Julius Baer has signed a declaration to support the United Nations (UN) Principles for Responsible Banking making it the first Swiss bank to commit to them. The Bank will formally sign the principles on the occasion of the UN General Assembly in New York in September 2019.
The Principles for Responsible Banking have been developed by the UN Environment Finance Initiative (UNEP FI) and 28 banks from around the world and will be officially launched on 22 September 2019. The Principles set out the banking industry’s role and responsibility in shaping a sustainable future and in aligning the banking sector with the objectives of the UN Sustainable Development Goals and the 2015 Paris Climate Agreement. The principles represent a single framework for the banking industry that aim to embed sustainability across all business areas.
Bernhard Hodler, Chief Executive Officer Julius Baer said: “We are very proud to be the first Swiss bank to commit to the UNEP FI Principles for Responsible Banking. At Julius Baer, we continuously include sustainability practices into our business, meeting a number of notable milestones in our pursuit of long-term value creation for clients, shareholders, and society as a whole. We see our responsibility as encompassing all aspects of sustainability: economic, social, as well as environmental. With our declaration to the Principles for Responsible Banking, we affirm our willingness to assume an active leadership role in sustainable changes.”
The 19th CLAB Financial Technology and Innovation Conference, organized by the Florida International Bankers Association (FIBA) and the Federación Latinoamericana de Bancos (FELABAN), will reunite 1,000 banking executives and tech leaders from across the Americas in Hollywood, FL on September 4-6.
Experts from some of the world’s leading banking, technology and consulting companies, such as Netflix, PayPal, Microsoft, VISA, JP Morgan, Santander, McKinsey, EY, Deloitte, IBM, CITI and BBVA will join regulators and government officials to provide a broad and diverse perspective on how FinTech and digital transformation are impacting the financial services sector.
The speakers’ lineup includes: Jorge Machado, McKinsey; Dan Mendes, Deloitte; Gustavo Monteiro, Netflix; Rene Salazar, PayPal; Alan Koenigsberg, VISA; Fernando Moreno, BBVA; David Zimmerman, IBM; Driss Temsamani, CITI; John Hunter, JP Morgan; Liliana Marcos, CNBV Mexico; Irene Arias, IDB Lab; Nikhil Lele, EY and Belisario Contreras, OAS, in addition to senior executives from leading global organizations and FinTech innovators and entrepreneurs.
In addition, CLAB also announced that Andres Oppenheimer, the multiple award-winning columnist with The Miami Herald, CNN anchor and author of seven books, will deliver the keynote presentation on Friday, September 6 at 10 am.
“There is no question this is one of the best teams of speakers ever assembled for a CLAB event. From RegTech, blockchain and payment innovation to cybersecurity, CX and AI, participants will have first-hand access to the leaders and experts that are directly involved in the ongoing transformation of the financial sector,” said David Schwartz, FIBA president and CEO. “This is the platform to stay current with the leading-edge of FinTech.”
CLAB 2019 is supported by strategic partners, including Ernst & Young, Asi Group, Automation Anywhere, Entrust Datacard, Latinia, Vierge Group, Cloudflare, Microsoft, Infocorp, Prisma Technologies, Grupo Clai, Open Legacy, Tememos, Veritran, Charge Anywhere, Fiserv, ProColombia and more than 85 supporting organizations.
CC-BY-SA-2.0, FlickrCEPAL building. FDI Flows to Latin America and the Caribbean Increased by 13.2% in 2018
In contrast to the global trend, foreign direct investment (FDI) flows to Latin America and the Caribbean increased by 13.2% in 2018 compared to 2017, totaling 184.287 million dollars, which reversed five years of falls.
Although the figure reached last year is still below the values recorded during the boom price cycle of raw materials, the Economic Commission for Latin America and the Caribbean (ECLAC) reported in Santiago, Chile that, “when analyzing the different components of FDI, it is observed that the recovery of dynamism in 2018 was not based on the entry of capital contributions, which would be the most representative source of the renewed interest of companies to settle in the countries of the region, but in the growth of the reinvestment of profits and loans between companies”.
