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2020: The Year in Review

Highlights from Euromoney’s coverage of the last 12 months

The coronavirus crisis
Banks came into the coronavirus pandemic much stronger than they went into the global financial crisis, but will the capital and liquidity buffers they have built be sufficient to see them through the most dramatic economic crash in history?
A blizzard of monetary and fiscal policy announcements finally began to calm market nerves this week; but bankers and analysts are struggling to figure out what more might be needed – and just what kind of crisis this is.
Banks have been trying to rebuild trust since the global financial crisis. Covid-19 and the subsequent economic crisis will be a big test of their commitment.
The coronavirus crisis has hit Europe so hard and so suddenly that banks have to radically rethink their normal approaches to dealing with a crisis.
Will the growth in ETFs, together with advances in portfolio trading, mean the corporate bond market is better able to cope with crisis than before?
Private equity buyers are already looking to invest in companies that will survive the lockdowns.
Banks are building reserves to prepare for worse times ahead
Capital markets volumes show how well the industry has adapted since the coronavirus crisis began, but as economies emerge from lockdown, bankers and clients need to look much further ahead.
Central bank intervention has delayed the deluge of insolvency that Covid-19 lockdowns will cause, but lenders will soon face the grim prospect of deciding who to save and who to let go.
For wealthy clients, the Covid-19 crisis has afforded an opportunity to test the asset-allocation advice and lending capabilities of their wealth managers
The EU’s new recovery fund is a historic step to help the countries worst affected by Covid avoid a debt trap. If the EU’s short-term bills become a risk-free, interest-rate instrument, this temporary response to the deadly virus could become a permanent change to Europe’s capital markets
Covid-19 may be the moment sovereign wealth funds were made for: a shocking disruption to national economies that calls for a stable, patiently invested buffer. Funds have reacted in different ways, but they’re all bigger, shrewder and hopefully smarter than they were during the GFC.
Corporates borrowed their way through the crisis of 2020. What might happen next? Seven months after the first lockdowns began in Europe and the US, is coronavirus now priced into debt markets?
Banks in Europe face a bleak choice. They can redouble cost cutting and capture the move to digital. They can also top up capital with AT1s, for which there is still a bid. But as the acute phase of the crisis now approaches and loan losses rise, banks’ fabled capital strength faces a stern test
European banks cannot afford to provision for losses like their US rivals.
ESG
The sector needs to become a long-term option.
Banks
The nation has become synonymous with 1MDB, much to its new leadership’s frustration. It needs to close the chapter on this scandal and begin a new narrative with the global financial community. Malaysia’s prime minister-in-waiting tells Euromoney what would help.
As the howls of anguish at negative interest rates reach a crescendo, central bankers and prominent economists are still convinced that Europe’s financial sector would be even worse off were base rates above zero. Banks are increasingly vocal in their opposition to the policy. Are they right to believe the systemic risks are growing? And could a move away from negative rates hurt banks more than if the ECB kept them?
With Santander Brasil registering record profits and Santander Mexico promising the same, the outlook for the group looks Latin. As its European business stalls, how will the bank be affected by Latin America’s shift from engine of growth to core business?
Four years after Scotiabank last took its investor day on the road, the bank put on a show in Santiago in January to highlight the advances it has made in its international banking strategy.
The bank says it remains committed to excellence, but its biggest pitch seems to be that it doesn’t feel the need to be the leader in everything it does any more. That may give it the flexibility it needs as it develops into new areas, but will it be enough to satisfy shareholders?
DBS’s chief executive has transformed it into a globally respected bank and a leader in digital finance. What’s next for the Singapore-based lender? It sees an open door to becoming a truly pan-Asian financial institution, with sustainability at its core
HSBC’s strategy shift will see it deploy more capital, assets and risk to the region. The challenge is the same one it faced a decade ago: how to do more in China and southeast Asia. But the truth is that the bank is not as strong beyond Hong Kong as it should be
They seemed to be emerging, blinking, into the light of a normal financial system under former president Mauricio Macri, but that moment has gone; the new administration has sent real rates negative, while economic and credit growth look to be years away.
Diversify or specialize: that has been the question for all the big global corporate and investment banks since the financial crisis of 2008 – we delve into the data to see who did what.
Mainland Chinese firms invested $72.2 billion in Africa between 2014 and 2018, much of it through the Belt and Road Initiative. Now that Covid-19 has struck, there is a growing sense of unease in Beijing over calls to write off debt to stressed African states.
Bill Demchak, CEO of PNC Financial Services, has spent years building the firm into a formidable force; its exit from BlackRock now sees it on the cusp of a new era.
The US investment bank is finally enjoying the fruits of a decade of investment in Asia. It has spent big to hire the bankers and analysts it needs to drive deal activity in China, Japan and Australia. Now the hard part starts – making money.
The US bank’s Asia chief executive and former global head of financial institutions group talks to Euromoney about his ambitions in digital, wealth and transaction banking, and about the bank’s future as a leader of both global and local change.
A bold move by New Zealand’s Jarden to hire some of the finest talent in Australian investment banking and go it alone feeds the sense of a changing competitive landscape.
In 1994, Aditya Puri left Citibank to launch a new institution in a rapidly changing India. As he prepares to retire after 26 years, HDFC Bank stands apart as the strongest and most successful private-sector bank in the country.
Credit Suisse has hired several big guns in the battle for the banking market in Brazil. Chief among them is Ilan Goldfajn, ex president of the central bank of Brazil.
As Spain prepares to digest the €17 billion merger of CaixaBank and Bankia, Andalucían lender Unicaja has revived merger talks with rival Liberbank as it faces a threat to its regional dominance. While its community roots are an advantage, it also needs an answer to the calls for change
As European bank consolidation finally gets under way, Euromoney looks at the financial firepower of the region’s top 20 players.
UBS’s strategy of creating emerging markets growth through partnerships is writ large in its joint venture with Banco do Brasil. Can the new entity become more than the sum of its parts?
A strong year means chief executive Bruce Van Saun is in the enviable position of having options.
wealth
UBS Global Wealth Management is the world’s best wealth manager. But its financial performance does not match its scale.

