Year: 2021

The financial development of Macau continues to grow

Posted on by itsupport

Established by the businessman Zhuang Shiping in June 1950 – and formerly known as Nam Tung Bank in Macau – Bank of China Limited, Macau Branch was formally renamed on New Year’s Day in 1987 and became the ninth overseas branch of Bank of China.

Bank of China Limited, Macau Branch (BOC Macau) holds a full banking licence and provides corporation banking, personal banking and related financial services in Macau. In recent years, the bank has actively expanded its business in investment banking, structural financing, and comprehensive cross-border banking services in order to provide better internationalised professional services for customers and to meet their various financial needs.

At the same time, BOC Macau has given full support to the Macau SAR government’s administration and the development of characteristic finance and the construction of smart cities. At the end of 2020, the bank had 36 sub-branches with total assets of over MOP790bn ($98bn), boasting over 40 percent of the local market share in mainstream businesses such as savings and loans.

BOC Macau employ more than 1,800 employees, which is approximately 30 percent of the total number of employees in Macau’s banking industry. While promoting economic development and creating wealth for society, BOC Macau also reward local talent with a wide range of employment opportunities and possibilities of upward social mobility.

2020 was the 70th anniversary of the establishment of BOC Macau, and it’s also been a year for overcoming adversity for many businesses. Amid the COVID-19 pandemic, with the challenges caused by the complex and severe situation in China, BOC Macau continued to support the relief measures of the Macau government, to combat the pandemic and assist the community to help overcome difficulties. The bank was not only awarded the ‘Decoration of Honour – Silver Lotus’ by the Macau government, but also had the historical achievement of recording an operating income of MOP10bn ($1.2bn).

Leading with technology
In recent years, the banking retail business has undergone a comprehensive change. BOC Macau has taken the initiative to seek innovation and change. The bank’s digital transformation focuses on mobile banking and smart counters, which also achieved breakthrough development during 2020. The digital transformation of retail business is comprehensively promoted through scientific and technological forces, various product types, key scene development and more efficient sub-branch services.

In 2020, BOC Macau listed mobile banking as the number one project for the whole bank. In a push to expand and support its customer base, BOC Macau sped up the optimising and adding of new functions to its mobile banking app, including UnionPay quickPass, cross-border wealth management, ‘BOC PAY’ online payment support, inter-bank transfer, transfer product sharing, registration and new accounts, and overall login speed. In 2020, the number of mobile banking transactions increased by 150 percent over the same period for the previous year, which successfully became the starting point of the bank’s digital transformation and provided a solid platform for new digital ventures.

BOC Macau provides a full range of mobile financial services for Macau merchants and residents through ‘BOC PAY’ and ‘BOC Macau APP’ in multiple life scenarios such as paying for clothing, food, housing and transportation. By supporting diversified payment methods, reducing the costs of local merchants and increasing the transparency of the business environment, BOC Macau is committed to providing more convenient mobile payment services for Macau residents, and it also further promotes the development of financial inclusion and economic diversification in Macau.

2020 was also the year for the comprehensive promotion of overseas smart counters in Macau, with more than 100 smart counters launched to achieve full sub-branch coverage. In December, the number of customers served by smart counter reached nearly 50,000, the transaction volume reached nearly 100,000, and the customer migration rate steadily increased to more than 30 percent. The customer service experience will be further improved all while reducing the operating pressure for sub-branches and counters.

Cash management services
BOC Macau has pioneered a cash management service, which provides various products, such as Bank-Enterprise Direct Connection, Bank-Bank Direct Connection, and Swift Direct Connection. These programmes serve a large customer base including state-owned enterprises, private enterprises, insurance companies and integrated resort hotels. BOC Macau has also established local cash pools for many globally operated private enterprises in mainland China to satisfy their need for timely funds scheduling, collection, and inquiry. The successful launch of these multiple projects not only enhanced the satisfaction of key customers and cemented their loyalty, but also further strengthened the bank’s dominant place in the local cash management business.

The customer service experience will be further improved all while reducing the operating pressure for sub-branches and counters

In terms of business development, BOC Macau has continued to deepen the implementation of its strategic development, supporting local small and medium enterprises (SMEs) with various types of loans and helped the overall recovery of the economy of Macau. BOC Macau has fully cooperated with the government to construct a smart city and facilitated the development of mobile payments through mobile banking services. BOC Macau has vigorously promoted the services transformation of sub-branches, with the innovation of smart counters and online banking services, in order to provide a high-quality financial services experience to its customers.

In terms of assisting the government to maintain a financial system and livelihood stability during the most severe period of the pandemic, BOC Macau resolutely maintained the services of nine sub-branches, and successively introduced a number of financial supports and measures, such as the special purpose loan for SMEs to combat the pandemic and the mortgage repayment rearrangement plan, which together helped to maintain social stability in Macau.

In terms of supporting the development of the Guangdong-Hong Kong-Macau Greater Bay Area (GBA), BOC Macau integrated and actively linked up with domestic institutions, promoted inter-regional connectivity, and provided convenience for Macau residents to use mobile payments and property investment in the mainland.