The study shows great heterogeneity in national results: In 16 countries there is an increase in entries compared to 2017 and in 15 countries there is a decrease. Most of the growth of FDI in 2018 is explained by the greater investments in Brazil (88.319 million dollars, 48% of the regional total) and Mexico (36.871 million dollars, 20% of the total).
They are followed, in terms of the amount received, Argentina (11,873 million dollars, 3.1% increase over 2017), Colombia (11,352 million dollars, 18% drop), Panama (6,578 million dollars, increase in 36.3%) and Peru (6.488 million dollars, 5.4% drop). Entrances to Chile (6,082 million dollars) grew slightly (3.9%), but, as in 2017, capital flows to the country were clearly below the average of the last decade.
“In an international context of reducing FDI flows and strong competition for investments, national policies should not be aimed at recovering the amounts recorded at the beginning of the decade, but rather attracting more and more FDI that contributes to the formation of capital from knowledge and move towards sustainable production, energy and consumption patterns,” said Alicia Bárcena, ECLAC Executive Secretary.
“The increasing incorporation of a sustainable development approach in the strategic decisions of the main transnational companies in the world is an opportunity to design policies that accompany this paradigm shift,” said the senior official. The outlook for 2019 is not encouraging because of the international context. A drop of up to 5% in FDI inflows is expected, according to the report.
In 2018, FDI in Central America grew 9.4% compared to 2017 due to the momentum of Panama. In the Caribbean, the entries decreased 11.4% due to lower investments in the Dominican Republic (2,535 million dollars, -29%), the main recipient in this subregion.47% of FDI inflows in 2018 corresponded to the manufacturing industry, 35% to services and 17% to natural resources. On the other hand, cross-border merger and acquisition megaoperations were concentrated in Chile and Brazil, in the mining, hydrocarbons and basic services (electricity and water) sectors.
Regarding the behavior of Latin American transnational corporations, known as translatinas, the ECLAC document reports that the outflow of FDI from Latin American countries decreased in 2018 for the fourth consecutive year and reached 37.870 million dollars. 83% of direct investment abroad from Latin America originated in Brazil, Chile, Colombia and Mexico.
Most of the capital that entered the region came from Europe (which has a greater presence in the Southern Cone) and the United States (main investor in Mexico and Central America). China, meanwhile, lost participation in mergers and acquisitions in Latin America and the Caribbean, according to the report Foreign Direct Investment in Latin America and the Caribbean 2019.
Finally, the report indicates that 7.9% of FDI received by Latin America between 2012 and 2016 went to the agrifood chain, especially to the agribusiness sector, a percentage that rises to 15.5% in the case of Uruguay, 14.5 % in Paraguay, 14.4% in Mexico and 11.9% in Argentina. “FDI can contribute to the need for changes in regional agri-food chains to meet the environmental and social challenges of the coming decades,” concludes ECLAC.
Pixabay CC0 Public DomainFoto: MaxPixel CC0. Los riesgos de una espiral de reducción de tasas están aumentando
Stocks closed at all-time highs on eight days during July to end the month with a gain despite a broad last day surprise sell off during Chairman Powell’s post FOMC statement press conference. The Fed cut its policy rate by 25 basis points. Stocks headed down when he characterized this reduction as a ‘mid-cycle policy adjustment’ but rallied later when he said this cycle may not be ‘just one’ cut.
The Fed made it clear that it will reduce rates again to ‘insure’ downside risks if global economic growth falters and/or the trade war escalates. Stocks dropped sharply on August 1, after President Trump announced a new 10 percent tariff on $300 billion of Chinese imports. The risks of a trade war/rate cut spiral are rising.