Should spirituality be one of the lenses through which the wealthy manage their money?

It has made waves with an IPO and by building a strong retail banking platform. Less well known is how the firm is gatecrashing the country’s thriving wealth management industry.

The greatest wealth transfer in history is taking place, as baby boomers pass the mantle – and their money – to a lucky few millennials, but the process is strewn with obstacles.

Joseph Poon is group head of DBS Private Bank, one of Asia’s leading wealth managers. But the event that drives him today, informing his values and his views on investing and risk management, was stepping aboard a rickety raft in 1976 to flee an impoverished and divided Vietnam.

Edelweiss has grown over 25 years into an independent and successful diversified financial services group, but it needs capital. Its decision to sell a controlling stake in its wealth management business spotlights the institution and the potential of the sector.

Private banks are having a good pandemic, streaming Covid-themed webinars to high net-worth clients. Now they’re competing with each other to hire the biggest names in US politics to explain to wealthy investors what Trump or Biden will do.

China’s asset management industry barely existed 20 years ago. By 2030 it will be the world’s second largest. There are myriad ways for foreign firms to get it right – or horribly wrong. Here are Euromoney’s precepts for a better chance of winning – and avoiding failure.

It is the time of year when global banks publish their wealth reports. This year they make for compelling reading. Euromoney examines the outlook for 2021.

ESG
ESG
Across the UK, Legal & General has invested over £22 billion in affordable housing, homes for the homeless, clean energy, life sciences, creative industries, and technology and infrastructure. Is this the institutional-scale impact model we have been waiting for?
ESG
From financial support and flexible working to Zoom ‘happy hours’, choirs, online yoga and mindfulness classes, banks around the world are seeking to address employee mental health during the Covid-19 crisis
ESG
The momentum for environmental finance had been growing, but Covid-19 has forced a pause. Can environmental finance help economies to ‘build back better’? And how can that movement boost environmental finance?
ESG
The $40 trillion environmental, social and governance investment industry is built on a bedrock of data from an ever-widening range of sources. Is that data fit for purpose?
ESG
The bank’s new Development Finance Institution could move the needle in helping developing economies meet the UN’s sustainable development goals. Euromoney talks to managing director Faheen Allibhoy and chair of the governing board Daniel Zelikow.
ESG
The Covid pandemic and racial injustice protests have thrust social investing into the spotlight this year. However, using this to achieve long-term change on the ground will be a tough job.
Treasury
Corporate treasurers are doing everything they can to keep businesses running as smoothly as possible during these challenging times. How do their relationships with bank partners hold up in times of stress?