Bond breakthroughs
In terms of promoting modern financial development in Macau, the bank has continued to utilise business advantages in bond issuance services. BOC Macau are the first commercial institution in the world to issue RMB blue bonds, and the first commercial institution to issue an anti-pandemic bond in the overseas market of China. BOC Macau will continue to utilise their characteristic financing platform advantages and deepen the construction of financial services platforms between China and Portuguese-speaking countries.

2021 is the first year of the 14th five-year plan of China, and the first year for the Bank of China Group to set its corporate vision of ‘building a world-class modern banking group.’ BOC Macau will continue to benefit from the advantage of the ‘one country, two systems’ principle, fully utilising the ‘dual circulation’ intersection location advantage. This will allow it to seize market opportunities in the development of the GBA, the ‘One Belt One Road’ initiative and also construction within Portuguese-speaking countries.

BOC Macau will also be able to carry out Bank of China Group’s core value: “excellent service, stable creation, openness and tolerance, and win-win cooperation,” continuing to provide high-quality financial services to the public, support economic development, maintain financial stability in Macau, and make new and meaningful contributions to the moderate economic diversification of Macau.

Central Bank digital currency to spell the end for crypto?

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Working for a global financial services firm that offers access to the markets for more than 1.5 million investors via our online trading platforms has enabled me to see a wide range of market participants’ views. Currently I am interested in why central banks’ embrace of all things digital could put cryptocurrencies on the road to nowhere. Even central bankers must worry about their job security. You would think having a monopoly on something everyone needs would make your profession pretty secure, but central bankers would disagree. The recent announcement that Facebook, with its 2.7 billion users (one-third of humanity), was stepping into the money-transfer business shocked the world’s central bankers. With its unparalleled reach and cutting-edge technology, Libra (now renamed Diem), could become the de facto standard for global payments, thereby undermining the banking system and creating a host of problems for monetary authorities.

As a prime example of where we could be headed, here’s how the International Monetary Fund (IMF) described the writing on the wall for central bankers in a policy paper titled ‘Digital Money Across Borders’ in October 2020: “A single global stablecoin (GSC) becomes commonly adopted in many countries and replaces the local currency as store of value, means of payment, and unit of account; and is also widely used for international transactions. This scenario may arise if a big tech platform of global scale decides to launch a GSC to its large customer base which spans across the globe. In this case, adoption will be driven by the network externalities associated with the existing large customer base as well as the synergies between the coin and other goods and services that the platform offers.”

“Such a GSC could initially be issued against assets denominated in existing reserve currency. Given the vast scale of the customer base of the big tech platform, the GSC could be adopted globally at a rapid pace. And the launch of a payment instrument that is catered specifically to its customer network would help strengthen its business model. As the GSC gains popularity, network effects would take over: agents would start invoicing contracts in the GSC and financial intermediaries would start collecting deposits and lend through GSC-denominated contracts. At some stage, once adoption reaches some critical mass, the peg to existing reserve currencies may no longer be needed to generate trust in the value of the GSC, and the GSC could become a fiat currency.”

In short, the financial system is vulnerable to ‘creative destruction’ and if it doesn’t keep up with the times, the banking systems that had worked so well for so long could be disintermediated and left behind, just like the landline telephony business. The response has been a flurry of research into central bank digital currencies (CBDCs). According to a recent survey by the Bank for International Settlements (BIS), 86 percent of the 65 central banks polled are actively researching CBDCs, 60 percent are experimenting with the technology and 14 percent are deploying pilot projects.

 

The case of the Bahamas
One case that could support the early promise is the ‘sand dollar’ in the Bahamas, an initiative that was rolled out in October 2020, making it the first country with a functioning national CBDC. The digital currency uses a simple two-tier system that is becoming the consensus structure among central banks, because it keeps the banking system and its essential functions intact. In this two-tier system, the central bank creates and issues digital currency to banks, which in turn distribute it to the end-users. The mechanics of how the Bahamian sand dollar gets into circulation is essentially the same as that of the conventional Bahamian dollar, except that the whole process is digital. No armoured trucks moving bags of cash around.

Bahamian dollars from the Central Bank of the Bahamas (CBB) reach citizens by the CBB selling cash to commercial banks; yes, banks have to buy cash. Banks pay for it with reserves they hold at the CBB. The banks keep the cash in their vaults. When customers want cash, they get it from an ATM. The bank deducts the amount from their accounts. Sand dollars, however, reach citizens by the CBB selling sand dollars to commercial banks. Banks pay for them with reserves they hold at the CBB. The banks keep the sand dollars in a digital vault. When customers want digital cash, they download it from the bank into their digital wallet. The bank deducts the amount from their accounts. The whole process is indistinguishable from cash, but it happens digitally, not physically.

As of October 2020, some Bahamians have been paying with sand dollars via a mobile phone application or a physical payment card. This payments and clearing process works as simply as cash does, while being far more secure. The added bonus is that if you lose your digital wallet you don’t lose your money. The sand dollar is only usable in the Bahamas. But when major currencies such as the US dollar or the euro go digital, seamless global secure money transactions will be possible at the touch of a button. For example, China, Hong Kong, Thailand and the UAE are currently working on a joint cross-border CBDC project, formally known as a ‘multiple central bank digital currency bridge’ (m-CBDC). The plan is eventually to extend the project to all major countries.

