THE REINVENTION OF GLOBAL BANKING: WITHSTANDING CHALLENGES, SEIZING OPPORTUNITIES
The panel session involving representatives of major banks was dedicated to the challenges faced by the international banking system. Speakers discussed changes in regulations and geopolitical situation, the accelerated development of innovations and growth in shadow banking. Special attention was paid to the prospects of Russian economy in light of the forthcoming presidential elections.
The discussion started with a presentation by the President, Management Board Chairman, Supervisory Council Member and Strategy and Corporate Governance Committee Member, VTB Bank, Andrey Kostin, who confessed that the economic situation in Russia and worldwide doesn’t really trigger his concern, since he deems it rather favourable. He admitted that, amidst the global and national economic growth, the business is in the process of getting used to new regulatory requirements, political restrictions in the form of sanctions and the challenges associated with new technology development. Mr. Kostin recognized all the above to be the key challenges confronting the system.
President of the European Banking Federation, Chief Executive Officer of Société Générale Frederic Oudea shared his opinion regarding the challenges. He also pointed out the need to adapt to new requirements of regulators. For another thing, in his view, the world has become more fragmented after the US presidential elections and the Brexit referendum, which entails certain complications.
Chief Executive Officer Europe, Middle East and Africa (EMEA), Citigroup Inc., James С. Cowles took up the US topic and indicated that it would be difficult to change the current US regulatory system from legislative point of view. He reminded of the promises given by Donald Trump with regard to tax reform, and predicted negative response from the markets in case those promises get broken.
The Financial Times Editor Lionel Barber agreed with Mr. Cowles and stressed that the tax system reform would require support from both Senate parties. Upon pointing out the possible complications with the reform as an actual risk, he also mentioned the shadow banking growth in China and Brexit as yet another risk. According to his opinion, the situation induced by Brexit will not benefit the British. “Some will leave, offices will move to other countries. Paris and New York are likely to benefit from this,” he suggested. Chief Executive Officer of Corporate and Investment Bank, JPMorgan Chase & Co., Daniel Pinto, commenting on Mr. Barber’s statement, informed that his bank is planning to transfer some staff out of the United Kingdom.
Andrey Kostin commented on the presidential elections scheduled in Russia in 2018, and the changes that the economy may face in this connection. In his view, given the current level of support, Vladimir Putin might well run in the elections and “absolutely easily win in the first round”. Mr. Kostin said that the President had issued serious instructions to the Government to develop programmes that he might use in his election campaign. He also pointed out that it is possible to talk about the start of a ‘certain new stage’ in the Russian economic policy in connection with the forthcoming elections.
Mr. Barber called the participants to be more careful in their forecasts: “Who in this room said yes, the British would vote for Brexit, yes, the Americans would vote for Donald Trump, and yes, the French would vote for a 40-year-old ex-banker?” He admitted that Vladimir Putin managed to restore the Russian economy and hence has good chances to be re-elected, however the speaker left open the possibility of appearance of new personalities in Russian politics.
The participants also discussed the emergence of new platforms in economy, in particular, fin-tech companies. James Cowles said that the majority of global regulators deem it necessary to allow such companies to exist. “If they fail to get established on the markets, it will be regarded as an experiment,” he explained. Daniel Pinto agreed with Mr. Cowles and pointed out that fin-tech companies seek to help and offer banks the tools to deliver specific tasks.
The Emerging Markets Editor of CNN John Defterios, Chairman of the Boston Consulting Group Hans-Paul Buerkner and the Management Board Member and Head of Regional and Government Engagement, World Economic Forum, Philipp Roesler also took part in the event.