The Value of News

Lee Enterprises for Davenport, Iowa, is a leading US provider of local news. In January, the company paid $140 million to add 31 smaller-circulation newspapers to its burgeoning stable that includes such hallmarks of print as the St Louis Post-Dispatch and The Buffalo News. The timing of the acquisition was particularly unfortunate for an already troubled company. Over the past five years, shares of Lee Enterprises have lost 71 percent of their value even as its earnings per share (EPS) improved by 13 percent annually. However, the profit margin remained razor thin at just 1.9 percent.

Whenever Warren Buffett is selling, it pays to be wary – and keep a distance. Mr Buffett does not usually offload companies that do well or have a promising future. Lee Enterprises procured its latest batch of papers from Berkshire Hathaway, Mr Buffett’s investment vehicle. After the sale, and without an ounce of malice, the Oracle from Omaha called the newspaper business ‘toast’.

Since Mr Buffett sold his rags, things have gone from bad to worse for the newspaper business. Advertising revenue has all but vanished as a result of the pandemic and the associated lockdown measures. Whilst demand for news has probably never been stronger than at present, US mainstream media companies have furloughed or fired some 36,000 reporters, editors, and support personnel.

Local papers, such as the 75 titles owned by Lee Enterprises, have borne the brunt of a crisis affecting the entire industry. Dependent on Main Street for advertising revenue, the closure of shops, restaurants, and car dealerships has deprived these newspapers of their principal source of income.

Just as people everywhere need access to reliable news – as opposed to the fake stuff peddled on social media – journalists are yet again asked to do more with less. The good EPS results posted by Lee Enterprises are not so much the result of management magic as of a ruthless slimming down of local newsrooms and forcing hacks to cover their beat as a reincarnation of Mr Tambourine Man, carrying not just pen and notepad, but microphones, cameras, and other multimedia paraphernalia as well.

Major national news outlets, including those that successfully transitioned from print to online, also suffer from the pandemic’s cruel paradox. Earlier this month, The New York Times reported that it had signed on over 600,000 new online subscribers, pushing the total north of 6 million, but warned that advertising revenue over the second quarter may fall by as much as 55 percent. The iconic newspaper has shuttered its vast mid-town Manhattan newsroom and has its editorial staff working from home.

Whilst The New York Times is financially sound and will not streamline the editorial business end of its operations, others are not so lucky. Yesterday, The Atlantic Monthly announced that it must fire 68 employees – 10 percent of its staff. The magazine, published since 1857 and celebrated for its peerless long form reporting on public and cultural affairs, cited a ‘bracing’ decline in advertising revenue as the reason for its ‘painful’ decision.

Though The Atlantic Monthly’s reporting on the corona pandemic attracted 90,000 new subscribers, that exponential growth in readership cannot compensate the loss of advertising income. Most of the magazine’s in-depth articles reach millions of readers and the company’s chairman, David Bradley, promised that The Atlantic will continue its quality reporting.

Condé Nast, publisher of Vogue, Vanity Fair, and The New Yorker, has cut salaries and mulls layoffs whilst management takes stock of the situation and maps a future path. Fortune magazine, recently bought by Thai businessman Chatchaval Jiaravanon for $150 million, has sent 10 percent of its staff home.

The New York Post tabloid, owned by Rupert Murdoch, fired 20 employees, including newsroom staff. The Plain Dealer, the newspaper of record in Cleveland, Ohio, fired 22 journalists and editors, including its health reporter. The Tampa Bay Times, Florida’s largest-circulation newspaper, adopted a twice-weekly print format after it lost $1 million to the pandemic. In a scarcely believable development, the largest newspaper publisher in the US, Gannett, has seen a staggering 94 percent of its market capitalisation evaporate since August 2019.

Even successful online news outlets such as Slate, Buzzfeed, Vice Media, and Protocol are also suffering and shedding personnel or reducing their pay.

Professor Penny Abernathy, who holds the Knight Chair in Journalism at the University of North Carolina, expects hundreds of newspapers and websites to disappear in the wake of the pandemic: “An extinction-level event will probably hit the smaller ones really hard, as well as the ones that are part of the huge chains.”

Between 2004 and 2018, an estimated 1,800 US print newspapers have ceased publishing as readers moved online and tech giants such as Google and Facebook poached their copy. Prof Abernathy points out that the news industry had little resilience left after watching its revenues decline steadily for close to two decades. The surge in readership as a result of the corona crisis has done little to bolster the bottom line of news organisations and may, indeed, be an example of ‘too little, too late’.

In a landmark study detailing the impact of the demise of local newspapers on 1,300 smaller communities throughout the US, Prof Abernathy discovered large ‘news deserts’ where the fourth estate is completely absent and with it, scrutiny of local officials.

However, Prof Abernathy did find a silver lining. Her 2018 study found that 71 percent of news consumers believe that their local newspaper is doing ‘alright’ financially whilst only 14 percent had actually paid for information. With all the other changes brought by the pandemic, the popular notion that news is free may come to its timely end: “Once people understand that reporting news costs money, they may display more willingness to recognise its value and pay for it,” says Prof Abernathy.

That is already now happening as millions deploy their credit card to break to the paywalls of mainstream media. It may, however, not be enough to save the industry and ensure the diversity by which it thrives.


Business in Times of Corona

Ten weeks ago, CFI.co published a series of five reports on the portent of a novel economic event. Some 70,000 words later, that event has become – not arguably, but factually – the most significant news story of our lives.

The pandemic of 2020 has directly or indirectly affected all of earth’s inhabitants. A virus, unseen and barely understood, has managed to change everything. It did not usher in a new era; it gate-crashed a future not yet understood by anybody. The contours of the new normal will take time to emerge and the only certainty is that there is none.

Today, CFI.co’s Business in Times of Corona publishes its fiftieth essay in what has become a chronicle of both hope and despair – and a document of our troubled times. Conceived and named in a hurry, BiToC looks for trends, explores possibilities, consults experts, applies reasoning, traces parallels, and draws lessons for history and philosophy in order to assemble a first composite image of the post-corona world that beckons.

Contrary to popular belief, history does not repeat itself. It is a canvas painted by the hidden hand which has moved human interaction since the very beginnings of time, including all the considerations that provide our species with a reason for being – from great acts of kindness and magnanimity to petty acts of selfishness and greed. The complex yet inalterable emotional makeup of the human being is history’s only true constant – and the only compass available to plot a course forward.

It is through this lens that CFI.co observes the world, tries to understand its workings, and hopes to mine opportunity. No matter how high the despair, dire the straits, or fearsome the predicament, human ingenuity will carry the day – as it will the coming era. The world will change, but its inhabitants won’t. Some find that idea fearful, we at CFI.co derive comfort and hope from it.

See also: Corona Journal


EU: Stage Set for Clash

The Hague is expected to deploy the biggest gun available to EU member states and roll out its veto to derail a Franco-German plan that introduces eurobonds under a different name. Last week, the Dutch were said to have succumbed under pressure from Germany and ceased their opposition to the issuance of common debt.

Slipping into the role vacated by the United Kingdom and leading the Frugal Five – Finland has now apparently joined the original four – The Netherlands is leading an open revolt to the Berlin-Paris axis that tried to reclaim its former prominence by setting the union’s response to the economic fallout of the corona pandemic. Fellow ‘frugals’ Austria, Denmark, Finland, and Sweden may also threaten to use their veto to torpedo the French proposal, seconded by Germany, to funnel €500 billion in grants to Italy, Spain, and other hard-hit countries via the EU budget.

In a surprise move, German Chancellor Angela Merkel early last week announced her backing of a plan first suggested by President Emmanuel Macron of France and that includes raising the required funds via a one-time bond issue by the European Commission and guaranteed by all member states. Whilst Berlin may publicly disapprove of the Frugal Five’s revolt, the German government is not likely to be seriously displeased and may, in fact, have used The Hague to (again) stage a ‘good cop, bad cop’ scenario which allows it to scupper the French plan without being seen to do so.

In a secret policy document leaked on Saturday, the original Frugal Four clearly state that they cannot accept any ‘instruments or initiatives’ that lead to shared debt or a larger EU budget. Already before the corona outbreak, the Dutch had voiced their strong opposition to an increase of annual remittances to Brussels, arguing that the departure of the UK offered an opportunity to reappraise and streamline the EU budget. The ‘frugals’ have now expanded their line of argument and note that a ‘thorough modernisation’ of the premises that guide EU spending may allow for the creation of a European Recovery Fund to help member states improve their resilience to the next crisis.

The Frugal Five intent to throw down the gauntlet when EU leaders meet next month by formally proposing that the European Commission rearrange its spending priorities to free up funds for the necessary post-corona recovery effort. This implies a sharp reduction in the monies available to the EU’s cherished farm subsidy programme as well as the reassignment its structural support budget. The former is certain to offend the French whilst the latter may encounter stiff opposition from eastern member states.

The Dutch-led group will also propose to offer Italy and Spain economic support in the form of plentiful cheap credit instead of the grants envisioned under the Franco-German plan. The recipients must, however, ´strongly commit’ to an agenda of structural economic and administrative reform. According to the leaked document, countries taking up credit must also promise to adhere to the rule of law. This is considered a direct and rather crude warning to the governments of Poland and Hungary which have limited the independence of their judiciaries.

Both Rome and Madrid argue that now is not the time to tinker with policy and say that the austerity measures suggested by the Frugal Five may prolong the Corona Recession and cause great harm to the social fabric. The countries of southern Europe have asked for €1.5 trillion in financial support. Earlier this month, the European Parliament urged the Commission to provide up to €2 trillion to member states and adopted a resolution to this effect.

A compromise solution may be in the works after Poland, Hungary, and others indicated a preference for a recovery package with a mix of loans and grants tied to economic and social reforms. Slovak Foreign Minister Ivan Korcok said that a future ‘recovery instrument’ should include fiscally responsible ‘elements’. His comments were echoed by government officials in Poland, Hungary, and elsewhere.