The digital dividend dominated the cash management market in 2020. Corporates responded well to those banks that digitalized the services they needed to stay afloat in the choppy waters of a global pandemic.

moonshot cropped 3.jpg
A new Euromoney podcast series traces the relationship between space and the private sector, from the early Cold War state-funded model of Apollo to one in which venture capital backs the most interesting and visionary ideas.
Awards
It was not the only bank that came into the Covid crisis with a strong balance sheet, but, as in 2008, the bank has shown that its diverse businesses provide plentiful earnings to take big reserves, even while it keeps financing large corporates and small businesses alike.
The firm didn’t foresee the coronavirus crisis when it decided to pivot its investment bank more explicitly towards clients than ever before. But as so often, its timing could not have been better


Capital Markets
Global banks are finally getting full access to China’s capital markets. Regulators will let them own joint ventures outright as they roll out a host of services from forex to advisory to wealth management. For Beijing it’s a final frontier – and there’s no going back.
Foreign capital is flooding into Chinese bonds, but investors should scrutinize the ways issuers can wriggle out of meeting their obligations.
Despite MSCI index inclusion and a landmark trade by Saudi Aramco, global funds are still $70 billion underweight Gulf equities.
Volumes more than doubled in March; before the coronavirus crisis hit, Euromoney spoke to market participants about why portfolio trading will transform bond market liquidity.
Having raised liquidity in March, Latin American companies are now trying to assess the best way forward.
The country is enjoying a record year in equity capital raising. But there are signs that those behind the leaders may struggle.
Politicians in the US and China warn of decoupling, but at a financial level the two countries are closer than ever. China needs US money and help to build its capital markets. US funds are snapping up mainland securities as they tap into the great investment opportunity of the 2020s. It’s a perfect match.
The transition from Libor is passing key tests as benchmark reform moves into its endgame. In October, the discounting rate for cleared interest rate derivatives was smoothly shifted to Sofr and Isda’s fall-back protocol was finally published. However, the Gordian knot of legacy loan contracts remains.
For an IPO alternative designed not to give a first-day pop, liquidity is the real measure of success.
The volatility of 2020 has pushed listings of special purpose acquisition companies to record levels. But the gradual shedding of their fly-by-night reputation is also driving the surge.
Japanese conglomerates have woken up to the need to divest non-core assets; international private equity houses have plenty of dry powder with which to buy them. This happy alignment appears to have survived Covid-19, unlike other forms of cross-border M&A.
Real estate investment trusts are the mainstay of Singapore listings, a rare example of liquidity and foreign interest in an otherwise dull local bourse. Two contrasting mergers tell intriguing stories about where the Reit market goes from here.
China’s decision to scrap Ant Group’s IPO made headlines around the world. But why did the Party act so late and why is it so concerned about Ant? Euromoney looks at the reasons behind the decision and asks what the future holds for a firm hemmed in by a raft of new rules on everything from online lending to anti-trust and data privacy.
Nobody had more to lose from scrapping Ant's IPO than the bookrunners. What happens next?
Litigation funding has surged in recent years. Now it is expanding from its roots to tap new markets.
Fintech
First central banks ignored cryptocurrencies, then they mocked them, next they fought them and now they are building their own. Before long central bank digital currencies will be in use, with possibly startling consequences. What will it mean for privacy and personal freedoms? And could the backstop to banking become the banking system itself?
After turning French banking upside down, Compte Nickel is taking its tech-savvy approach to financial inclusion abroad. Insiders say its barebones account service will spread further and keep its dynamism under BNP Paribas ownership. But can a bank for outsiders with a physical network also be the fintech champion of Europe’s banking establishment?
Banks in emerging Europe are touting their fintech programmes and credentials, but is the enthusiasm reciprocated by the startup community?
Retail banking has been disrupted. Now comes wholesale’s moment, as banks shift into a higher gear to meet the increasingly onerous demands of digitally connected corporates. Only the best and most adaptable firms are likely to survive.
For a sector reeling from money laundering scandals, it’s tempting to imagine that technology could be a low-cost way of solving such problems. AI could be a game changer for detecting low-level crime, but corporate-scale laundromats will remain tough to crack.
Recruited to set up a national payments system, the central bank’s Olga Skorobogatova has overseen initiatives to protect consumers and promote competition in Russia’s banking sector. In her first interview with international media, she talks sandboxes, blockchain and the challenges of regulating bank ecosystems.
Financial technology is not being employed to its best effect, while the coronavirus financial relief effort is struggling. Banks need to innovate and work with fintechs if they are to ensure that the most vulnerable do not get left behind.
Fears that the Covid-19 virus might live on banknotes and coins has focused public attention on once esoteric experiments with central bank digital currency. The virus has also exposed the slow pace of emergency government support payments through the conventional banking system, so what once sounded futuristic may be coming soon. CBDC just got real.
Everyone is hungry for data to help navigate the coronavirus crisis, but thorny questions remain about consent and privacy.
A new Swiss-Singaporean enterprise styles itself as the world’s first digital asset bank. It is regulated, resembles the structure of a mainstream bank and has some high-visibility advisers and investors, among them Peter Wuffli. Will it work?
Within three years a quarter of Europe’s bank branches could be closed – more if the rising M&A wave strengthens. When banks shout about investing in digital for their customers, they want investors to hear they are cutting costs. In the rush to become tech companies could they lose what keeps customers loyal?
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