 

Questioning digital currencies
In my view, this development raises an existential problem for cryptocurrencies such as bitcoin: what will be the raison d’etre for cryptocurrencies once CBDCs become ubiquitous? Why would someone prefer to let Facebook’s Mark Zuckerberg look after their money rather than Fed Chair Jerome Powell or ECB President Christine Lagarde? And who would prefer to hold their money in an unsecured exchange like Mt. Gox, an entity that was hacked in 2014 while losing $460m in the process? Other crypto exchanges have collapsed due to outright fraud – Turkey’s Thodex exchange was taken offline after its founder absconded with $2bn in bitcoin-denominated client funds.

Indeed, why do bitcoin or other cryptocurrencies have any value to begin with? The key to that is their generic name: cryptocurrencies. Bitcoin and others have been promoted as a superior upgrade to managing a financial system, as opposed to ‘fiat’ US dollars and euros that are susceptible to debasing and devaluation by reckless monetary authorities. Early adopters and buyers are expecting greater demand in the future, but why exactly should demand increase?

One assumes it is because they expect people to use them for two of the three uses of currencies: a medium of exchange and a store of value.

 

The Quora question
I got that view from Quora, a website where users can ask questions and provide answers to both the mammoth and mundane alike. I’m active on Quora to field questions related to finance. I’m routinely asked questions such as: what will happen to the world when cryptocurrency takes over? Are cryptos becoming a western response to the possible fall of the fiat-US dollar standard? Have any countries stated that they are building up reserves of cryptocurrencies like bitcoin and ether? And will bitcoin become the reserve currency of the world?

It seems silly to me that what underpins bitcoin sentiment is the idea that, over time, people will use it more, and that will generate higher demand (and prices). But here’s the rub. Why would someone use bitcoin – or any other cryptocurrency, for that matter – if there are alternatives such as ‘digi-dollars’ and ‘e-euros’? Moreover, why would they choose bitcoin if government-backed alternatives can do it just as quickly, only with a zero bid/offer spread and military-grade security to negate lingering concerns regarding hackable wallets? The answer to this question is that people are likely to go for the easier solution, which is CBDCs.

The adoption of CBDCs is likely to dispel the illusion that cryptocurrencies are ‘currencies’ in the true meaning of the term and scuttle their aspired goal of becoming cash equivalents (see Fig 1). As many policymakers have pointed out, including former Bank of England Governor Mark Carney and Swiss National Bank President Thomas Jordan, cryptocurrencies are crypto-assets, not currencies. People are buying them simply in the hope of selling them at a higher price in the future. But if CBDCs occupy the niche in the financial sector that cryptocurrencies are expected to occupy, why should demand increase? Eventually, people are likely to realise that cryptocurrencies are no more than digital goods. They may still undergo extreme price inflation – think of the digital kitten that reportedly sold for $172,000 in 2018 and the digital dress that sold for $9,500. Although, these kinds of items typically serve a function in an online game or carry aesthetic appeal that gives them value.

 

 

Cryptocurrencies, on the other hand, are restricted to a limited role in online gaming and you can’t wear them in photographs, so even their role as virtual goods is questionable. If CBDCs are eventually introduced as a counter to cryptocurrencies, it will only be a matter of time until people realise that cryptocurrencies have no real futures as trustworthy currencies, and therefore, are likely to have limited value as assets. But yes, I do wish I had bought a wallet full of bitcoin at 50 cents in 2011.

 

Supply and demand
I passed the ideas in this article by a few online cryptocurrency enthusiasts. Needless to say, they staunchly disagreed. They argue that bitcoin and other such coins are not currencies at all – which I agree with – but rather stores of value deemed superior because of their independence from irresponsible monetary authorities. They contend that no respectable bitcoin holder would abandon it in favour of central banker-sponsored digital versions, which the monetary authorities can debase at will.

However, I have my doubts. Most importantly, the idea that bitcoin is a store of value is based on the premise that its total production is limited. But with bitcoin derivatives already available, that’s no longer true. The connection between supply and price has been severed. Nor is the supply of cryptos limited; on the contrary, there are over 2,000 of them. Three-quarters have already fallen by the wayside, taking everyone’s money with them. This demonstrates my other objection: there are many things in limited supply that are not particularly valuable.

Scarcity is a function of demand as much as supply.

Making a difference with sustainably sourced biomass

Posted on by itsupport

The climate crisis demands urgent action. If we are to meet global commitments to phase out coal, cut greenhouse gas (GHG) emissions and achieve net-zero carbon emissions by 2050, the world needs to embrace renewable energy.

Since its founding in 2004, Enviva’s sustainably sourced biomass – industrial wood pellets made from low-value forest feedstock like thinnings, tops, limbs, and sawmill residues – has successfully displaced more than 16 million metric tonnes of coal, enabling its energy customers to avoid emitting 31 million metric tonnes of carbon dioxide into the atmosphere. This equates to eliminating more than 3,519,688,984 gallons of gasoline.