Chairman Wolfgang Ischinger of the Munich Security Forum, a leading forum on foreign policy, says that opposition to the Franco-German plan is to be expected but notes that the proposal only provides broad outlines with details to be hammered out by EU leaders later on. Mr Ischinger suggested that the plan could become a catalyst for ‘sweeping changes’ and possibly even a new EU treaty that would seal the legacy of Chancellor Merkel: “Existential challenges call for extraordinary measures.”

Pointing to Germany’s upcoming presidency of the EU Council, Mr Ischinger expects the plan to add to the momentum for change. Last week, Chancellor Merkel hinted that she may lend her country’s considerable weight to push for changes in the way the union operates and reaches decisions in order to enhance the EU’s role in world affairs. However, such a radical reform agenda is unlikely to receive support from smaller member states that have previously resisted all attempts at limiting their ability to use a veto to check the ambitions of France and Germany. The loss of this prerogative is considered by many EU members a ‘no-no’ as it would undermine their sovereignty.

It is now up to Commission President Ursula von der Leyen to soothe resentful southern member states and placate the northern ‘frugals’ – and keep the EU together. This week, Mrs Von der Leyen will present the Commission’s own proposal that runs for almost 2,000 pages. The Commission is expected to include key elements of the Franco-German plan but limit grants to public health programmes only and underwrite economic recovery efforts with loans. EU diplomats are not too concerned over the red lines drawn by the Frugal Five and expect the group to yield on some issues.

Over the weekend, former German Finance Minister Wolfgang Schäuble, a notorious budget hawk and president of the Bundestag (federal parliament) since 2017, came out in favour of non-refundable grants and said that his country has a vested interest in the economic recovery of southern member states: “If Europe wants to have any chance at all, it must now show solidarity and prove that it is capable to act.”

Thomas Wieser, who presided the two principal advisory committees of the Eurogroup during Greece’s banking crisis, also favours grants: “If we get this wrong, it will ruin the political atmosphere for decades, literally decades. Loans are easy because they are free. But when it comes to true solidarity and help, nothing is free. And true solidarity is what is needed now.”

Spanish Prime Minister Pedro Sánchez signalled that his government will not agree to any recovery plan that includes loans, arguing that a higher debt load will only add to the problems his country faces.

According the latest economic outlook for the Eurozone published by the International Monetary Fund, debt levels are rising in all countries of the group though disparities remain large. Whilst The Netherlands has added ten percentage points to its national debt as a result of the pandemic, the country keeps its prized pole position in the bloc with a debt-to-GDP ratio of 58.3 percent. Spain (113.4%), Belgium (114.8%), France (115.4%), Portugal (135%), Italy (155.5%), and Greece (200.8%) dwell on the opposite end of the scale. For 2020, the average indebtedness of the euro area is forecast to rise to 97.4 percent of GDP (2019: 86.1%) – well above the 60 percent agreed to in the 1997 Stability and Growth Pact.

The stage is now set for a major north-south clash when EU leaders convene by video conference next month. Though some pundits predict the imminent demise of the union, common sense will probably prevail as it has before. The EU is unequalled in finding compromise solutions and exploring commonalities whilst ignoring the rhetoric of leaders playing to home audiences. Whilst their bravado sometimes does momentarily spill over into summit meetings, it is more often than not checked at the door.


Few Strings in US, Many in Europe

As trillions of dollars and euros were being doled out in state aid by governments and central banks trying to buy their way out of a recession, some of the cash ended in the wrong pockets. This morning, The New York Times reported that twenty large US healthcare providers pleading poverty received some $5 billion in federal aid whilst sitting atop a $100 billion cash pile.

A study conducted at the request of the Kaiser Family Foundation, a think tank for health-related policy issues, found that hospitals catering mostly to well-insured and wealthier patients received on average twice the amount of financial support as those serving low-income communities.

Most of the country’s largest healthcare providers, including the main beneficiaries of federal support, are registered as non-profit organisations, prompting Congressman Frank Pallone (D-NJ) to wonder why these entities have accumulated vast cash reserves if not to meet an emergency.

Last year, Providence Health & Services, founded in 1859 and currently operating 51 hospitals and over 1,100 other medical facilities, generated about $1.3 billion in profits from a cash reserve estimated at $12 billion invested in hedge funds, private equity, and real estate. Providence pays no federal taxes on its earnings yet managed to pocket $509 million in emergency grants from the Department of Health and Human Services which has so far spent more than $72 billion to bail out supposedly struggling healthcare providers with another $28 billion to follow shortly.

The speed and ferocity with which the corona virus struck required a like official response. Most of the usually applied due diligence had to be ditched in order to provide the levels and volumes of cash needed. Under such circumstances, mistakes were all but inevitable – and not exclusive to the US.

In Europe, governments sourced and released untold billions to support privately-owned businesses that saw revenue slashed overnight by half or more. Yesterday, German taxpayers became a major stakeholder in Lufthansa, the country’s flag carrier. The company received €9 billion ($9.8bn) in state funds in return for a 20 percent equity share. The government will furnish €5.7 billion in fresh cash and guarantee €3.3 billion in loans from the state-owned FdW development bank. The German government also has the option to increase its stake to 25 percent in order to block any takeover attempt.

After adhering for decades on end to a particularly strict interpretation of laissez faire principles, the British government is now also openly considering taking charge of private enterprise. Chancellor Rishi Sunak is working on plans to save strategically crucial businesses whose failure may harm the economy ‘disproportionally’.

The first sectors under consideration for expanded state aid include the aerospace, steel, and automotive industries. Under ‘Project Birch’, the UK government may acquire an equity stake in iconic companies, to be sold at a profit once the economy has recovered. This partial and possibly temporary renationalisation of British industry is meant to preserve whatever is left of the country’s much diminished and mostly foreign-controlled industrial base.

Taboo topics, such as support for long-suffering UK steel mills, have become fashionable. Tata Steel Europe has requested up to £500 million in state funds to support its operations in the country, most of which have long failed to turn a profit. The Indian-owned company is in a particularly difficult spot since it leans heavily on the profits generated by its subsidiary in The Netherlands which, under a new corporate plan, is expected to pay out over €100 million annually to the British mills. Tata Sons, the holding company, announced earlier this month that it is no longer able or willing to financially support its European businesses.

Management and workers of the IJmuiden steelworks are now in open rebellion against the company’s owners after they announced redundancies and cutbacks in order to keep the fires burning at the troubled UK mills. British employee representatives on the supervisory board of the company have walked out angrily in protest against the perceived lack of solidarity shown by their Dutch counterparts, leading to a near-complete breakdown in relations between both divisions of the company.

The managing director of the IJmuiden plant was summarily fired last week for refusing to carry out the instructions of the Indians, sparking wildcat strike action and appeals to The Hague for the renationalisation of the mill.  The director had been asked to fire up to 1,250 employees and remit the resulting savings to the UK.

To extricate itself from this political minefield, Tata Steel Europe is reportedly planning to demerge its European operations into two separate companies. The Dutch government has signalled that it may not allow the IJmuiden plant and its 9,000 workers to be used as a crutch to support Tata Steel Europe’s loss-making British operations. Conversely, before releasing any bail out cash, the British government seeks assurances that the money will stay in the UK. Similar conditions have been attached to Dutch state aid.

Tata Steel Europe has reportedly resumed talks with German conglomerate Thyssenkrupp, Europe’s second largest steel producer, to explore a possible merger. Earlier negotiations broke down after the European Commission voiced fears that a joining of both companies could run afoul of the bloc’s notoriously strict fair competition rules. In. May, Thyssenkrupp management announced its intention to sell parts of the business. Besides holding talks with Tata Steel Europe, the Germans are also exploring the interest expressed by Sweden’s SSAB and China’s Baoshan Iron & Steel.

As in The Netherlands, worker representatives hold half of the seats on the German company’s supervisory board and are expected to block a foreign takeover. Tekin Nasikkol, who represents the powerful IG Metall union on the board, warned that he can imagine ‘no scenario’ that would convince the group’s labour representatives to approve a sale.

The Corona recession has put almost everybody on edge and unhinged to balance of power between business, labour, and government. Whilst in the US private enterprise seems to remain firmly in control, European corporations appealing for state financial support face increased scrutiny and a long list of conditions.

In return for €4 billion in state aid, Dutch flag carrier KLM has to ‘green’ operations, hold back on layoffs, stop all dividend payouts, and curtail executive remuneration. To get its €3 billion, Air France had to promise to phase out its domestic network in order to boost train travel.

Amongst the continent’s largest carriers, British Airways and Spain’s Iberia have landed a predicament not dissimilar to the one plaguing Tata Steel. Both companies plus Irish Air Lingus and low-cost carrier Vueling are owned by the International Airline Group (IAG) with shares and management positions almost equally held by British and Spanish interests. The UK’s departure from the EU has complicated matters considerably with the EU reluctant to provide aid and national governments eager to salvage only ‘their bit’ of the group.

Whilst Iberia has applied to the Spanish government for €900 million in state-backed loan guarantees, British Airways has preferred to wing it under its own power. Some 36,000 of BA’s 45,000 employees have been furloughed with 12,000 expected to be dismissed. BA CEO Alex Cruz deplored the UK government’s decision to decree a two-week quarantine period for all visitors arriving in the country, comparing the move to a death knell for the industry. Although the UK government is considering ways to help BA stay aloft, the company has not yet formalised any request for state aid. The airline is, however, included in the ‘Project Birch’ roster of companies too important to fail alongside Virgin Atlantic which earlier failed to secure significant government support. The British state may yet come to own an airline or two.


Resistance Is Futile as Berlin Backs EU Solidarity

[caption id="attachment_15475" align="alignright" width="300"] Berlin, Germany[/caption]

For the third time in her 15-year reign, German Chancellor Angela Merkel has sprung a major surprise and taken the lead whilst others dither. In 2011, she renounced nuclear energy and fossil fuels, promising to put Europe's largest economy on a sustainable footing. Four years later, Merkel opened the border to welcome around one million refugees from Syria and other war-torn countries.