Up to this point, the consumer driven U.S. economy and corporate profits have done relatively well. On July 30, the Commerce Department reported that May wages and salaries were revised to up 5.3% y/y, a large incremental increase of about $230 billion with June up 5.5%, the savings rate at 8.1% and the PCE deflator at 1.4% according to ISI. Bottom line – real wages and salaries up 4.1%.
Additionally, with a major global central bank easing cycle now under way, the U.S. Fed’s balance sheet is likely to increase about $9 billion a month, and in combination with the ECB and BOJ, at an annualized rate of about $700 billion.
We continue to expect M&A activity to pick up for small and mid-sized companies during the second half of the year as lower rates get strategic and private equity buyers to take a closer look at the intrinsic values versus the market prices of these companies. We continue to keep our eye on the upcoming election in the U.S. and the potential effects on the market.
Column by Gabelli Funds, written by Michael Gabelli
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The information and any opinions have been obtained from or are based on sources believed to be reliable but accuracy cannot be guaranteed. No responsibility can be accepted for any consequential loss arising from the use of this information. The information is expressed at its date and is issued only to and directed only at those individuals who are permitted to receive such information in accordance with the applicable statutes. In some countries the distribution of this publication may be restricted. It is your responsibility to find out what those restrictions are and observe them.
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Participant Capital, a Miami-based private equity real estate investment firm, founded by Royal Palm Companies, a developer with more than 40-years of success, has announced today the promotion of Claudio Izquierdo to Chief Operating Officer. With Claudio’s years of experience in international investment and business development, the company is strongly aimed to elevate its global expansion.
Claudio Izquierdo has a long history of working with institutional investors and ultra-high net worth individuals throughout Latin America. His successful career includes impressive achievements at some of the world’s most prestigious investment banks such as Morgan Stanley where he rose to the position of Vice President. He also served as a Senior Vice President of Investments at UBS and a Senior Financial Advisor at HSBC.
“Claudio is an exceptional professional with international business acumen and deep expertise. He is managing over 30 distributors and building partnerships with key financial institutions across the globe,” comments Daniel Kodsi, Participant Capital CEO. “We are proud to have him on our team!”
Prior to joining Participant Capital, Claudio enjoyed a successful career as an entrepreneur having established a number of international export and trading businesses. He has a degree in finance from Florida International University. He is a frequent contributor to a variety of trade and business publications and a sought-after speaker and expert authority on international investment and management products.
“I am happy to oversee how fast Participant Capital is growing,’’ says Claudio. “Thanks to the dedication of our team, we are creating long-lasting value for our clients and providing direct access to world-class real estate projects from the ground-up at the developer’s cost basis.”
Pixabay CC0 Public DomainFoto: PxHere CC0. La "manipulación de divisas" de China: ¿una señal de pánico o un plan astuto?
Over the past several months, there has been hype about the prospect of the Chinese renminbi (RMB) weakening past 7 per U.S. dollar, despite no evidence that 7 is a magical number. China’s central bank, People’s Bank of China (PBOC), had denied that it was focused on defending 7, and the IMF said it wasn’t significant. So when the RMB finally broke 7, the media treated it as a dramatic event, but I believe, this will soon pass.
It is likely that the timing of the move was deliberate, following President Trump’s latest round of tariffs last week.
A sign of panic?
In a Monday morning tweet, President Trump responded to a depreciating Chinese renminbi by stating, “It’s called ‘currency manipulation.’ ”
The decision to tag China as a currency manipulator was either a sign of panic, or a cunning plan. Or a bit of both.
My interpretation of yesterday’s tweet is that the president still wants to sign a trade deal with Chinese President Xi, because Trump recognizes that a deal is better than no deal for his re-election prospects.
No deal would mean continued taxes on Chinese goods, paid for by American families. (And the next round of tariffs would fall largely on consumer goods, which had previously been spared because of the direct impact on voters.) No deal would mean a continued Chinese boycott of American soybeans, which is contributing to harsh conditions for farmers in politically important states. No deal would mean continued economic uncertainty, which is leading to weaker corporate capex and worries about a recession. Moreover, the prospect of no deal, and an escalation of the tariff dispute into a full-blown trade war, has had a clear, negative impact on investor sentiment.