Today, bioenergy accounts for around 10 percent of the world’s primary energy supply, almost double what it was when Enviva first began turning low-value wood into energy-dense, low-moisture, and uniformly sized pellets that provide stability, reliability, and flexibility in energy generation.

The world is embracing biomass at different rates. Today, bioenergy represents almost 60 percent of the European Union’s (EU) renewable energy and is currently the largest renewable energy source in the EU. Currently the US, where Enviva’s manufacturing operations are based, is the leading exporter of wood pellets to Europe, and has the potential to supply as much as 65 percent of the EU’s import demand, representing a trade value of approximately $1.6bn per year. Relatively speaking, Europe is on a path to become the first climate neutral continent by 2050.

Enviva’s Chairman and CEO John Keppler tells World Finance how this will only be achievable through negative emissions, a solution enabled by woody biomass.

 

Which nations are leading the pack when it comes to biomass use?
For ambitious countries that have been largely successful in reducing GHG emissions, look to the UK and Denmark, which aim to eliminate coal by 2030. In fact, last year, the world witnessed the UK complete a record-breaking 67-day period without burning coal thanks in part to the recycling/repurposing of segments of grid infrastructure and the deployment of woody biomass.

Recent research shows the UK is halfway to meeting its target of net-zero emissions by 2050. For countries that currently have large dependencies, such as Germany and Poland, coal may not be completely displaced in 10 years, but both economies will be well on their way to achieving net-zero carbon emissions by mid-century.

Additionally, Japan’s demand for wood pellets is expected to increase by 33 percent in 2021 alone.

 

What role can bioenergy play in the global switch to renewable energy and how does the use of biomass work in combination with renewables such as wind, solar and hydrogen?
Wind and solar have a part to play, but they cannot solve the world’s energy needs all by themselves. When it comes to replacing fossil fuels for both power and heat generation, the intermittency of these technologies falls short. That’s where woody biomass comes in. Wood-based bioenergy is a complement to wind and solar, and when sourced responsibly, it is the only renewable, reliable, dispatchable, cost-effective, low-carbon energy source currently available. What’s more, it can provide global power and heat generators with a drop-in alternative to fossil fuels that can be used in energy systems that exist today.

Enviva is one of very few companies that have the track record, the resources, and the know-how to successfully deliver this important benefit globally.

When used to displace coal, sustainably sourced wood pellets reduce GHG emissions by more than 85 percent on a lifecycle basis, and by more than 70 percent compared to natural gas. As we continue to power down coal plants, governments should consider converting those plants to renewable fuel use in an effort to meet internationally recognised climate targets of net-zero by 2050. In doing this, the existing plants, grid connection and the transport links can all be repurposed and essentially recycled from coal to alternative, renewable technologies. It will keep costs down, people employed, and communities supported, and can deliver change in coal-dependent countries quickly and at scale.

Biomass is also projected to play an important role in the hydrogen economy. The most obvious route is to use biomass directly to create hydrogen through gasification and thereby avoid carbon emissions that are associated with natural gas. Even further down the road, when surplus solar and wind could potentially be used to create hydrogen at scale, there will be an exciting opportunity to produce aviation and other fuels with carbon capture of biomass that could result in negative greenhouse gas emissions.

 

How do you see the potential of BECCS (bioenergy with carbon capture and storage) when burning biomass instead of coal?
BECCS will be significant in terms of the role biomass can play in reducing carbon emissions. We expect the role of wood pellets in the energy system to substantially evolve as we look to exponentially reduce carbon emissions globally and BECCS is one of the very few options on the table that can remove carbon from the atmosphere. Once matured, BECCS could mark the beginning of a new era for renewable, low-carbon fuel applications, one that will enable economies to meet and exceed international net zero targets while still enjoying the benefits of industry sectors like air travel and heavy goods transport, which are difficult and very expensive to decarbonise.

 

What changes are required for the steel industry to fully embrace biomass to create ‘green’ – aka carbon-neutral – steel?
‘Green steel’ will have an important part to play in eliminating the burning of coal and achieving global climate commitments. Biomass was first used for steel production back in the 18th century and fell out of favour as coal became cheaper. It is still used in some smaller smelters today, but for the steel industry to embrace biomass fully, a number of factors need to be addressed. First, current steel production processes need to be adapted to a fuel with lower energy density and structure.

This will require testing and then, based on results, implementing changes to the fuel logistics and infeed systems. Steel producers will also need to be confident that they can source enough sustainable biomass of the right quality to conduct their operations. Finally, these producers would need to see a robust demand for green steel – which Enviva believes is already there – converted into firm contracts for longer-term deliveries. As for timing, many companies are already making this transition. We believe the next two to three years will be spent developing solutions for full implementation, which means green steel, at scale from biomass, could be established before 2025.

Sustainably sourced wood pellets help reduce carbon emissions by more than 85 percent on a lifecycle basis
Sustainably sourced wood pellets help reduce carbon emissions by more than 85 percent on a lifecycle basis

 

What steps is Enviva taking to ensure that the forests it sources from are sustainably managed?
Whether it’s biomass for power and heat generation, steel production or hydrogen creation – sustainability is key. Carbon emissions have massive negative environmental impacts and tackling climate change via bioenergy must not come at the expense of habitat destruction or damage to biodiversity and water quality, to give just a few examples.