Cementing her already formidable reputation for political daring, the German Chancellor has again turned 180 degrees and ditched Germany’s long-standing tradition of fiscal rectitude. The country will no longer lecture others on the morality of public thrift. In what is probably to become Merkel’s last hurrah before her retirement, the German government has taken the lead in formulating Europe’s response to the corona pandemic. The stern paymasters of the European Union who, only a decade ago, chastised Greece for its unholy spending habits, have become adorable sugar daddies, showering those less fortunate with words of comfort and generous gifts.

Merkel has always understood, better than most, the supreme importance of the European Union to Germany’s own place and role in the world. In fact, the preamble to the country’s 1949 Basic Law (constitution) specifically mentions the national aspiration to help build a united Europe.

Watching the continent fall into bickering parts as the north-south divide widens to a rift, and sensing an opportunity for Germany to put its considerable clout to good use, Merkel has seized the moment and offers help to fellow EU member states unable to deal on their own with the economic devastation caused by the pandemic.

Prime Minister Mark Rutte of The Netherlands, Merkel’s long-time ally and confidante, has been properly hung out to dry and was told, rather unceremoniously, to stop throwing ‘childish tantrums’. A Dutch recovery plan, supported by the Frugal Four and seconded by the Visegrád Four of Eastern European member states, offering only limited help to Spain, Italy, and other severely affected member states was summarily swept aside as inadequate in light of the present crisis.

Over the coming days and weeks, Germany will have to draw on all its resources to quell a Dutch-led rebellion against EU largesse and strong-arm member states not yet fully exposed to the new wind blowing across the continent back into line.

With the EU split into mostly dissonant quartets, the truly Big Four – Germany, France, Italy, and Spain – ultimately set the tune and follow Berlin which suddenly has become the true capital of Europe. Anyone listening to Rutte or his Austrian counterpart and new BFF Sebastian Kurz may gain the impression that the pandemic has changed nothing, and that life will revert to normal once a vaccine has been found. This is not how Berlin sees the present moment or the immediate future.

Former German Finance Minister Wolfgang Schäuble, a fiscal hawk with impeccable credentials until mere months ago, came out swinging when he bluntly stated that Europe’s future depends on its solidarity. Schäuble reminded his domestic audience of the premise that guides German foreign policy since the birth of the federal republic in 1949: Whatever is good for Europe, is good for Germany. Merkel added that the guiding principle applies not just to peace, but also involves the continent’s economic wellbeing and its prosperity.

According to the view from Berlin, the Frugal Four and their eastern hangers-on are behaving like freeloaders, demanding all the advantages of the single market whilst refusing to help insure its overall health. At home, Merkel faces few political obstacles as she reminds Germans of their historic responsibilities in safeguarding Europe’s future. That message is, however, a much harder sell in countries not burdened by a lingering sense of collective guilt. The stubbornness of the Frugal Four in opening their bulging wallets stems from political realities on the home front. Rutte and Kurz know that their national parliaments are unlikely to agree to any policy initiative that smacks of a fiscal transfer union. However, given Germany’s epiphany, there is little they can do to stop the juggernaut from imposing its will on the EU 27.

On Wednesday, the European Commission unveiled a €750 billion post-corona recovery plan that expands on the €1 trillion already promised by the EU and the previously agreed €540 billion in direct financial support for countries suffering most from the pandemic’s economic fallout. EU Commissioner for Economy Paolo Getiloni said that €500 billion is to be disbursed to member states in the form of non-repayable grants and the remainder as loans. Recipients must only demonstrate a need and are not expected to adopt a structural reform agenda. Conditions, Gentiloni explained, are minimal and payouts are to commence later this year.

Under the proposal, Spain and Italy are the main beneficiaries. Rome is promised a total of €173 billion (€81bn in grants) whilst Madrid may pocket €140 billion (€77bn in grants).

The recovery plan was announced by Commission President Ursula Von der Leyen in a speech before the European Parliament. Though the proposal expands on last week’s Franco-German plan (€500bn), its falls well short of the €1.5 trillion demanded by Italy and Spain and the European Parliament’s own call for a €2 trillion economic rescue deal.

In her speech, Von der Leyen said that the present challenge offers ample opportunity to build a modern, green, and digitised Europe that will help bolster the resilience of its societies and improve the health of the continent’s environment. Budget Commissioner Johannes Hahn spoke of a ‘next generation’ EU and said that the proposals help the continent become more competitive and sovereign.

In a nod to the concerns of more recalcitrant member states, commissioners took pains to avoid mentioning the sourcing of the funds. The Commission proposes to raise the required cash via a one-time issue of bonds backed by member states’ future contributions. Germany now supports the pooling of debt as the least painful way of distributing the financial burden. However, in a position paper released earlier this week, the Frugal Four reject this approach as a portal to the wholesale mutualisation of debt and risk. However, their dismissal was somewhat less categorical than before, leading EU watchers to believe that the holdouts now realise that continued resistance is futile.


A Question of Balance Finds Fine Solution with Fiduciaria Central

[caption id="attachment_15478" align="aligncenter" width="851"] President: Oscar de Jesús Marín[/caption]

From its headquarters in Bogota and Medellin, Fiduciaria Central works to build trust and reach the goals of its clients — Colombian nationals and foreign investors — always with the intent to stimulate the socio-economic development of Colombia.

Fiduciaria Central is a subsidiary of IDEA (Institute for the Development of Antioquia) and was founded in 1992; its corporate purpose is the celebration and execution of contracts and operations of the fiduciary activity, subject to the restricted requirements and limitations imposed by the Colombian laws, all of those contained in the Organic Statute of the Financial System, the Colombian Commercial Code and the External Circulars issued by the Financial Superintendence of Colombia.

Its position in the sector makes it a crucial partner for projects that cover a range of sectors. Starting with hotel tourism and real estate of all types, including VIS, VIP, VIPA, from strata 3 to 6 throughout the national territory; as well as some commercial enterprises and reaches departments and municipalities that no other company does, helping them to unite each other behind the cause of corporate social responsibility.

Fiduciaria has developed a portfolio of products and services that covers management of investment funds, business administration and payments, legal representation of bondholders and administration of pension liabilities. The main objective of Fiduciaria Central is to serve as a financial facilitator between companies and businesses, helping to "untie knots in the economic process", fact that helped the fiduciary to consolidate as a financially stable entity and allows it to project itself in the future as the fiduciary with the greater participation in regional and national development.

The company was acquired at the beginning of the 21st Century by the IDEA, led by the current Fiduciaria Central president, Oscar de Jesús Marín, who was then serving as IDEA manager at the time and returned to the fiduciary in 2016, seeking to promote the consolidation of the company, its positioning in the market and its participation and performance at national level. Marín had accumulated extensive experience in his political career prior to his Fiduciaria appointment, which has allowed him to understand the importance of service and leadership. Those values continue to permeate the corporate culture of the fiduciary, inspiring team members to strive for shared business objectives.

Fiduciaria Central has developed several high impact projects that have boosted national economic growth and strengthened national infrastructure. Marín has demonstrated exemplary leadership as a president, taking on the task of applying financial inclusion strategies that have helped lower-income families become homeowners, and have generated jobs for indigenous communities. The residents of remote areas of Colombia are both the native labour force and the beneficiaries of the fiduciary’s business developments. It works both ways, meaning that Fiduciaria Central recognises the company would not exist without the goodwill of the people. It cares about the welfare of employees and their families and accepts responsibility for all regulatory compliance with government authorities. With these pillars, it builds support systems for local communities.

Good corporate governance is evident in all Fiduciaria Central’s operations, balancing the need for corporate transparency and respect for customers with the confidentiality of their information. Under Marín’s leadership, Fiduciaria Central has reached one of the most important accomplishments for finantial entities, garnering an AAA credit rating for the efficient management of its portfolio in the 2019 term.


Otaviano Canuto on Central Banks and Climate Change: Turning Black Swans Into Green

There are three possible motivations for the engagement by central banks with climate change: financial risks, macro-economic impacts, and mitigation/adaptation policies.

Regardless of the extent to which individual central banks incorporate the three prongs of motivations, they can no longer ignore the issue.

Last month, a Bank for International Settlements (BIS) book referred to a “green swan” as an adaptation of the concept of a “black swan” used in finance.

[caption id="attachment_15498" align="aligncenter" width="592"] Chart 1: Change in global average temperature relative to 1880–1900.
Source: Rudebusch, G.D. Climate Change and the Federal Reserve, FRBSF Economic Letter 2019-09, March 25, 2019.
Note: Global average surface temperature based on land and ocean data from the National Aeronautics and Space Administration (NASA)[/caption]

Extreme weather events — floods, violent storms, droughts and forest fires — occurred on all inhabited continents last year. At least seven of them resulted in damage of more than $10 billion, according to a report by Christian Aid.

Regardless of scepticism in some quarters, and the varying opinions about the role of human action, the fact is that the average global temperature at sea and on land has been rising since the 1970s, and shows a greater range of variations and extremes (Chart 1).

As a result of this rise in temperatures, there is a higher frequency of extreme weather events. A recently published study by Vinod Thomas and Ramón Lopez estimates that high-intensity storms and floods could double over the next 13 years. Chart 2 depicts the worldwide increase in natural catastrophes, and proportions of insured losses, in recent decades.

With different degrees of urgency and coverage, central banks are now considering climate change issues as relevant to their functions. Without the participation of the US Federal Reserve, 50 central banks created the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) in December 2017. This is a network for mutual consultation on environmental risk-management practices, and those associated with climate change. Christine Lagarde, president of the European Central Bank (ECB), has stated that climate change policies will be crucial to her mandate.

