As Wall Street chief executive officers flock to the World Economic Forum, they’ll be breathing a sigh of relief along with the Swiss mountain air: There are no panels on compensation or redesigning financial regulation.
After spending much of last year’s meeting defending the industry and debating proposed rules, bankers plan to focus on wooing clients and winning business, according to executives at three Wall Street companies, who spoke anonymously because they weren’t authorised to comment publicly.
The bankers will be coming to Davos, Switzerland, with a renewed sense of confidence. JPMorgan Chase & Co’s profits last year were the highest in the bank’s history, and Citigroup Inc returned money to the US Treasury and reported its first full-year profit since 2007. Governments have so far opted against breaking up or levying extra taxes on banks deemed too big to fail, and the Basel Committee on Banking Supervision, which sets global financial-regulatory guidelines, isn’t requiring lenders to meet new capital standards until 2015.
“It will feel less acute,” said Anne M Finucane, Bank of America Corp’s chief strategy and marketing officer, who attended with CEO Brian T Moynihan for the first time last year and is returning this week. “The level of angst should have dissipated some given that there is movement in the economy.”
Goldman, Morgan Stanley
Two years ago, after the 2008 financial crisis, the CEOs of Bank of America, Citigroup and Morgan Stanley stayed away from the annual forum. This year the only major Wall Street banks that aren’t sending CEOs are Goldman Sachs Group Inc and Morgan Stanley, instead represented by President Gary D Cohn and Chairman John J Mack respectively.
That means banks will be spending on parties. JPMorgan upgraded its cocktail reception to the Kirchner Museum from last year’s event at the Tonic Piano Bar at Hotel Europe Davos. Bank of America’s Moynihan and the firm’s other top executives will meet clients for drinks on January 27 at the Steigenberger Grandhotel Belvedere — the same night Morgan Stanley’s Mack is hosting a private dinner at restaurant Gasthaus in den Islen. Standard Chartered and Deutsche Bank are both hosting events at the Belvedere the following night.
Nomura Holdings Inc is having a British journalist and a newspaper editor speak at a dinner for clients, the first such event the Tokyo-based bank has held in Davos, according to a person familiar with the planning. Barclays Plc will again hold its annual client dinner at the Hotel Schatzalp, and Credit Suisse Group is hosting two client lunches, one discussing financial regulation and the other focused on emerging markets.
‘Cup of coffee’
As always, much of the action at Davos will happen at meetings and parties that aren’t on the official programme.
“The most useful thing for us is really just to spend time with key clients over there, even if it’s just a cup of coffee for 20 minutes or so,” said William Vereker, the London-based joint global head of Nomura’s investment banking division.
For bankers like Vereker, in contrast with this year’s Davos theme of “Shared Norms for a New Reality,” the old reality is back.
“They’re out there to make money for shareholders and trying to do that the best way they can under a system they helped design,” said Simon Johnson, a professor at the Massachusetts Institute of Technology’s Sloan School of Management and a Bloomberg News columnist. “We’re just going through the same cycle again with pretty much the same incentives and power structures. Why would one expect anything different?”
Co-chair Kochhar
One thing different this year is that none of the heads of big western banks is among the event’s six co-chairs. Chanda D Kochhar, the 49-year-old CEO of ICICI Bank, India’s second- biggest lender, is replacing Deutsche Bank CEO Josef Ackermann and Standard Chartered CEO Peter A Sands, who represented the industry last year.
Kochhar’s bank, unlike many of its western counterparts, remained profitable throughout the financial crisis and this week reported a record profit for the three months ending December 31. Her salary, bonus, expenses and pension contributions for the year ending March 31, 2010, totalled $457,500, the Mumbai-based bank’s annual report showed, less than half the $1 million base salary paid to JPMorgan CEO Jamie Dimon, who is returning to Davos after skipping last year.
A survey released a year ago by New York-based public relations firm Edelman showed the percentage of respondents in India who said they trusted banks rose to 83 per cent, while in Germany, France, the UK and US, trust in banks tumbled below 30 per cent. Edelman is scheduled to release an update of that study later today.
Finucane and other senior bankers said the lessons learned from the financial crisis aren’t forgotten. They also said the reform process isn’t finished. Many of the rules required by the US’s Dodd-Frank financial legislation have yet to be written, and Basel still has to craft rules for too-big-to-fail banks and capital requirements for trading units.