Enviva’s overarching commitment to responsible wood sourcing is laid out in our global responsible sourcing policy, our standing environmental pledge that holds us to the highest standards of sustainability, integrity, forest stewardship and continuous improvement. We do not source from old growth forests, from protected forests, or from forests that could be threatened by forest management activities. The wood we purchase must be sourced from sustainably managed forests and from land that will be returned to forest. All harvest operations must employ best management practices and comply with federal and state water quality standards.

Developed in 2016 and deployed in 2017, our industry-leading Track & Trace (T&T) technology has been our flagship platform for open communication and has proven mission-critical in monitoring, tracking, and reporting exactly where all of Enviva’s wood is sourced. The T&T programme enables Enviva to monitor and report on our supply chain as low-value wood travels by the truckload from the forest to the wood pellet production plant. This proprietary system equips our network with detailed insights into the origin of our feedstocks, which we routinely update and make available to the public on our website.

In 2020 we worked to improve our internal processes to prepare for our first internal audit of our T&T standard, and in 2021 we will undertake our first independent third-party audit. We believe that the T&T standard provides our stakeholders with important information about feedstock sourcing and traceability, and in the future we’d like to see other biomass producers adopt this standard as well. Looking to expand and improve the traceability characteristics of T&T, in 2020 Enviva partnered with GoChain to pilot a program designed to enhance the traceability of sustainable biomass. GoChain is a blockchain company that drives the adoption of impactful technology for the betterment of society and our habitat.

The pilot programme identified a select group of suppliers from Enviva’s wood sourcing regions in the US Southeast to monitor various data elements such as forest tract locations, load weights, fibre commodity types, and forest types. Leveraging GoChain’s blockchain, Enviva was able to monitor the movement of wood fibre in real time from select forest tracts at the time of harvest to Enviva’s wood pellet production plants with a unique QR code. The initial pilot is among the largest-scale of blockchain application technology to date in the global biomass industry.

 

What inspired your recently announced plan to achieve net-zero in your operations by 2030?
Sustainability isn’t just about responsible harvesting. Enviva is now taking steps to dramatically reduce the climate impact of its own operations by committing to net-zero carbon emissions by 2030. We plan to reduce, eliminate or offset all of our direct emissions. When it comes to the electricity we consume in the course of our operations, the company plans to source 100 percent renewable energy by no later than 2030, with an interim target of at least 50 percent by 2025. We’ll also be engaging with partners and other key stakeholders to address emissions generated as part of our supply chain. An example of this is our partnership with Mitsui O.S.K. Lines (MOL), with whom we seek to develop and deploy an environmentally friendly bulk carrier to reduce the greenhouse gas emissions in the ocean transportation of sustainable wood pellets. Finally, we’ll be tracking and publishing our progress in reducing emissions annually. The world is in need of more renewable energy. Enviva is proud to be stepping up to deliver.

At the forefront of digital transformation with 5G

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Undoubtedly, the global economic challenges caused by the onset of COVID-19 created an entirely unprecedented situation for the telecommunications industry. Movement restrictions, phenomenal increases in demand for data and connectivity and unavoidable financial constraints irrevocably altered the landscape, and players were forced to come up with ever more creative ways in which to manage their operations and continue to perform for both their customers and their companies. This was no different in our markets.

At Ooredoo, strategic investments and planning in the years preceding the pandemic meant our networks could cope with the huge increase in demand for data, and the demand for fast, reliable networks to support the communities where we operate and keep economies running.

Our response to the pandemic situation and our robust strategy enabled Ooredoo to report solid operational and financial performance. Evidence of our resilience is seen in the recent successful pricing of our $1bn bond issuance, reflecting investors’ confidence in the strength and stability of our balance sheet as well as our strategy to deliver new and innovative solutions to our customers by leveraging world-class technology and infrastructure.

Our customers share this confidence – we increased our customer base by three percent to 121 million across our global footprint in 2020 – as do international benchmarking consultancies, with Brand Finance naming Ooredoo a Top 40 Telecom Brand in 2021.

 

Response to the pandemic
Thanks to our balanced portfolio of assets and clear focus on digital services, we were able to mitigate the negative impact of the pandemic and maintain stability. We managed to keep our operations resilient and deliver a solid performance throughout 2020, during the height of the pandemic and with the resulting economic turbulence spreading across the globe. Moving into the first quarter of 2021, Ooredoo Group continued to deliver a robust set of results despite continuing challenging market conditions.

The company remained focused on its digital transformation agenda, which has enabled us to create value for our customers by offering a seamless and convenient user experience, and to optimise our cost base by streamlining and automating processes. Consequently, our EBITDA margin improved to 45 percent in Q1 2021 compared to 41 percent for the same period last year. A history of investing heavily in network development and expansion paid off when we found ourselves ready and able to hit the ground running as soon as the scale and impact of the pandemic became apparent.