[caption id="attachment_15499" align="aligncenter" width="592"] (left - number of relevant natural loss events | right - overall and insured losses)
Chart 2: Increase in the number of extreme weather events and their insurance (1980-2018).
Source: Bolton et al, The green swan - central banking and financial stability in the age of climate change, BIS, Jan. 2020
(data from MunichRe, The Natural Disasters of 2018 in Figures)[/caption]

There are three possible motivations for the engagement by central banks. The first is the set of risks to financial stability potentially brought about by natural disasters. This is particularly the case for financial sectors such as banks and insurance companies.
According to the Institute of International Finance (IIF) report Sustainable Finance in Focus, Climate change: a Core Financial Stability Risk (June 6, 2019) more than $2.5tn of global financial assets in 2016 were subject to some kind of risk as a result of climate change. As the first NGFS report noted: “Climate-related risks… fall squarely within the mandates of central banks and supervisors to ensure the financial system is resilient.”

There are two types of financial risk in this context: physical threats to the value of assets resulting from climate shocks, and trends such as rising sea levels, rising temperatures, and melting polar ice caps. Such physical risks include potential direct losses, and indirect impact on global value chains and repair costs.

There are also financial risks arising from climate change mitigation strategies that may be implemented, called “transition risks”. The move to a low-carbon economy will change the allocation of resources, technologies in use, and the construction of infrastructure. The strategies adopted will have consequences on the value of company assets, from carbon taxes to options to accelerate the transition to renewable energy.

Chart 3 provides a snapshot of associated financial risks.

[caption id="attachment_15500" align="aligncenter" width="895"] Chart 3: Channels and spillovers for materialisation of physical and transition. Source: Bolton et al, The green swan - central banking and financial stability in the age of climate change, BIS, Jan. 2020[/caption]

It is worth noting that risks associated with climate change also bring opportunities. According to estimates of growth models indicated by the IIF, a transition to a low-carbon economy could eliminate climate damage equivalent to nearly two percent of the GDP of G20 countries by 2050.

The Organisation for Economic Co-operation and Development (OECD) suggests that what it calls a “decisive transition” could raise GDP, in the long run, by up to 2.8 percent in the G20 countries.

In addition to financial risks and stability, another concern is impact on economic growth, inflation and on monetary policy decisions. ECB president Christine Lagarde evaluates climate change impacts on the eurozone economy in the institution's models and assessments.

The Federal Reserve officially considers climate change to be a “negligible macro-economic risk” in the medium term. Nonetheless, as acknowledged by Glenn D Rudebusch, from the Federal Reserve Bank of San Francisco: “In coming decades, climate change — and efforts to limit that change and adapt to it — will have increasingly important effects on the US economy.” Relevant considerations for the Federal Reserve in fulfilling its mandate for macroeconomic and financial stability, he says.

Lael Brainard, a member of the board of governors of the Federal Reserve System, added: “Climate risks are projected to have profound effects on the US economy and financial system. To fulfil our core responsibilities, it will be important for the Federal Reserve to study the implications of climate change … and to adapt our work accordingly.”

The third area of potential central bank engagement with the issue of climate change is less consensual. It is about using their balance sheets to favour its mitigation, giving special treatment to green bonds in its asset acquisition programmes. Despite opposition from members of the ECB — such as the president of the Bundesbank, the German central bank — Christine Lagarde has referred to a role of the ECB in supporting the EU’s economic strategy.

Regardless of the extent to which individual central banks incorporate the three prongs of motivation, they can no longer ignore the issue of climate change. As noted in the book The Green Swan: “The growing realisation that climate change is a source of financial (and price) instability: it is likely to generate physical risks related to climate damages, and transition risks related to potentially disordered mitigation strategies. Climate change therefore falls under the remit of central banks, regulators and supervisors who are responsible for monitoring and maintaining financial stability.”

The book refers to a "green swan" as an adaptation of the concept of "black swan", popularised in finance after Nassim Taleb’s 2007 book. Black swans refer to unexpected events, with low probability but heavy impact, only after they happen. By their nature, they do not fit the analysis of normal and known conditions. "Climate change can lead to 'green swan' events and be the cause of the next systemic financial crisis", note the authors of the book.

About the author

Otaviano Canuto is principal at the Center for Macroeconomics and Development, a senior fellow at the Policy Centre for the New South and a non-resident senior fellow at Brookings Institution. He is a former vice-president and a former executive director at the World Bank, a former executive director at the International Monetary Fund, and a former vice-president at the Inter-American Development Bank. Otaviano has been a regular columnist for CFI.co for the past seven years.
Follow him on Twitter: @ocanuto


Mohamed El Dib, Chairman & MD, QNB ALAHLI: Thinking Laterally and Literally About  Egypt’s Financial Future

QNB ALAHLI is one of Egypt’s leading financial institutions, established in 1978 and ranked in 2020 as the country’s second-largest private bank. Mohamed El Dib is its Chairman & Managing Director.

[caption id="attachment_15503" align="aligncenter" width="837"] Chairman & Managing Director: Mohamed El Dib[/caption]

The full-service organisation operates around diversified business lines serving corporate clients, SMEs, individuals, professionals and financial institutions through a range of products. Over the years, the bank has also established subsidiaries in specialised fields — leasing, life insurance and factoring.

QNB ALAHLI provides services for more than a million clients, served by 6,700 dynamic teams, and supported by a multinational platform and 227 branches across all Egyptian governorates. An expansive network of 487 ATMs and 24,000 point-of-sale machines serves clients around the nation.

A customer call centre operates around-the-clock, seven days a week. This focus on corporate social responsibility — and the bank’s awareness of the link between social development and organisational success — has driven QNB ALAHLI to participate in charity projects allied with its group values, goals and principles.

QNB ALAHLI has maintained its status as a major player in the Egyptian market and has been consistently able to demonstrate growth in loan/deposit portfolios, market share and returns. All the while, it has maintained sound asset-quality and cost ratios.

QNB ALAHLI provides dedicated products for corporate banking, financial advisory, project financing, structured financing, trade financing, cash management, and foreign exchange. With competitive offerings, QNB ALAHLI has established enduring bonds with corporate customers — whether large domestic organisations, subsidiaries of multinational companies, midcaps, or SMEs.

In the SME sector, QNB ALAHLI applies a business model supported by dedicated business lines offering specialised programmes: consulting, financing, and services. It was the first large bank to achieve its Central Bank of Egypt (CBE) target a year ahead of target. The SME loans portfolio is 23 percent of total (exceeding the CBE status requirement of 20 percent).

In the retail space, QNB ALAHLI has managed to capitalise on the bank’s position as a pioneer. It adapted its market segmentation approach to structure products and solutions for individual requirements, with a personalised response and a variety of payment solutions.

QNB ALAHLI employs its resources to support and develop the Egyptian economy by expanding its services coverage and promoting financial inclusion.


Affordable Housing, Entrepreneurship, Nigerian Economy as Targets:  Sonnie Ayere Has the Experience to Make It Happen

[caption id="attachment_15507" align="alignright" width="300"] Founding Chairman and Group MD: Sonnie Ayere[/caption]

Founding chairman and group MD of investment firm DLM Capital Group, Sonnie Ayere, has a passion for empowering young Nigerian entrepreneurs – and the goal of boosting the country’s economy.

He has the right sort of experience in corporate and structured finance, corporate banking and asset management. Sonnie Ayere has worked at the International Finance Corporation, a World Bank subsidiary, on the development of the Nigerian bond market – a market that is now worth over NGN N6.5tn ($41.7bn).

He launched and directed the investment banking arm of UBA Group as managing director and CEO of UBA Global Markets before establishing his own full service financial investment house, Dunn Loren Merrifield, in 2009.

He has also worked with HSBC Bank, NatWest, The Sumitomo Mitsui Bank, Bank of Montreal (BMO) – Nesbitt Burns (the investment banking arm of the Bank of Montreal) where he was part of the senior team responsible for setting up a $20bn Fixed Income Structured Investment Vehicle (SIV).

Fascinated by the alchemy of securitisation, Sonnie Ayere developed a keen interest in developing ways of financing large corporate projects, private companies and government institutions. He says he feels “instantly at ease devising innovative models of structured finance”.

At the IFC, Ayere held the role of structured finance business specialist for sub-Saharan Africa. He developed finance and securitisation transactions and created instruments that support value in debt-capital markets.

Ayere was task manager for the setting up of the Nigeria Mortgage Refinance Company (NMRC) as a private firm charged with the public purpose of developing the primary and secondary domestic mortgage markets.

The NMRC raises long-term funds at home and abroad, and encourages the development of affordable housing in a country of 170 million people. The initiative was championed by senior Nigerian government figures, the Federal Ministry of Finance and the Central Bank of Nigeria. It won support from the World Bank, the IFC, the UK’s Department for International Development and private sector partners, commercial and mortgage banks.

Sonnie Ayere is registered with the UK Financial Services Authority (FSA). He is a Fellow of the Institute of Credit Administration in Nigeria, and the Association of Investment Advisors & Portfolio Managers. He is a technical committee member for the Central Bank of Nigeria’s Vision 2020, a member of the Presidential Committee on Foreclosure and Securitisation Law for Nigeria, and a member of the SEC Committee on Market Practice and Reform. He is also a member of the Bond Steering Committee of Nigeria and the Technical Sub-Committee on Aviation Financing for Nigeria. He was the inaugural CEO of the Nigeria Mortgage Refinance Company.

Ayere has advanced mentoring programmes facilitated by the Mara Mentor Scheme and Dunn Loren Merrifield Foundation. He holds an MA (Hons.) in financial economics from the University of Dundee, Scotland. He has an MBA from the Cass Business School, London, he concluded the Executive Corporate Finance Programme at the London Business School. He also holds an Honorary Doctorate Degree conferred on him by the European American University in 2009.


