VIEWS: 6 PAGES: 5 POSTED ON: 9/9/2011
Concluding Remarks “With Greece experiencing unprecedented economic and regulatory conditions alongside the trend of wealth outflow, the Local Asset Management and Private Banking Industries are striving to satisfy client needs with a wide range of global investment opportunities based on local expertise and service”. The Asset Management and Private Banking Conference, attended by more than 200 delegates, took place in Athens Grande Bretagne Hotel, on Wednesday, April 13. During its sessions, keynote speakers and panelists expressed different points of view, illustrated and assessed the new directions, trends, strategies and investment opportunities designed to cope with uncertainty, restore confidence and promote investment in the global recovery. The official opening of the conference was declared by the President of the Hellenic Fund & Asset Management Association and Managing Director of Eurobank EFG M.F.M.C., Aris Xenofos. In his introductory remarks Mr. Xenofos pointed out today‟s market trends and their impact on institutional asset management. Taking one step back, he overviewed the facts that led to the financial crisis both globally and locally and analyzed the consequences and trends in the global, European and Greek fund markets concluding that: Fund management services contribute positively in state financing, employment (100,000 employees, EFAMA) and in GDP (in France it is estimated that each employment position in Fund Management, creates 4 positions in auxiliary services) Greek Fund Market performs well below its potential Normalization of banking conditions in Greece and active involvement of the Greek Government in introducing Long Term Saving Scheme (3rd pillar) can make a difference Contribution of institutional asset management in state financing remains unquestionable, especially in providing depth in local capital market, in supporting employment and in generating tax. Greek Minister of Finance, George Papaconstantinou, while analyzing the roots of the current crisis in Greece, focused on two main reasons: the catastrophic financial management and the deeper structural problems in the local economy. In order to achieve recovery Greece needs to create primary surpluses, to achieve development rates and to reduce debt service costs, he stated. According to the Professor of London School of Economics and Chief Economist of Citi, Willem Buiter: The outlook for the world economy is quite positive – a large part of the world population lives in countries for which we expect fast growth in real per capita GDP Poor countries with young populations should find it easy to grow fast Our G3 countries – the countries with the best prospects for fast growth in real per capita GDP - are Bangladesh, China, Egypt, India, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka and Vietnam „This time it‟s different‟: Greater openness, emphasis on education and health, adequate domestic investment and saving rates and modicum of political and institutional stability should allow poor countries to grow fast Countries are not the only lens through which to examine growth opportunities – cities, regions, companies, commodities, asset classes and products are alternatives, sometimes more useful alternatives. Parliament Member, Institutional Economist, Social Entrepreneur and author, Elena Panaritis pointed out that persistent dysfunctions slow down the recovery process and halt sustainable long term growth. In order to move ahead strongly, Greece needs more institutional reforms. These reforms should lower the cost of production by reducing transaction costs, leakages, bureaucracy, and confusion and therefore will increase productivity, efficiency, exports and revenues. Greece and the EU as a whole must focus on the supply side and not so much on the demand side. In the panel discussion concluding the first session, chief economists, Paul Mylonas (National Bank of Greece S.A.), Gikas Hardouvelis (Eurobank EFG, Professor, University of Piraeus) and Michael Massourakis (Alpha Bank), agreed that there is currently no need for debt restructuring. Rumors that restructuring is pending can only cause further damage. Greece needs to focus on the financial stability program that we agreed upon by the signing of the memorandum. Starting the second Session, the Chairman of the Hellenic Capital Markets Commission, Anastassis Gabrielides analyzed the regulatory reforms that are being introduced and concluded with the realization that the regulatory wave is rolling, yet changes are not to be necessarily considered as negative developments for the industry but may even prove to be opportunities for future growth. The President of the European Fund & Asset Management Association (EFAMA) and CEO of Invesco Europe, Jean Baptiste de Franssu outlined that in Europe 500,000 persons are employed in the Asset Management Industry. 