Engineers worked around the clock to upgrade networks where necessary, and ensure the reliability of our networks for the millions of video calls taking place every minute around the world, and networks were optimised to ensure educational establishments could continue to provide lessons to the many students learning at home.

Even entertainment was not missed. Systems were boosted to handle the increased demand for online gaming, with ping times shortened to ensure optimum gaming experiences, and extra channels were added to TV packages. From an operations perspective, we rapidly rolled out a working-from-home protocol to ensure continuity of service for our customers. Within a matter of hours of lockdowns being announced, our workforces from all areas of operations including head offices and call centres were safely and effectively shifted to working from home. Our engineers and IT support teams managed this shift phenomenally, ensuring staff could continue to support customers in turn.

 

Initiatives to support communities
Ooredoo Qatar was recognised by an IPSOS poll as one of the top 10 companies in the country for its response to the pandemic, recognition that was mirrored across many of our operating companies. Our programmes of support for the communities in which we operate across our global footprint were comprehensive, including distribution of essentials such as masks and sanitisers, mass awareness campaigns via social media, leaflets and other means of communication and sanitisation of areas identified as particularly hard-hit by the virus.

Also, they included financial contributions to various aid initiatives and governments, and free data and minutes for frontline and key workers as well as more vulnerable members of the community. From a service perspective, we rolled out a comprehensive programme of measures to help communities adapt to the situation; faster speeds, free minutes, free educational entertainment and free money transfers.

We shifted the focus of our CSR strategy to support a wide variety of initiatives across all of our operating companies, aimed at helping communities manage, and recover from, the pandemic situation. We also signed major partnerships with content providers – Netflix, Disney+, Apple TV – to enhance home entertainment services and provided entirely digital mobile experiences via Ooredoo apps, such as the Ooredoo Money app, which offers a safe and convenient way to transfer money from a mobile phone.

 

Future plans
We have a clear, comprehensive strategy to take the Ooredoo Group to the next level in the coming years. This strategy will remain the same as we move into the post-pandemic ‘new normal’ and the ever more digital age.

We are making it easier for our customers to find, buy and use our products and services online so that we can attract and retain customers at a lower cost, driving value to our shareholders. We will build leading digital services and explore new, previously unaddressed areas to drive top-line growth, and implement digitalisation across the entire Ooredoo Group to be more efficient and agile. 5G and its myriad use cases will remain a key driver of our ongoing success as we adopt the latest technologies and continue our 5G rollout across our digital footprint. Beyond digital, our strategy rests on three more pillars; core, infrastructure and portfolio.

We managed to keep our operations resilient and deliver a solid performance throughout 2020

We will continue to accelerate the performance of our core business, investing in people, our networks and our services, to win in the marketplace and maximise return on our assets. We have recently made several new appointments to our C-suite, including several female leaders. We continue to work tirelessly to ensure our organisational culture enables a more innovative working environment, and we will continue to recruit, train and develop the next generation of talent from within the markets in which we operate.

We will work to be more efficient, flexible and asset-light, extracting optimal value from our infrastructure via network sharing and infrastructure deals. An example of this is our recent signing of a sale and leaseback agreement for more than 4,200 telecommunications towers in Indonesia, valued at approximately $750m. We expect this transaction to close in Q2.

 

Digital transformation
Over the last few years we made a strong push to improve our customers’ journeys and experiences by digitising our core and leveraging analytics to personalise the customer experience and offerings, both online and offline. In our home country, Qatar, a national plan – Qatar National Vision 2030 – includes a goal of complete digitalisation, with the country aiming to be the world’s first truly smart nation.

This digitalisation encompasses every facet of our operations, from customer service to back-end support and logistics. We want to enable our customers to be able to engage with us digitally in the way that best suits them. Accordingly, we are continuing to invest significantly in enhancing our digital customer experience not just in Qatar but across the Ooredoo Group and its operating companies.

 

Focus on 5G
As data market leaders, data now constitutes over 50 percent of revenue, so we expect a continued focus on 5G, enabling customers to access our incredible 5G networks that we continue to roll out across the Ooredoo Group global footprint. To date, Ooredoo has upgraded more than 90 percent of outdoor macro sites with 5G in Qatar, covering over 90 percent of the population. We have also launched 5G networks in Kuwait, Oman and the Maldives, and are also preparing to implement 5G in Indonesia, where we have already trialled a number of 5G use cases.

We are also enabling and increasing investments in the Internet of Things and artificial intelligence via our 5G networks, which provide the ultra-high speeds and very low latency required for such connections and enhancements. Our incredible 5G network and its myriad use cases will remain a key driver of the company’s ongoing success as we adopt the latest technologies, and we will therefore continue to strengthen our partnerships with the world’s leading technology providers, to further consolidate our offering to our customers.
We believe that this will allow us to deliver on our vision to enrich people’s digital lives, and bring the benefits of the latest technology to our customers across our vast and diverse global footprint.

Championing the mutualist approach to a global crisis

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Underpinned by the dedication of its 83,200 employees and 22,000 elected members, Crédit Mutuel demonstrated exceptional commitment in 2020. The group implemented concrete responses throughout France to help its customers navigate their way through the crisis.