AFP Confía: Communication and Transparency Vital in  Drive to meet Clients’ Pension Needs

AFP Confía, a subsidiary of Atlántida Financial Group, manages the largest private pension funds in Central America and the Caribbean.

[caption id="attachment_15510" align="aligncenter" width="769"] Standing left to right Rafael Alejandro Núñez AFP Confía Board Member Enrique Garcia Dubón AFP Confía Board Member Arturo Herman Medrano Inversiones Financieras Atlántida José Walter Bodden AFP Confía Board Member Seated Maria de Lourdes Arévalo President AFP Confía Guillermo Bueso Anduray Inversiones Financieras Atlántida[/caption]

The El Salvador-based pension fund administrator began its operations in 1998. AFP Confia has been instrumental in shaping El Salvador's pensions system, which constitutes 44 percent of the country's GDP. It manages pension savings and retirement benefits for more than 1.5m employees, retirees, and their families.

Its commitment to complying with highest standards of corporate governance has been internationally recognised, which translates into more transparency and accountability to shareholders, regulators and – most importantly – clients. Clear, complete and promptly communicated information is essential to adhere to international governance best practices and local regulations.

AFP Confia has invested time and resources to better serve clients while supporting sustainable growth and development. It responded swiftly to new legislation that opened its portfolio to international diversification, and unlocked fresh digital efficiencies.

AFP Confia has embarked on a complete digitalisation strategy using data analytics, biometric tech and artificial intelligence.

The company maintains its lead in the pension fund field by working on the key business indicators, strengthening and incorporating better procedures in every management and risk control area, improving efficiency and implementing initiatives that attract new clients and retain existing ones.

[caption id="attachment_15511" align="aligncenter" width="570"]<img class="size-full wp-image-15511" src="https://cfi.co/wp-content/uploads/2020/06/AFP2.jpg" alt="Standing left to right René Hernández Communications and Marketing Director Kelvin Mejía Risk Director Luis Diego Varaona Operations and Technology Director Patricia de Campos Auditor Rafael Castellanos Investment Director Jorge Mejía Commercial Director Ricardo Pineda Financial Director Seated left to right Alicia de Moreira Legal Director Flor Alvarado Business Inteligence Manager Alba de Ibáñez Human Resources Director Lourdes Arévalo President Lilian de Alegría Compliance Officer" width="570" height="319" /> Standing left to right René Hernández Communications and Marketing Director Kelvin Mejía Risk Director Luis Diego Varaona Operations and Technology Director Patricia de Campos Auditor Rafael Castellanos Investment Director Jorge Mejía Commercial Director Ricardo Pineda Financial Director Seated left to right Alicia de Moreira Legal Director Flor Alvarado Business Inteligence Manager Alba de Ibáñez Human Resources Director Lourdes Arévalo President Lilian de Alegría Compliance Officer[/caption]

These key activities generate economic value for shareholders, and are aligned to the company’s four-pillar strategy: Clients, Leadership, Profitability and Innovation.

These pillars have allowed the AFP Confia team to achieve continuous innovation. The team is also implementing new communication channels via AI and other cutting-edge technologies to get closer to clients, and remotely resolve their problems.

AFP Confia’s plan for the future is to continue adapting to market changes, with support from the board, shareholders and key partners. As always, it will be led by its duty to meet clients’ needs and expectations.

AFP Confía, a subsidiary of Atlántida Financial Group, manages the largest private pension funds in Central America and the Caribbean.

[caption id="attachment_15510" align="aligncenter" width="769"] Standing left to right Rafael Alejandro Núñez AFP Confía Board Member Enrique Garcia Dubón AFP Confía Board Member Arturo Herman Medrano Inversiones Financieras Atlántida José Walter Bodden AFP Confía Board Member Seated Maria de Lourdes Arévalo President AFP Confía Guillermo Bueso Anduray Inversiones Financieras Atlántida[/caption]
The El Salvador-based pension fund administrator began its operations in 1998. AFP Confia has been instrumental in shaping El Salvador's pensions system, which constitutes 44 percent of the country's GDP. It manages pension savings and retirement benefits for more than 1.5m employees, retirees, and their families.

Its commitment to complying with highest standards of corporate governance has been internationally recognised, which translates into more transparency and accountability to shareholders, regulators and – most importantly – clients. Clear, complete and promptly communicated information is essential to adhere to international governance best practices and local regulations.

AFP Confia has invested time and resources to better serve clients while supporting sustainable growth and development. It responded swiftly to new legislation that opened its portfolio to international diversification, and unlocked fresh digital efficiencies.

AFP Confia has embarked on a complete digitalisation strategy using data analytics, biometric tech and artificial intelligence.

The company maintains its lead in the pension fund field by working on the key business indicators, strengthening and incorporating better procedures in every management and risk control area, improving efficiency and implementing initiatives that attract new clients and retain existing ones.

[caption id="attachment_15511" align="aligncenter" width="570"] Standing left to right René Hernández Communications and Marketing Director Kelvin Mejía Risk Director Luis Diego Varaona Operations and Technology Director Patricia de Campos Auditor Rafael Castellanos Investment Director Jorge Mejía Commercial Director Ricardo Pineda Financial Director Seated left to right Alicia de Moreira Legal Director Flor Alvarado Business Inteligence Manager Alba de Ibáñez Human Resources Director Lourdes Arévalo President Lilian de Alegría Compliance Officer[/caption]
These key activities generate economic value for shareholders, and are aligned to the company’s four-pillar strategy: Clients, Leadership, Profitability and Innovation.

These pillars have allowed the AFP Confia team to achieve continuous innovation. The team is also implementing new communication channels via AI and other cutting-edge technologies to get closer to clients, and remotely resolve their problems.

AFP Confia’s plan for the future is to continue adapting to market changes, with support from the board, shareholders and key partners. As always, it will be led by its duty to meet clients’ needs and expectations.


Nordea Life Assurance Finland: Maintaining Focus on Key Issues Takes Assurance Company to a Winning Position

[caption id="attachment_16083" align="alignright" width="300"] CIO: Petra Särkkä Photo: Petri Wäänänen[/caption]

Nordea is thrilled to have been recognised for its continuous efforts for achieving exceptional customer experiences through operational excellence.

Nordea Life concentrates on simplicity, agility, efficiency and quality, and maintains a focus on positive employee experience and wellbeing. Also in constant focus are strong financial stability, and sustainable saving and investment offerings.

“We are happy and proud to have won the CFI.co award for the Most Sustainable Assurance (Nordic) 2019 — for the second consecutive year,” says Chief Investment Officer Petra Särkkä.

Sustainability in Investment Practices

Sustainability is an integral part of Nordea Life’s investment strategy and processes.

The company believes that via its investments, it makes a positive contribution to environmental, social and governance (ESG) issues. “We are able to mitigate risks while achieving competitive returns,” says Särkkä. “We continuously aim to improve sustainability in our investment portfolios by increasing investments that are prepared to mitigate ESG risks and support transformation to a carbon-free economy.”

“Our vision is to improve the quality of life for our customers by getting the best possible returns in a responsible way, and we strive to offer responsible, value-adding solutions to our clients.”

Solution for sustainable saving and investing

In 2019, the company has taken further steps to offer sustainable investment solutions. “We have launched a new set of multi-asset investment products, called Globe Baskets,” Särkkä explains. “Through these baskets, our customers can make a positive contribution to ESG issues.

“All underlying investments in Globe Baskets have specific sustainability goals, for example, a lower carbon footprint than the reference group or benchmark, active engagement with companies to push for sustainable development, and investments in companies that build solutions for sustainable future, such as renewable energy.

In addition to this initiative, Nordea Life strives to broaden sustainable offerings.

Sustainability in Real Estate

Sustainability aspects are embedded in Nordea’s direct real estate investment process. “We want to be good ‘property owner and landlord’ to our tenants,” says Särkkä. “We focus on environmental issues, such as energy efficiency, improved trash management and reducing water use.”

“During 2019 we have actively geared our properties towards using green electricity, and we encourage our tenants to make similar decisions. We take good care of our properties, with systematic renovation and maintenance activities, and prioritise safety for tenants and construction workers. We have also initiated a process to certify the sustainability our properties.”

Nordea Life, together with other large real estate investors, participates a Finnish corporate sustainability programme. “We are actively developing tools for sustainable real estate activities and communication. In addition, we have joined Green Building Council Finland network to share knowhow and activate dialogue on how to improve the built environment and eventually make it carbon-neutral.”

Growth Companies Play a Key Role

Nordea Life has invested in several domestic and Nordic venture and growth funds. “We believe that start-up and growth companies can play a key role in developing and providing solutions to tackle global challenges,” CIO Petra Särkkä adds.

“We see that through our investments we can contribute positively to environmental issues and society, support innovation and employment as well as enhance economic growth.”


Zaw Zaw Wants Nothing but the Best for  Group and Country – Preferably With Some Football

Zaw Zaw is the founder and executive chairman of the Max Myanmar Group and AYA Financial Groups.

[caption id="attachment_15516" align="aligncenter" width="842"] Founder and Executive Chairman: Zaw Zaw[/caption]

His vision for Max Myanmar Group was simply to create one of the best institutions in the country – with a special focus on transparency and corporate responsibility.

Zaw is a firm believer in giving compassionate aid, and was quick to contribute to those affected by the COVID-19 crisis. Within 1 week of the prevention programs were launched, he contributed MMK 600 million (USD 0.5 million) worth medical aids for Waibagi hospital and Yankin Children’s Hospital and provided facility quarantines as well as funded Health Insurance Benefits for caregivers and has provided accommodation, food and transport for the embattled doctors and nurse of Waibagi Hospital. With additional donation of protective chambers for Covid Testing, he has contributed MMK 1.44 billion kyats (USD 1 million) to Myanmar’s fight against the Coronavirus outbreak.

Through the Ayeyarwady Foundation, he has donated more than 80 billion kyats (USD 56 million) to philanthropic causes and corporate social responsibility activities.

