Global money-go-round
More evidence that Aberdeen Asset Management is one of the financial firms well-placed to take on business that others need to shed, with yet another tranche of Credit Suisse coming within Martin Gilbert's growing empire.
It was announced as I was listening to Alistair Darling and Lloyds' director Archie Kane set out the 10- to 15-year prospects for Britain's financial services sector to tackle threats and opportunities developing globally.
This was a presentation of the Bischoff Report, published last week, and although it suffers from quite a bit of vagueness, there were some significant pointers to the way to survive and possibly thrive.
Archie Kane reminded us how vast a financial force swirls around London's Square Mile, with 10 trillion pounds of funds flowing in and out in a good year.
He pointed out that despite the UK and US being seen as culprits in the events that led to near meltdown, nevertheless, London and New York are benefiting from business coming from less established centres in "a flight to quality".
With Singapore now "racing ahead" towards third position in the rankings, the other strong prospects are in Mumbai - "developing a strong offering in a very short space of time", Middle East centres led by Dubai, and above all, Shanghai, with the Chinese government setting itself the task of making it a global financial centre by 2020.
But there is a Bischoff report warning against a "zero sum game mindset" - meaning the growth of other financial centres need not mean the demise of existing ones. The key, according to Bischoff, is collaboration and networking, internationally and with other centres around Britain.
And after a lengthy committee debate on the optimum size for banks looking into the future - potentially separating investment from retail banking - the conclusion reached was that narrowly-focussed banks were among those that suffered most; Lehman Brothers and Northern Rock.
Alistair Darling's take on this: "If you look at who's failed, very sophisticated complex institutions have run into difficulties, and some very narrow banks have failed.
"You shouldn't say to a bank: 'OK you've done well, but now you're not going any further'. What do you do to a bank that's got a retail basis, a lot of commercial customers, but it can't help them if they want to do more complicated investment bank-type work? They're sent somewhere else. I suspect they'll say: 'thank you very much, we'll transfer all our business elsewhere'."
A hint, there, of the regulatory reform proposals due next month. But as the Chancellor said, there are no easy answers.
Comment number 1.
At 16th May 2009, tomais6 wrote:pertinent and a very polite reporter.
Portays a modest insight into Scottish politics
Tomais6
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Comment number 2.
At 17th May 2009, mekquarrie wrote:Agree wholeheartedly that interconnectedness will be a healthier model for global finance - when it's working. But as we've seen from the toxic asset 'flu virus' bad business can spread like wildfire. Local (but limited) measures can protect the spread of poor practice without shutting down the jetstream of international money.
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Comment number 3.
At 17th May 2009, jockbast wrote:An impenetrable article which hints that its author doesn't actually understand the subject.
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Comment number 4.
At 17th May 2009, mike boothroyd wrote:Sorry jockblast at #3 but I cannot agree with your comment.
I often drift up north for a browse through Douglas's blog as he at least expresses a thought-through comment rather that re-producing NuLabour press releases or spun statements such as the drivel we have to endure from Robert Peston south of the border.
You've got a little gem up there with a mind of his own IMHO
Regards.
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Comment number 5.
At 17th May 2009, jockbast wrote:I'll make allowances for your lack of local knowledge, Ebahgum. Believe me that "up here" we're getting a different flavour of "NuLabour" press release from ´óÏó´«Ã½ journalists, some of whom seem unable to cope with the idea that they're actually in opposition.
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