changes in overall competitiveness factors, such as labour costs, real exchange rates, business environment, infrastructure, and others. Over time, this has led to waves of relocation and spatial concentration in specific countries in the developing world for each of the tiers of sophistication in value chains. Chart 1 depicts the large variation of experiences with manufacturing employment and gross value added between emerging markets.

"There is more complementarity than substitutability between productivity and competitiveness factors between manufacturing and services."

Second, ongoing technological changes reducing the weight of labour costs are threatening to unwind some of the motivation for transferring manufacturing to non-advanced economies – as we approached in the previous issue of Capital Finance International. The historic recent experience of using manufacturing exports as a platform for high growth will likely become harder to expand, sustain, or obtain in the case among latecomers. At the very least, one may say that the bar in terms of requisites of infrastructure, business environment, local availability of skilled workers, and other competitiveness factors is going up.

Natural resource-based activities offer opportunities for technological upgrades, productivity increases, exports and – volatile but positive – economic growth, but not the massive job creation of manufacturing. As such, a question increasingly asked is whether services could eventually foot the bill in terms of quantity and quality of job creation in developing countries. Would ongoing technological changes lead to higher transferability of technologies and tradability of services? To what extent local manufacturing bases would still matter as a precondition for production of services?

[caption id="attachment_12438" align="aligncenter" width="891"] Chart 1: Manufacturing employment and gross value added. Note: DM = Developed Markets; EM = Emerging Markets; GVA = gross value added. Source: IIF, A Primer on Premature Deindustrialization, October 19, 2017. [/caption]

Those are among the questions approached by Mary Hallward-Driemeier and Gaurav Nayyar (2017, Trouble in the making? ISBN: 9781 4648 1174 6). They call attention to how advances in information and communications technologies (ICT) have made some services – financial, telecommunications, and business services – increasingly tradable. That process has been making feasible the diffusion of technology and the possibility of exporting in addition to attending local demands.

The authors also highlight the high potential of reaping economies of scale in those services highly impacted by ICT, especially as very low marginal costs are incurred by adding units to production. R&D intensity has risen, with as an example, expenditure in business services rising close to 17% in 2005-10 from 6.7% in 1990-95.

On the one side, like manufacturing, opportunities for local technology learning and raising productivity in developing economies may be created by increasing international tradability and technology transferability. On the other, unlike labour-intensive manufacturing, those services are not expected to be a strong source of jobs for unskilled labor.

The low-end services that remain users of unskilled labour are less likely to create opportunities of productivity gains. With exceptions – the authors mention construction and tourism services – there is less scope in the services sector to yield simultaneously high productivity increases and job creation for unskilled labour, at least as compared to what manufacturing-led development provided in previous decades.

How about the connection between manufacturing and services? Besides the increases of demand for stand-alone services with high income elasticity, what are the prospects for the demand for services accompanying the current transformation of manufacturing? To what extent supply and demand for these manufacturing-related services benefit from local manufacturing bases?

[caption id="attachment_12439" align="aligncenter" width="894"] Chart 2: Value Added of Services in Manufacturing, 1970s versus 21st Century. Source: Hallward-Driemeier, M. and Nayyar, G. “Trouble in the Making?: The Future of Manufacturing-Led Development”, World Bank, Washington D.C., 2017.[/caption]

Hallward-Driemeier and Nayyar call attention to the rising “servicification” of manufacturing, as the latter is increasingly “embodying” and “embedding” services, while the share of component manufacturing and final assembly in value added declines (see chart 2).

The relevance of embodied services in manufacturing products has risen either as inputs (design, marketing, distribution costs, etc.) or as trade enablers (logistics services or e-commerce platforms). Furthermore, services are also increasing embedding facilities that come bundled with, or are added to, manufactured products. They point out apps for mobile devices and software solutions for “smart” factories. They conclude (p.162):

While a range of “stand-alone” services and some embedded services can provide growth opportunities without a manufacturing core, the increasing servicification of manufacturing underscores the growing interdependence between the two sectors. Given this deepening interdependence, policies that improve productivity across different parts of the value chain will result in the whole being greater than the sum of its parts. The agenda therefore should be to prepare countries to use synergies across sectors to participate in the entire value chain of a product while also exploiting stand-alone opportunities beyond manufacturing.

In sum, the challenges to achieve, simultaneously, the employment of unskilled workers and substantial increases in productivity are becoming taller. Furthermore, those horizontal productivity and competitiveness factors - including local accumulation of capabilities, low transaction costs, infrastructure improvement, etc. - that were crucial for a broad and deep manufacturing-led development are now extended to services. There is more complementarity than substitutability between productivity and competitiveness factors between manufacturing and services. There is no alternative but to raise the bar domestically if a developing country wants to enjoy any of these as engines of growth.

About the Author

Otaviano Canuto is an Executive Director of the World Bank and a Member of the OMFIF Advisory Council. The opinions expressed in this article are his own. Follow him on Twitter: @ocanuto