I believe Trump wants a deal, but is struggling to find a way to close the deal.
Given that the currency manipulator label carries no concrete consequences, Xi is unlikely to feel more pressure to sign a deal that he believes is disadvantageous. He may see the accusation as a sign of panic. I believe the timing of latest currency move was a short-term political signal by Xi.
Xi is unlikely to resort to a significant devaluation to respond to Trump, in my view. The tariffs are having little direct impact on China’s economy (net exports were less than 1% of China’s GDP last year, and only 20% of total exports went to the U.S.), and Xi has far better tools to deal with the more significant indirect impact: weak confidence by manufacturers, who have slowed output and deferred investment. Further, China’s consumer story—the largest part of its economy—remains pretty healthy, as does employment and wage growth, so there is no reason for Xi to panic.
A cunning plan?
In the past, Treasury Secretary Steven Mnuchin ignored the president’s calls to tag China as a currency manipulator. And when the law required a formal ruling on the question, Mnuchin—following in the footsteps of many Democratic and Republican predecessors—declared that China was not a manipulator.
His last finding was just a few months ago, on May 28, when Mnuchin informed Congress that China did not meet the criteria for being designated as a currency manipulator under either the 1988 or 2015 legislation.
Yesterday, however, just several hours after Trump’s tweet, Mnuchin issued a press release designating China as a currency manipulator under the 1988 legislation. “In recent days, China has taken concrete steps to devalue its currency…to gain an unfair competitive advantage in international trade,” according to the press statement.
What changed between May 28 and Monday that led Mnuchin to reverse course?
During that period, the RMB depreciated by all of 0.4% against the dollar. Was that enough to justify a change in policy? Was that sufficient to provide, as the Treasury press release claimed, “an unfair competitive advantage in international trade.”
The timing of Xi’s decision to relax his central bank’s interventions that had for many months prevented market forces from pushing the RMB below 7 was clearly politically motivated, in response to Trump’s August 1 announcement of additional taxes on Chinese goods. But this market pressure itself was the result of uncertainty created by the Trump tariffs, and Xi’s action was modest: The PBOC lowered its target rate for the currency by only 0.3%, although market forces pushed it down further.
Here’s another way to look at it: between Trump’s August 1 announcement of additional taxes and Monday’s currency manipulation decision, the RMB depreciated 0.3% against the dollar.
Yet another perspective: over the course of 2019, the RMB is behaving as it has in recent years, with its direction vs. the dollar determined by the strength or weakness of the dollar. Year to date, the RMB is down 1.5% vs. the dollar, while the U.S. Dollar Index (DXY) is up 1.5%.
(China has in fact been manipulating its currency to stop market forces from weakening it even more. The Trump administration wants them to stop? And on Tuesday, China’s central bank guided the exchange rate a bit higher, consistent with its statement that they are “not carrying out competitive devaluation.”)
It is fair to conclude that little has changed since the Treasury’s May 28 decision that China did not meet the legislative criteria for currency manipulation.
So, did Mnuchin change course yesterday simply due to pressure from his boss?
Or, was it part of a cunning plan?
Yesterday’s press release says, “As a result of this determination, Secretary Mnuchin will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’s latest actions.” Well, we know that the IMF believes the RMB is roughly fairly valued, so this is unlikely to worry Xi.
Did Mnuchin decide that designating China as a manipulator might calm the president without blowing up the trade talks, because there are no consequences to the designation? Mnuchin may have decided that this course of action would lead Trump to give U.S. Trade Representative Robert Lighthizer and him more time to negotiate with their Chinese counterparts, in an effort to reach the deal that Trump knows he needs, but doesn’t know how to achieve.