All of its 5,433 local banks and branches remained open for the duration and throughout 2020, the group granted over €20bn in government-guaranteed loans to more than 137,000 businesses. These loans were decisive in helping to keep employment stable and the economy afloat. Alongside these measures, deferrals were allowed on 1.8 million loan repayments totalling €3.6bn to help self-employed professionals and individuals get through the worst of the health crisis.

Businesses also benefited from exceptional support measures, representing over €200m on the part of insurance companies and the regional federations ramped up local initiatives. World Finance was given the opportunity to delve into the strategy behind Crédit Mutuel’s success in the face of the global health crisis.

 

Looking at your 2020 results in comparison with those of your competitors, the group has doubled its net additions to provisions for loan losses. Why such prudence?
This was a lucid and responsible decision to take action now to anticipate the risk of future defaults. We have made prudent provisions to give our networks the means to continue supporting our customers.

 

During this crisis, Crédit Mutuel was praised for the prime de relance mutualiste (compensation for loss of earnings). Do you intend to continue this initiative?
In response to the urgency of the situation caused by the pandemic, the Crédit Mutuel Group demonstrated its solidarity and commitment to self-employed professionals and SMEs with this immediate flat-rate assistance. The aim was to get help to them quickly to enable them to remain in business. With this unique initiative, the group did not hesitate to push back the boundaries. And we will continue to do so. Being a pioneer and adapting to the current situation is part of our mutualist DNA.

 

This crisis has clearly changed attitudes and has, in particular, increased awareness of the environmental and climate emergency. How has the group revised its strategy to give these matters a higher profile?
Even before the pandemic struck in 2020, the Crédit Mutuel Group was helping to confront the challenges and transformations ahead, chief of which is the environmental and climate emergency. In recent months, it has forged ahead with its climate policy, praised by NGOs, by asserting new ambitions, such as its definitive exit from coal by 2030.

Crédit Mutuel hopes to pave the way for the future by enabling the younger generation

All of our networks stepped up environmental initiatives to help transform our economy and build a path towards achieving the goals of the Paris Agreement. In 2020, the group also worked on structuring a nationwide governance policy and consolidated roadmap around the management of climate risk and CSR.

 

This is proof of Crédit Mutuel’s commitment to achieving financial, societal, regional and environmental objectives as part of this approach. It was this commitment that the vast majority of the group’s networks and subsidiaries decided to formalise in 2020 by adopting a raison d’être, while some adopted the status of a mission-driven company. This is a strong symbol of their mutualist values, and the sole purpose that drives Crédit Mutuel’s operations.

 

What importance do you give to technological innovation when implementing your business model?
Our group has always been a leader in the field of technological innovation. However, here at Crédit Mutuel we stress the importance of using technology for the benefit of all. Remote banking, innovative payment solutions, telephone services, remote surveillance, paperless systems, electronic signatures, cognitive technology and data science: we select innovations that bring added value to our members and customers, by ensuring that we support and help them to embrace change and take these new tools on board.

These services are rolled out in support of the physical network, to foster closer business relationships for the benefit of our members and customers. They enable us to anticipate, innovate and be highly responsive – a mark of the high quality of customer service and relationship management provided by the Crédit Mutuel Group, so that we continue to be a leading customer-focused bank in a digital world.

 

This crisis has been particularly hard for young people. Have you provided solutions specific to their situation?
At this unique time, the common interest remains central to our objectives. Faithful to its founding values of local proximity, solidarity and social responsibility, Crédit Mutuel hopes to pave the way for the future by enabling the younger generation. As a responsible employer, Crédit Mutuel helps young people into work. A large number of its regional federations are therefore heavily involved in work-linked training.

Thus, after initially promoting the two-year Master’s programme in 2019, Crédit Mutuel Midi Atlantique continued its commitment to work-linked training in partnership with the ESB (École Supérieure de la Banque) and TSM (Toulouse School of Management). With 94 young people employed under work-linked training programmes (140 over two years), Crédit Mutuel d’Île-de-France is also showing its commitment to supporting employment and social inclusion for young people from deprived areas.
For its student and apprentice members hard hit by the crisis, Crédit Mutuel implemented immediate concrete measures, such as the payment of mutual assistance (aide mutualiste) of €150 and a six-month extension of the grace period, free of charge, for those who were due to start repaying their student loans. Most of the federations have continued their policy of offering internships to students by increasing the number of offers.

Irrespective of the crisis, the group is a leading supporter of associations throughout France, and is involved on an ongoing basis with young people via these structures, which promote their participation in sporting and cultural activities and promising citizen project initiatives.

 

More generally, in what way is the mutualist approach an appropriate response to the challenges ahead?
The 2020 crisis has demonstrated the strength and relevance of the mutualist model. We have experienced mutualist values in action. Through proximity, with a structure rooted in local economies, focused on development and that of the economic players. Through the group’s solidity, which gives it the means to act in support of a project that reconciles the economy, social issues and the environment. Through solidarity, by providing a response to the crisis for everyone throughout the regions. And also through its independence, because, as it does not have shareholders, the group has only its customers to satisfy and therefore has greater freedom of action. However, over and above the turmoil it has caused, the pandemic has also offered the vision of a society that is united and fraternal. Through its day-to-day actions, the Crédit Mutuel Group intends to carry on showing that it has heard the message by continuing its commitments and action for the common good.