In his business dealings, he has almost three decades of management experience to draw on. He graduated from the University of Yangon with a major in mathematics, and worked in Japan before returning to Myanmar in 1995 to establish the Max Myanmar Company (now the Max Myanmar Group).

Zaw has been honoured with his country’s State Excellence Award, presented by the president of Myanmar, Win Myint. He has also been recognised for leading the group to support Dream Asia, the AFC’s social responsibility initiative. Dream Asia promotes a culture of giving, and emphasises the potential of football to bring about positive change in Asian societies.

Zaw is passionate about promoting the sport in Myanmar. He has been the chairman of the Myanmar Football Federation since 2005, and is vice-chairman of Asian Football Confederation.

He was recognized as Banker of the Year by The Myanmar Times in 2014 for his leadership performance.


Argentina Looks Good, Brazil Not So Much

[caption id="attachment_15557" align="alignright" width="300"] Brazil: Rio de Janeiro[/caption]

Argentina has defaulted on its public debt - again. The country is familiar with the script that follows and unlikely to be intimidated by upset creditors. In fact, Argentina is seen blazing a trail for other countries grappling with debt loads that have suddenly become unsustainable after the corona pandemic unhinged economies, disrupted cross border trade, and ushered in a yet-to-be-defined new normal.

President Alberto Ángel Fernández, barely seven months in office, has received considerable praise for his government’s decisive response to the pandemic. He managed to unite the nation by clearly indicating that its needs trump those of bondholders.

Late May, both Fitch and S&P downgraded three tranches of the country’s sovereign bonds to ‘D’ after a $500 million payment was missed and negotiations on the partial restructuring of the public debt all but collapsed.

Pushed over the edge for the ninth time since its founding in 1816, Argentina’s default script is well rehearsed and contains few surprises. Downtown Buenos Aires was duly plastered with posters featuring the silhouette of a vulture and demanding a break with the International Monetary Fund (IMF) and an immediate end to ‘debt bondage’. Though the placards change, the message stays the same. It is also a slightly inappropriate message as the fund has turned into Argentina’s prime cheerleader.

The prospect of a debt default no longer causes anxiety or fear. Few countries are more experienced in dealing with economic shocks than Argentina. In 2001, the country staged the world’s largest sovereign debt default when it suspended payment on the $132 billion owed to foreign banks and investors. Since then, and notwithstanding its poor record, Argentina’s debt stock has ballooned to a staggering $414 billion, equal to 93 percent of GDP, proving that it takes two to tango.

Over the past decade, private investors looking for yield have showered Argentina with funds. In 2017, not even a year after the country ended a long court battle with a group of private equity funds refusing to accept a settlement on the 2002 default, Argentina managed to issue a $2.75 billion 100-year bond, carrying a juicy 7.9 percent coupon. Eager buyers placed orders worth almost $10 billion, raising some eyebrows amongst analysts mindful of the country’s rather poor credit record. They had a point: the 100-year bond now trades for 37 cents on the dollar.

Argentina’s present troubles stem, to a considerable degree, from its government’s prudent approach to the corona pandemic. Entering a strictly enforced lockdown early on, the country managed to limit the spread of the novel virus and avoid a major outbreak. Whilst the approach yielded better than expected results, it also paralysed an already shaky economy that had been put on IMF life support in September 2018. In a surprise move, at the time interpreted as a motion of confidence, the fund arranged credit facilities worth $57.1 billion for Argentina – the largest bailout package in IMF history.

The government of President Fernández now says it needs to refinance at least $65 billion of short-term debt to put the economy on a more sustainable footing. Some major investors seem to agree. BlackRock and a few other large bondholders have indicated that they recognise the need for debt restructuring given the extraordinary circumstances.

Nobel laureates Joseph Stiglitz and Edmund Phelps have joined a group of prestigious economists calling for a ‘constructive approach’ to Argentina’s troubles. They argue that the Argentine government acted responsibly by shielding its citizens from both the virus and the economic consequences of the pandemic. French economist Thomas Piketty pointed out that private investors were ‘fully aware’ of the risks when they bought into high-yield Argentine bonds.

Argentina has proposed to reduce coupon payouts, introduce a three-year grace period, and push maturities back by up to a decade. However, three major groups of creditors rejected the plan outright. Whilst recognising that a consensus may prove hard to reach, Economy Minister Martín Guzmán remains hopeful that an agreement can yet be negotiated. Talks are ongoing but a considerable gap remains with the government demanding a $500 million reduction in annual debt servicing costs.

Should an agreement prove elusive, Argentina’s major corporations may be locked out of the global capital market and forced into default as well. Guzmán fears that the damage may already have been done and said that post-corona credit will be scarce with bondholders reluctant to engage unless the government comes up with a major fiscal and administrative reform package. However, the post-corona new normal points in the opposite direction. Argentina is no exception to the global trend that sees states assume a more proactive role in the management of the economy.

Still, Argentina seems well-poised to recover relatively quickly. In the 2000s and whilst shut out of capital markets, the country staged a remarkable economic recovery under its own power. It may well do so again. This lesson from recent history is not entirely lost on its creditors either and helps Guzmán navigate the brink.

Though slightly less indebted and with a much more robust domestic industrial base, Brazil is likely to discover that a lack of national unity and political resolve may undermine attempts to kickstart the sluggish economy. The shenanigans of President Jair Bolsonaro do not inspire confidence. Although the president has consistently prioritised the economy and refused to order a national lockdown, the country’s GDP is expected to shrink by almost 13 percent in the second quarter. Analysts predict Brazil will register a 6 percent economic contraction over the full year, putting a premature end to the tentative return to growth initiated in 2017.

Facing the sharpest economic recession in its history, Brazil seems singularly ill-equipped to meet the challenge. The pandemic fractured the political landscape and further deteriorated the relationship between the federal government and the powerful states. Governors have stepped up as the president squandered his authority and standing by consistently downplaying the pandemic and displaying an almost heartless indifference to the suffering of Brazilians.

After he assumed control of the country in January 2019, Bolsonaro promised to implement a vast programme of structural fiscal reform that was to transform Brazil into a global economic powerhouse and an engine of growth. However, the quest to Make Brazil Great got off to a slow start as the divided federal congress declined to fast track approval of key measures and the economy responded only hesitantly to the dawning of the new era.

The pandemic has now derailed the Bolsonaro Administration’s entire agenda. With political strife nearing an all-time high, congress is unlikely to support any of the president’s initiatives, postponing, yet again, the promised renaissance of an overregulated economy marred by pervasive corruption, social inequality, and capricious rule.

Foreign investors cast a wary eye on the rising tensions between the president and his widely respected and powerful economy minister who is considered a lone voice of reason in the cabinet. Minister Paulo Guedes has grown frustrated with the president’s repeated interventions and apparent disregard for fiscal prudency. Though both agree that the Brazilian economy faces collapse unless the state-ordered lockdowns end, Guedes emphasises the need to immediately bring down the fiscal deficit which is expected to reach 8.7 percent of GDP by year’s end. Guedes also resists attempts to bridge the spending gap with freshly minted money, fearing a return of inflation.

In a curious turn of events, Brazil now finds itself on the periphery of global events as the country becomes the focal point of the corona pandemic whilst the Bolsonaro Administration loses control of the crisis and is unable to forge a degree of national unity or a coherent response to the emergency. Meanwhile, Argentina, long the enfant terrible of the continent, is displaying a level of maturity that holds promise. As a result of getting his priorities straight, Fernández enjoys the backing of the IMF even as he stopped some debt payments. Whatever shape the new normal takes, good governance will likely carry the post corona recovery.


Edible Protein from Thin Air: Dyson Knows a Bargain When She Sees One

[caption id="attachment_15570" align="alignright" width="300"] Kiverdi co-founder and CEO: Lisa Dyson[/caption]

Lisa Dyson looked to nature for inspiration on how to combat climate change; now she runs a biotech company that spins edible protein from the air that we breathe.

Say the word “carbon” and most people’s minds turn to the negative — pollution and greenhouse gases. But Dyson, CEO and co-founder of San Francisco-based Kiverdi, reminds us that we are all carbon-based life forms. Carbon is emitted and captured as part of the Earth’s natural cycle, but centuries of unchecked human activity have disrupted a delicate balance.

“Our system is out-of-whack,” Dyson said at the 2019 VERGE Carbon Conference. “We’re removing natural carbon sinks. The Amazon is on fire. We are destroying our soil, which is also a carbon sink, and we’re pumping carbon into the atmosphere at a rate that is faster that our natural ecosystems can handle or recycle.”

Dyson and fellow MIT alum John Reed co-founded Kiverdi by piggybacking on 1960s NASA research that targeted supercharged carbon recyclers to sustain deep space travel. The study focused on microbes called hydrogenotrophs, which have the power to transform hydrogen into energy — including food — through carbon-dioxide reduction. NASA wanted to create a closed-loop system, using the microbes to convert the exhaled breath of astronauts into a sustainable food source. The plan was eventually shelved, but when Dyson unearthed the study, she realised she had the key to a puzzle.

Many medicines are microbial biproducts. Kiverdi has pushed the science further to replicate the natural chemical refineries that are fuelled by single-celled organisms such as yeast, algae and bacteria to create matter from carbon-dioxide. Kiverdi uses a bioreactor to process different microbe and input combinations and create a variety of fine-tuned solutions.

“We’ve created a bunch of closed loops that we’re working to commercialise,” Dyson reports; about 50 patents for carbon transformation technology have been granted, or are pending.

The Kiverdi business model promotes environmental and economic sustainability — by converting low-cost carbon waste into high-value products. Kiverdi has proven the profitability of carbon recycling and won over investors and partners in the process. The company has secured multiple rounds of non-dilutive grants and early capital funding.

Kiverdi’s list of eco-friendly breakthroughs started with a microbe-based alternative to palm oil, a key driver of global deforestation. The company also recently made headlines by introducing the world’s first air-based protein, presenting a timely step forward in the fight against world hunger.