If they are given room to negotiate, I think a deal can be reached by the end of the year, as I believe that Xi continues to want to reach a deal. While tariffs are not a huge problem, as China is no longer an export-led economy, failure to conclude a deal would open up the risk that a full-blown trade war leads to restrictions on China’s access to American tech, everything from semiconductors to research collaboration. That would be a setback to China’s economic growth, which Xi wants to avoid.
Column by Matthews Asia, written by Andy Rothman, Investment Strategist
CC-BY-SA-2.0, FlickrFoto cedida. Marcus Evans prepara su próximo Latin Private Wealth Management Summit
The Latin Private Wealth Management Summit is a two day event offering Latin America’s leading advisers of single and multi family offices, wealthy private investors, international fund managers and asset managers a devoted environment for unparalleled business and networking opportunities in a stimulating environment.
For two days between October 3rd and 4th, senior investment executives responsible for fund management and asset allocation decisions of Family Offices including: Presidents, Founders, CEOs, Managing Directors, CIOs, will meet in Panama City for an extensive program organized by marcus evans.
Foto cedidaGonzalo Binello. Schroders nombra a Gonzalo Binello director para Latinoamérica
Schroders is announcing today that Gonzalo Binello has been appointed Head of Latin America. His appointment will bring a dedicated, regional-specific emphasis on our development in Latin America, a key strategic growth area for the firm. Gonzalo will also retain his role and responsibilities as Head of Offshore Intermediary Sales.
Gonzalo joined Schroders in 2003 and was most recently the Head of Intermediary Offshore Sales, based in Miami. He has extensive experience and knowledge of the Latin American market, having been Head of Distribution for Latin America and Central America at Schroders from 2009 to 2013.
Gonzalo will report in to John Troiano, Global Head of Distribution at Schroders.
As part of these changes and our focus on Latin America, Pablo Albina will also become Head of Investments for Latin America and continue with his role as Country Head of Argentina. Pablo will work in partnership with Gonzalo to develop and implement our strategy for the region, focusing on building our local investment teams and enhancing our product suite. In this role, he will report to Karl Dasher, Co-Head of Fixed Income and CEO North America.
The new appointment of Gonzalo, together with Pablo, will secure the ongoing prosperity and growth in the Latin America region.
John Troiano, Global Head of Distribution, Schroders commented:
“Schroders has established itself as a growing force in the Latin American market. Furthermore, the region has become a key strategic growth area for the firm and we are experiencing significant client demand for our investment expertise across the continent. We are confident that Gonzalo’s appointment will support the continued growth of our business across Latin America.”
Gonzalo Binello, Head of Latin America, Schroders, said:
“Schroders’ profile in Latin America among investors continues to grow. I am excited to bring my regional experience of the market to this new role and help build on the substantial foundations that Schroders already has in place.
“The investment needs of investors across the continent are diverse. I am determined to ensure that Schroders’ business continues to evolve to meet the complex challenges that both existing and prospective clients face.”
After years of growing older, the ranks of advisers and RIA firm leaders are getting younger. New FA Insight benchmarking research from TD Ameritrade Institutional finds the leadership of registered investment advisor firms is passing the torch from the Baby Boomer to Gen X and investing to sustain their firms’ strong performance well into the future.
The report found that the advisory community as a whole is getting younger, reversing a graying trend that had many advisors worried about the sustainability of the industry. With a median age of 49 years – three years younger than in 2015 — six out of 10 firms have at least one owner who expects to stay at the helm for at least another 12 years, according to The 2019 FA Insight Study of Advisory Firms: People and Pay.
The median age of firm associates, overall, dropped to 42 from 44 in 2015, while the median age of lead advisors is now 46 years, down from 50. The study also found that the number of owners who are 40 years of age or younger equals the number of firm owners who are over 60.
“As the next generation of RIA leaders comes to the forefront, they’re investing in their firms with a long time horizon,” said Vanessa Oligino, Director of Business Performance Solutions at TD Ameritrade Institutional. “We expect to see different approaches to industry challenges – whether they be staffing and compensation, growth and organizational design, or technology and innovation.”