15% of the total European savings are being managed by asset managers. This alone proves that the Asset Management is an Industry worth paying attention to. Yet, under the current financial and demographic conditions there is a strong need to increase long term savings. There is nothing worse than bad regulation, he stated. The financial crisis revealed the need for regulatory reforms. This realization led to significant regulatory activity with the issue of 72 new pieces of regulation about the financial services, of which 23 concern the Asset Management. Yet, there is some doubt whether all this is necessary. We must find the right equilibrium and focus on being proactive and not reactive. Today we have reached a quite satisfactory level. The Chairman of the Life, Health, Pensions & Bancassurance Committee of the Hellenic Association of Insurance Companies and CEO of EFG Eurolife, Alexandros Sarrigeorgiou ,explained that the role of private insurance in the resolution of the pension systems‟ deficit is important yet supplementary to the social security system. The actual demographic conditions make it imperative that the 2nd and 3rd pillar of the social security system are assigned partially to Private Insurance under the supervision of the Bank of Greece and the guarantee of the Solvency II directive. The occupational and private pensions‟ sector should be given strong tax incentives in order to achieve an increase of savings for pension purposes, fact that would significantly support the local capital market through the management of institutional investors, since they could be directed mainly to Greek bonds and the Athens Stock Exchange. This institutional frame will ensure the system and investments‟ reliability under the strict supervision of both the Bank of Greece and the Hellenic Capital Markets Commission. In the session‟s concluding panel discussion sessions‟ keynote speakers and the President of the Hellenic Fund and Asset Management Association analyzed and debated on the ways all stakeholders could cooperate in this changing regulatory environment for the development of occupational pensions and the increase of investment flows. They all agreed that placing the management of Social Security providers to professionals would benefit the state as well as the local economy. Private insurance can offer the know-how and the distribution channels and under the supervision of the Bank of Greece and the compliance with the Solvency II directive can also guarantee to citizens that they will finally receive the pension that they have paid for. Mutual Funds and institutional administration and management offer protection mechanisms for the management of occupational pensions‟ savings. The development of the institution of occupational pensions could bring significant macro- economic benefits to the Greek economy. In session 3 keynote speakers investigated Investment Opportunities in today‟s uncertain markets. Opening the session, the Head of Global Equity & Alternatives Research of the Private Banking Division of Credit Suisse, Lars Kalbreier, urged delegates to expect the unexpected and challenged most investment dogmas of the era before the current financial crises. He concluded in five take-aways: Is your benchmark the right one? Take a fresh look at EM government bonds as part of your government bond BM Cash is not king Crisis has been good for companies: Increase equities exposure USD is no safe heaven anymore: Diversify currency exposure Pascal Botteron, Global Head of Hedge Funds, Mutual Funds and Multi-Manager Investments of Deutsche Bank, analysed his methodology for Asset allocation decisions in a post-crisis world. Concluding that: Generally, diversification remains key Risks controls (market, credit, operational) are now a priority in decision- making; therefore, manager due diligence is critical for successful investment strategy implementation Today, for several investment vehicles such as hedge funds, liquidity and open architecture are among the key drivers influencing clients in their investment decisions The industry is rapidly evolving to adapt to both institutional and private client demand in terms of security, liquidity and transparency. The CEO of Piraeus Wealth Management, a Joint Venture with BNP Paribas Wealth Management assessed on Hybrid Investments, analyzing the methodology of combining traditional with alternative asset management. Synopsizing his speech: Traditional investment products will continue to be the mainstream of asset management with the bulk of AuM. The significant losses of traditional portfolios during the past decade have increased the demand for investment products that participate in the markets, but with less volatility and some capital protection (soft or hard). This generates demand for hybrid investment products, i.e. products that are traditional in nature, but use alternative