The Global Carbon Project reported a modest 1.3 percent increase in 2019 emissions; bad news when that represents an annual record of more than 43 billion tons. Land-use emissions were singled out as prime culprits, with deforestation at a five-year high. Land use in 2019 contributed to 14 percent of total global emissions — and more than half of the annual increase in carbon emissions. Grabs for the world’s arable land — in a bid to provide for the 820 million people suffering from hunger — have been haunted by outdated production methods and short-term wins at the expense of long-term benefits.

“The fact that our modern agricultural system produces more greenhouse gases than our planes, trains, trucks and cars combined means that we have to think about how we eat,” Dyson points out.
She believes that it’s time to switch to a futuristic, hyper-efficient version of agriculture. Traditional farming relies on horizontally scaled, land-based, weather-dependent operations. Kiverdi’s high-tech system is vertically scaled — and requires 10,000 times less surface area and 2,000 times less water.

The world population is expected to reach 10 billion by 2050, but Kiverdi hopes to bring in sustainable, mass-market protein alternatives before then. Kiverdi has launched a spin-off company, Air Protein, to produce and market its protein powder. The flour boasts a strong nutritional make-up: 80 percent protein, a full set of essential amino acids, and plenty of vitamins and minerals — including the B12 component that vegan diets lack.

“One-in-three Americans considers themselves a ‘flexitarian’,” Dyson said in an interview with Medium. “Air Protein will enable consumers to make the choices they are increasingly interested in making: eating delicious, healthy foods without the footprint.”


Lord Waverley on Development Banks - By Name and By Nature: A Boon in Troubled Times

Development Finance Institutions (DFI), Development Finance Companies (DFC) or Development Banks (DB) are institutions that provide finance for development projects predominantly in weaker or developing economies.

Development banks provide medium- to long-term risk capital and technical assistance to developing economies where it cannot be found from the private sector. They are usually owned by several shareholders, often countries or governments.

The two main types of development bank are Multilateral Development Banks (MDB) and National Development Banks (NDB). MDBs have shareholders from several countries and finance development projects in several countries and regions, such as the Asian Infrastructure Investment Bank (AIIB) or the World Bank. NDBs such as the Agricultural Development Bank of China or the Development Bank of Kenya are set up by governments to finance and support domestic development projects. MDBs and NDBs fund private and public projects that provide and support global public goods.

Depending on their purpose and designated region, the banks have different mandates and remits. The AIIB, for example, focuses finance on Asia to create wealth and improve infrastructure connectivity. The African Development Bank (AfDB) is geared towards sustainable economic development and social progress on that continent. The Agricultural Development Bank of China focuses its attention, unsurprisngly, on agricultural development in China.

There are, however, common strains between them. What further sets development banks apart from commercial lenders is the inclusion of wider factors in their decision-making, such as climate change, sustainability, social impact, economic infrastructure and equality. With this diverse mandate, development banks are increasingly expected to provide solutions to global problems.

But where did development banks come from, and where are they going? The first came in 1944, with the establishment of the World Bank. The International Bank for Reconstruction and Development (IBRD), its lending arm, was designed to finance the reconstruction of Europe after World War II. During the late 1950s and 1960s, several multilateral development banks were established.

Throughout the ‘60s and ‘70s, sub-regional development banks were established, mostly in Latin America and Africa. There was also a rise in the number of Arab banks, reflecting the growing importance of oil-producing nations in the Middle East. The 1990s saw the collapse of the Soviet Union and subsequent introduction of the European Bank for Reconstruction and Development (EBRD). More recently, Asia has seen a resurgence of development banks, primarily in China with the AIIB and the NBD (also known as the BRICS bank).

The 2008 financial crash saw a global increase in lending from development banks as private finance fell. Total capital loaned between 2007 and 2009 increased by 36 percent, from $1.16tn to $1.58tn, with total assets of development banks in 2008 totalling $5tn. This is the core strength and purpose of development banks: alleviating the cyclical boom-and-bust nature of private finance.

Due in part to their strengths as international institutions that cover large regions and invest in diverse projects, support for development banks has grown. Their traditional mandate has expanded to address global issues. The decision-making process and subsequent implementation take into account factors such as economic and environmental sustainability, impact on gender equality and poverty.

Development banks, especially multilateral development banks, make for effective stakeholder management, where all shareholders are satisfied and the outcomes or policy-decisions are effective and positive, rather than a mismanaged amalgamation of competing and irrelevant objectives.

Due to their expansive remit, development banks fund projects ranging from renewable energy to telecommunications and transport infrastructure. They provide finance and engage with untested sectors that private lenders tend to avoid. The National Bank for Economic and Social Development (BDNES) in Brazil and the KfW in Germany fund new technology that has supported technological innovation, while the CORFO in Chile is designed to support entrepreneurship.

In 2015, the UN launched its 2030 Agenda, with 17 Sustainable Development Goals (SDGs) and 169 specific social, economic and environmental goals. MDBs in particular are crucial to supporting these goals.

While development banks have remained receptive to change and have largely risen to the challenges, they have detractors. Critics argue that they focus on simply financing projects, rather than ensuring their successful implementation. Banks, they argue, might be less opaque in their decision-making processes. That said, they predominantly follow World Bank procurement guidelines covering experience, financials and partnership content.

The Overseas Development Institute (ODI) in 2018 offered six recommendations. Chief among them was to boost the provision of global public goods through the enhancement of state and non-state incentives, and better co-ordination between multi-lateral development banks to produce more coherent and effective global policy.

Development banks have done a great deal of good. They have a unique and competitive edge, and should be encouraged to become more receptive and accept greater responsibility. Many want them to use their experience of diverse and complex projects, and their ability to facilitate multiple national interests, to develop effective responses to the world’s greatest challenges.

The question is not so much their ability or credentials, but whether they will be allowed to take on a new, larger and more complex mandate: one that supersedes national or regional borders.

About the Author
Lord (JD) Waverley
Member
House of Lords, London

Founder
SupplyFinder.com

Strategic Advisor
SmarterContracts.co.uk

jd@lordwaverley.com


CFI.co Introduces CFI Financial Group – No Relation, but a Shared Set of Values

The CFI Financial Group Holding is a leading trading provider, encompassing several regulated entities around the world. Founded by Hisham Mansour and Eduardo Fakhoury, the group offers a diverse range of trading products, dedicated support from its team, and deep financial expertise. For 22 years, the group has been offering a streamlined trading journey for private and institutional clients.

[caption id="attachment_15606" align="aligncenter" width="900"] Founder/Managing Director: Mr Hisham Mansour[/caption]

CFI Financial is an execution-only venue, providing traders with unparalleled access to the world’s financial markets using Metatrader 5, one of the most sought-after platforms in the industry. This has been achieved through continuous innovation in the facilitation of market access – and remaining true to its business model and vision.

The company boasts an advanced IT infrastructure and provides top-notch support, offering CFDs (contracts for difference) with zero commissions, and a proprietary account type called Deep Discount. This is exclusive to UK and Europe markets and has become a trader’s favorite with – as the name implies – consistently low spreads and no extra commissions.

CFI Financial’s product portfolio includes CFDs on currencies, equities, indices, commodities and energies, as well as stocks, options, bonds, futures and mutual funds. The range differs across entities but is sufficiently diverse to cater for most needs in all regions, worldwide.

The CFI Financial Group is made up of six regulated entities across Europe, Asia and Africa. All cater for clients on a global scale, but some bring focus to specific areas.

Entities include:

Credit Financier Invest Limited (CFI UK) – London, United Kingdom (CFI UK)

Credit Financier Invest (CFI) Ltd – Larnaca, Cyprus (CFI Cyprus)

Credit Financier Invest s.a.l. (CFI Lebanon) – Beirut, Lebanon

Credit Financial Invest for Financial Brokerage Ltd. (CFI Jordan) – Amman, Jordan

Credit Financier Invest (Mauritius) Ltd – Port Louis, Mauritius

Credit Financier Invest (DIFC) Ltd. (CFI Dubai) – Dubai, United Arab Emirates

The group is built on a set of values, a vision, and a team with limitless dedication and ambition. The success that has led to 22 years of continuous operation follows a traditional recipe… with a twist. This is hinted at in the CFI slogan: “Empower Yourself”. It applies to the team and its ability to lead and deliver, as well as to CFI Financial’s loyal clients who have confidence in its ability to innovate and evolve.

The group is owned and managed by Hisham Mansour and Eduardo Fakhoury. Mansour is an industry veteran, having established MIG bank in Switzerland, one of the major trading providers of the past decade. Fakhoury comes from a family with years of experience in private banking and trading services across Lebanon and the GCC area.


Hold the Bulls: US Recovery Marred by Uncertainty

In early June, the Business Cycle Dating Committee of the National Bureau of Economic Research formally declared a recession – the first since 2009. The US economy reached its apex in February and all but imploded in the weeks and months that followed, bringing the longest expansion on record to an end. However, just after the committee announced its verdict, early signs of a quick turnaround emboldened investors already primed for a comeback. On 9th June, the S&P 500 swung back to black and recouped all of the losses accumulated during the first three weeks of March with a strong and sustained rally that saw the index rise by 44 percent in little more than two months.

The US market seems to downplay the effect of the corona pandemic on businesses and consumers, trusting the Federal Reserve to tackle the recession with a ‘shock and awe’ display of its firepower. Fed Chair Jerome H Powell left little room for doubt when he declared that the wherewithal of the system of central banks is, essentially, without limit. That was Powell’s ‘whatever-it-takes’ moment and it did the trick: investor confidence promptly soared.

In June, most news was upbeat: oil prices briefly peeked north of the $40 mark and the haemorrhaging of jobs was stopped after around 40 million workers had filed for unemployment benefits. Even severely castigated airline stocks regained their lost lustre. Boeing, too, staged a modest rebound as investors took heart from a significant uptick in domestic business and leisure travel.