Firm owners remain characteristically confident about continuing growth in 2019. They’re investing in senior-level experience, with lead advisor compensation up by 12 percent over the last two years, in an effort to secure seasoned talent that can help supercharge growth and navigate tomorrow’s challenges.
The report found that, although 2018 ended with the major stock indexes posting their worst yearly performances since the 2008 global financial crisis, choppy markets did not quell firm owners’ optimism, even as growth in assets under management (AUM) slowed.
The median revenue growth rate for firms was 14 percent in 2018, up slightly from 2017, while the median client growth rate of 7.4 percent was little changed. The rate of growth for AUM dropped to 5.9 percent.
Today’s Advisory Firms: Growing and Profitable
Firms continued on their growth trajectory in 2018, thanks to efficient operations management and the increase in productivity from associates in revenue-generating roles.
At 21 percent, a typical firm’s operating profit margin last year rose by more than a percentage point from 2017, and overhead expenses as a share of revenue fell slightly in 2018. This translated to rising income for firm owners, whose median total income rose 3.6 percent in 2018 to $633,000, the highest since 2014, or 55 cents for every dollar or firm revenue.
Despite market declines at the end of 2018, firm financial performance was also strong compared to the average of the previous five years. The rate of revenue growth increased to 14 percent, versus 12 percent, while operating profit margin increased from 20 percent to 21 percent. Revenues generated by revenue-generating roles were up 14 percent to $547,000 in 2018, while annual revenues per full-time equivalent (FTE) were up 13 percent over a two-year period.
Wanted: Seasoned Help
Advisory firms anticipate doubling their hiring rate in 2019 compared to 2018, with 61 percent making at least one hire last year. The largest firms plan to increase headcount by 10 to 12 percent, bringing on board seven FTEs.
Senior revenue generators and advisory firm staff, who have a proven ability to navigate market volatility and ease client concerns, have seen compensation rise over the last two years, whereas compensation for less experienced revenue generators has fallen. The compensation of associate advisors, who are now generally younger and have less experience than in prior years, has gone down by 8.5 percent and operations manager compensation rose during this period by 8 percent during this period.
The quest for experience may also help explain why firms continue to recruit lateral hires from inside the industry. RIAs tend to hire predominately from other independent RIAs for revenue roles, though they may also consider recruiting from other financial services firms and wirehouses.
Only 4 percent of firms are hiring recent college graduates for revenue-generating roles. A slightly higher amount, 6 percent, are hiring professionals from outside of the financial services industry.
People costs represent 77 percent of a typical firms expenses and 59 percent of total revenues. For every dollar spent on cash compensation, firms spend an additional 14 cents, on average, on retirement programs, medical benefits, training and payroll taxes.
“Independent advisory firms are laser-focused on growth and profitability, keeping expenses in line, while generating healthy returns across market cycles,” said Oligino. “Entrepreneurial and optimistic, successful owners are making investments they believe will benefit their firm in the long-run.”
Click here to read the executive summary of The 2019 FA Insight Study of Advisory Firms: People and Pay.
CC-BY-SA-2.0, FlickrFoto: FIBA. FIBA y FELABAN preparan su CLAB 2019, enfocado en FinTech
Fintech revolution and regulation, digital transformation, blockchain, payment innovation, cybersecurity, the future of customer experience, financial inclusion and AI are some of the themes to be discussed at the 19th CLAB Financial Technology and Innovation Conference.
Between September 4-7, over 1,000 people from over 35 countries and representing more than 200 financial institutions will gather in Hollywood, Florida for three days of networking and lectures.
Organized by the Florida International Bankers Association (FIBA) and the Federación Latinoamericana de Bancos (FELABAN), CLAB will discuss the most relevant trends and technologies impacting the financial institutions in the region.