strategies to reduce risk. Hybrid investments go after the $84 trillion pie so even a small market share represents an excellent opportunity for growth. Foreseeing the future of private banking in Greece Dimosthenis Arhodidis, General Manager and Head of Group Private Banking of Eurobank EFG told that it can‟t get better than this… The severity of the Greek fiscal crisis especially coming in the wake of the global financial turmoil provides for an ideal real-life stress test to local Private Banking providers. The writing is at last on the wall for everyone to see. All came to the surface: weaknesses in setup, product platform content or lack of the all-important HR factor, management ability under stress and the willingness of each provider to perceive themselves as long term players or opportunistic also-runs. Yet, the Future can be Bright Despite the significant capital flight and risk-off stance of last year, confidence is creeping back and optimism gradually returns to the market. The challenge for the Private Banking providers however is very significant: staying the course often implies radical changes to the operational model, product platform setup and approach to client investment needs. Gone are the days when „two guys and a Bloomberg‟ could scrape by in the market for Private Banking services. Long term planning, radically different corporate structures that mitigate balance sheet risk and a continuous investment in infrastructure and human resources are ingredients that will attract investment funds back to the Greek market on a sustainable basis for the years to come. Theodore Krintas, Managing Director of Attica Wealth Management focused in wealth preservation, opportunity seeking and well being. He emphasized that in order to understand clients‟ needs we have to specify what well being means and to make the connection between personal targets and wealth evolution during the life-cycle of a person. The role of wealth management is to make this connection between the clients‟ targets and wealth and to deal efficiently with “black swan events”. He stressed the importance of financially educating clients in order to enable them to make decisions based on acquired knowledge and experience. In what concerns opportunity seeking he said that the effect of a crisis is to increase risk and opportunities, illustrating that with paradigms and giving a methodology for opportunity seeking following the “golden rule” in the synthesis of clients‟ portfolios. Gold was the topic of Dr. Nick Demos‟ (President of the Hellenic Relations Institute and Fund Raising Specialist of VRS) keynote speech. Gold as a scarce metal offers security and has retained its purchasing power since the golden age in Athens if not earlier. Historically, only 161,000 tons of gold has been mined and gold mining production represents only 1.5% of the total gold supply which is an insignificant amount to affect price. Financing gold mining therefore is a profitable venture. The conference ended with a panel discussion with the participation of Phaedon Tamvakakis, Vice-Chairman of the Hellenic Fund and Asset Management Association, Vice Chairman and CEO of Alpha Trust Investment Services S.A. and Director of the Athens Stock Exchange Members‟ Guarantee Fund, Spiros Kritikopoulos, CEO of Amundi Hellas, Andreas Thanos, Head of Managed Accounts, Private Clients of NBG Asset Management M.F.M.C., Lars Kalbreier (Credit Suisse) and Pascal Botteron (Deutsche Bank). The discussion was moderated by the conference chairman, Yuri Bender (editor-in-chief of Professional Wealth Management). Its subject was: Explaining portfolio trends to clients. Phaedon Tamvakakis pointed out that in his organization clients are treated as global citizens. “We do not treat them as product buyers. We do everything”, he said. Spiros Kritikopoulos emphasized that in order to explain portfolio trends to clients, asset managers play the role of advisors. Their key concerns are how to protect clients and how to allocate assets, in respect of clients‟ needs. It is different when a client declares that he wants safety and when he asks “what is my performance”. Andreas Thanos pointed out that Greek investors are insecure, even scared. It is very difficult to tell them that their assets can be managed from Greece as safely as from any other location. As a result, we experience a wealth outflow. According to Daniel Manailoglou usually it is not the products we have to blame for what might go wrong but the fact that the client has no perception of the involved risks. All products can find a place in a portfolio even … Greek bonds. Concluding the discussion Pascal Botteron stated that even during a financial crisis the answer to the question how to make money is through asset allocation. In a crisis you want custody of products, though.
Pages to are hidden for
"Concluding Remarks"Please download to view full document