In the second week of June, the Transport Security Administration reported that almost half a million travellers pass its airport checkpoints each day, just 17 percent of the normal volume for the time of the year, but up from the 14th April low of 90,000 (4%). Shares of American Airlines gained an astonishing 90 percent over a ten-day period whilst United Airlines (+70%) and Delta Air Lines (+45%) also joined the unexpected fray. Most carriers resuscitated their hastily slimmed down networks and plan to add extra flights to domestic holiday destinations in Florida, Montana, and Wyoming. Resorts in and around the Glacier National Park in Montana report strong bookings for July and August and expected occupancy rates bordering 80 percent.

As markets shrugged off concerns, pundits were left puzzled, if not confused. Instead of further job losses, the Bureau of Labour Statistics surprised all and sundry with the news that 2.5 million people went back to work in May. Sounding a cautionary note, analysts warned that the upswing merely expressed the heightened volatility of the market which may easily be spooked back into bear country. They also fear that a second coming of the coronavirus may stop any recovery dead in its tracks.

Unspoken, but still a major behavioural driver, is the conviction amongst investors that President Donald Trump may yet pull a trick or two to secure his re-election. The markets have largely dismissed his more outrageous statements, comments, and tweets, concentrating instead on the actual policy initiatives and actions of the Fed. The encouraging news on the economy is considered a sign that, quite possibly, the damage wrought by the pandemic may not have been as devastating as expected. The hope of a V-shaped recession has been rekindled.

There now exists broad agreement that the unprecedented stimulus package has managed to avoid, or significantly lessen, a sharp drop in consumer spending. The US federal government has so far injected well over $3 trillion into the economy and is considering a supplementary plan to keep the nation on life support. However, the good news has strengthened Republican lawmakers in their conviction that it is too early, and perhaps even unnecessary, to expand the existing support package.

Businesses in the food and beverage sector created more than half of the 2.5 million jobs added in May with about three-quarters of the establishments receiving federal aid under the Paycheck Protection Program. Last months, the healthcare industry hired an estimated 250,000 workers.

The remarkable rebound is being ascribed to the different aid programmes kicking in, after a slow start in April when the agencies and main street banks charged with the disbursement of federal monies were overwhelmed by the sudden surge in demand. With the backlog cleared, money is flowing smoothly to the intended recipients.

Trump Administration officials and Republican representatives and senators were quick to declare victory and mission accomplished. However, House Speaker Nancy Pelosi (D-CA) rained on the Republicans’ parade by reminding that the pandemic has claimed well over 100,000 deaths and left some 25 million Americans without a job: “The May numbers show that decisive action by Congress can and does make a big difference. Now is not the time to take the foot off the gas.”

Pelosi does have a point: real-time data from various sources fail to show a correlation between the relaxation of lockdown measures and a pickup in business activity. States that moved early to lift stay-in-place orders such as Texas and Georgia registered no more job gains than those that kept restrictions largely in place. Moreover, the finances of state and local authorities have taken a severe hit which caused over half a million civil servants to lose their jobs. Education was particularly hard-hit with over 310,000 teachers and support personnel being shed from the payroll. Meanwhile, local tax revenue has evaporated, forcing deep and painful budget cuts unless the federal government steps in with support.

Trump held out some hope when he mentioned that his administration is ready to do more ‘if we want’. The president is said to favour indirect forms of aid such as tax cuts for businesses and investors. Republicans, and some Democrats too, seem increasingly worried about rising debt levels and plead for a more measured response to the economic malaise. They cling to the notion, made fashionable by President Reagan and Prime Minister Thatcher in the 1980s, that governments’ only sources of cash are taxes or borrowing.

This apparently reasonable logic is still in vogue and led to the ‘deficit myth’ which has become a staple of US conservatives and European liberals alike. It holds that deficit are per definition wrong and draw on the earnings of future generations. Though the myth invites great one-liners and soundbites, it entirely ignores the monetary power of governments that issue their own currency. As Powell noted there is no limit to this power other than inflation and the availability of labour and material resources.

In the face of the trillions in ‘new money’ being created and spent by the US federal government, the deficit myth and austerity, its direct descendant, serve no purpose – if they ever did. Modern Monetary Theory (MMT) helps explain that only actual limits matter whilst the balance remaining at the end of the fiscal year does not. Rather than some exotic or esoteric fringe theory, MMT merely describes the actual role of money and does so without the inclusion of moral values or considerations. As such, MMT shows a way out of the Corona recession and offers solutions that may ease the economic and social pain.

However, politicians and even some of the more traditional economists have trouble understanding the concept of money and explaining its actual working to voters or readers. This may cut short the major interventions that have weaved the safety nets currently supporting the world’s major economies. Powell cautioned against too much optimism and offered a grim assessment at the close of the central bank’s June policy meeting: “This is the biggest economic shock in the US and the world, really, in living memory. We went from the lowest level of unemployment in 50 years to the highest level in close to 90 years, and we did it in two months.”

Powell promised that the Fed will do ‘whatever we can, for as long as it takes’ to support the economy and said that he and his colleagues cannot envision an increase in borrowing costs for this year or the next: “We are not even thinking about raising rates.” The Fed chairman said that May’s encouraging job report merely underlines the present uncertainty and the inability to make accurate predictions.


Responsible Investment: What it Says on the Tin, with Added Punch and Attention to Detail

[caption id="attachment_15615" align="alignright" width="300"] Global Head of Impact Strategy and Responsible Investment: Matt Christensen[/caption]

The rise of responsible investment (RI) as a crucial part of the financial industry has been one of the defining themes of the past two decades.

Matt Christensen has been at the heart of it for most of those 20 years. These days, he lives and works in Paris, heading up RI and impact strategy for AXA IM, the investment arm of the French insurer, AXA Group. Christensen’s efforts have helped to gain recognition for the group’s vocal and respected stance on sustainable investment.

He arrived in 2011, at a moment when the world was starting to peer out from beneath the fallout of the global financial crisis. Markets were looking bullish again (and would do for another eight years), underpinned by central bank and fiscal support. AXA IM had been delivering RI solutions for its clients since 1998, and there was clear potential to build on those strong foundations. The aim was to embed RI principles and ESG factors in every part of the business.

Christensen’s RI team is now 15 strong, and connected to another 15 ESG experts with specific asset-class focus, integrated throughout AXA IM’s investment teams – and it is still delivering on that early promise.

It was a natural path. In 2002, Christensen had been the founding executive director of Eurosif, the Europe-wide association of asset managers, pension funds and other financial services firms. It represented €600bn in AUM, and his work there focused on promoting the role of RI, drafting public policy recommendations for the European Commission, and developing industry standards.

Christensen also developed key research initiatives, such as an EU-wide study on ESG assets under management, as well as the first study on the then-nascent impact investment market in private equity. He was a member of the commission's co-ordination committee to explore the future of sustainability policy and legislation in the EU, a position he held until joining AXA IM.

It helps to explain why AXA IM has sought to play a leadership role in promoting new standards for the industry, and in collaborative efforts to push for change. That includes the recent call for an entirely new asset class, Transition Bonds, designed to finance projects that put carbon-intensive companies on a more eco-friendly path.

That ties in with US-born Christensen’s entrepreneurial background, something else he has brought to his work. He studied at the University of Pennsylvania’s prestigious Wharton School and has taken those skills into strategy consultancy, personal finance and the digital economy —arenas where success is measured by goals achieved and progress made.

It’s that decisive focus on getting things done that has shaped his approach at AXA IM. His tenure has ensured that every vote counts, and that investment in every asset class is guided by ESG and has increasing impact.

At AXA IM, Matt Christensen has personally made sure that every opportunity is taken to promote the importance of sustainable investment to the responsible, active and long-term clients whose interests he serves.


BlueRock: It’s All About the Team — and This Team is All About Excellence and Dedication

[caption id="attachment_15637" align="alignright" width="300"] BlueRock Team[/caption]

Over the past 10 years, BlueRock has successfully established itself as a leading investment boutique at the heart of Zurich’s financial hub.

It caters to the needs of a highly sophisticated and long-standing client-base, and the members of BlueRock Group’s management team are seasoned professionals. Their dedication to delivering exceptional investment opportunities — and their keen eye for real estate markets — have been pillars of the company’s success.

Team members complement each other well, representing different backgrounds and areas of expertise. CEO Ronny Pifko believes that a boutique operation should cover as broad a range of subjects as possible to meet client needs.

[caption id="attachment_15622" align="alignleft" width="300"] CEO: Ronny Pifko[/caption]

But having a strong asset management team takes you only so far. The investment cycle consists of various elements, each requiring dedicated processes: efficient asset selection, carrying out the transaction, the structuring processes, creating a satisfying client experience. The team needs proficiency in economics, financial analysis, legal and tax matters, project management skills, and marketing experience.

Having successfully completed a digital transformation over recent months, the company focus now lies on creating rewarding investment opportunities for clients. As well as that loyal team — whose members have, on average, been working at Bluerock for over five years — the company has engaged a new director of business development.

The BlueRock story

The company was founded in 2010 by Ronny Pifko, now CEO, and Uri Krausz. Together, they set the foundation of solid entrepreneurship and turned BlueRock into the respected investment house it has become. Both men have in-depth experience in large investment transactions, and both have held senior investment-related roles in their careers.

[caption id="attachment_15625" align="alignright" width="300"] BlueRock property in Berlin[/caption]

Pifko started his career as a tax advisor for high-net-worth individuals; Krausz was already a distinguished expert in the financial industry and the owner of an external asset management company. When hiring, the founders have always considered team spirit, social skills and practical experience, as well as academic excellence.

Originally, the company focus was on the Swiss real estate market. But the BlueRock founders were quick to realise that German markets represented an appealing investment segment that boasted unique risk/reward characteristics. This allowed the company to establish an excellent track record, and a loyal clientele.