In tune with the times and the needs of a changing society, Crédit Mutuel’s cooperative and mutualist model provides support for the transformation in progress. It will constitute one of the responses to the recovery through the support it gives its customers and members throughout France.

Bank of England on crypto: legitimate concerns or not?

Posted on by Richard Willcox

Fast forward to the present day, and you don’t need to be a finance or tech expert to know what cryptocurrencies are — or to invest in them. This year, in particular, was a big one for the digital currency as its total market cap surpassed $2trn for the first time.

Although news headlines and social media discourse sometimes make it seem like anyone and everyone is getting involved with crypto, this digital currency also has its critics. One notable figure to recently dim the sparkle of this enticing asset class was like Governor of the Bank of England, Andrew Bailey.

“Cryptocurrencies have no intrinsic value. That doesn’t mean to say people don’t put value on them, because they can have extrinsic value. But they have no intrinsic value,” he said during a press conference in London in May. “I’m going to say this very bluntly again. Buy them only if you’re prepared to lose all your money.”

His comments understandably attracted a lot of attention, but whether investors will take any notice is another matter. What’s more, the Bank of England isn’t exactly an institution anyone would expect to support plans for a decentralised currency. Did Bailey have ulterior motives when he issued this warning, or do his words ultimately come from a place of truth?


Is the BoE’s hostility predictable?
Bailey’s hostility to cryptocurrency is hardly surprising when you consider what it is and what it represents. These decentralised digital currencies operate outside the parameters of the current prevailing financial systems. In fact, this is one of the main reasons that crypto has its supporters. It is not created or regulated by a government body, which means that its value is not impacted by how central banks respond to social, economic or political developments, or by a particular bank’s monetary policy. The blockchain technology required also makes it very difficult for an individual to corrupt or manipulate cryptocurrencies. All in all, cryptos aim to prevent the risk of a single entity gaining too much power — something particularly enticing in the wake of the global financial crisis of 2007-2008.

Given that the nature of cryptocurrency is completely at odds with the financial systems we have today, perhaps it was to be expected that someone like Bailey would stand in opposition to it. After all, if Bitcoin became the norm in terms of how we make payments, there would be no need for a Bank of England or any other central bank for that matter.

It’s also interesting for Bailey to state that cryptocurrencies “have no intrinsic value” when warning people against investing in them. Although this is true, fiat currencies including the pound sterling have no intrinsic value either. In these cases, the value comes from the trust citizens place in the respective governments and because the value is maintained and agreed upon by all the parties involved. And while the value of cryptocurrencies can be manipulated (just look at how quickly Dogecoin skyrocketed), fiat currencies can also be immediately devalued. For example, a central bank may print more money.


Should investors be wise to crypto uncertainty?
Even though some may be sceptical about Bailey’s motives, there’s no denying that there are some issues crypto investors certainly need to bear in mind.

Bailey is right to point out the extrinsic value of cryptocurrencies. When there are only a certain number of bitcoins in existence, it goes without saying that people will place extrinsic value on it as an asset. The problem is that unlike other assets, there is no practical application when it comes to cryptos — they merely exist to be traded. Plenty of investors decide to put money into cryptocurrencies simply out of ‘Fear of Missing Out’. Gambles can and do pay off, but it’s important to remember that ultimately that’s all crypto trading is — a gamble on an asset offering nothing in material terms.


Huge volatility
Many people are attracted to cryptocurrencies as there is a chance of racking up impressive profits in a short space of time. Obviously, this also means it’s very possible that an investor could lose just as much, just as fast. In this sense, Bailey is speaking some sense when he says “prepare to lose all your money” because that could happen. In February 2021, Bitcoin fell by $10,000 in just 19 hours, followed by another steep drop in May where Bitcoin’s value halved in only nine days. This kind of volatility can be incredibly costly. That said, perhaps it is unfair to single out crypto when all investments ultimately come with risk. Whether it’s crypto or another type of financial instrument, the same rules apply. Investors should always do their research and exercise due diligence, and most importantly, never risk money they can’t afford to lose.


Regulatory issues
The potential positives of cryptocurrency are clear, but the downsides are just as obvious. One of the main problems with such a new, exciting yet complicated technology is how easy crypto can be exploited for criminal purposes such as money laundering and fraud. This makes regulation very important and necessary. Gary Gensler, the newly appointed head of the US Securities and Exchange Commission (SEC), has emphasised the need for greater regulatory oversight of exchanges trading crypto assets in order to instil more confidence. Unfortunately, crypto is also very hard to regulate. Investors and consumers need to be protected, but governments don’t want to bring in measures that end up constricting innovations that could bring huge benefits.

In conclusion, there is a lot of uncertainty surrounding cryptocurrency exchanges. For this reason, we don’t currently offer cryptos to our customers at Trade Nation. However, this may change if there were to be regulatory developments. Ultimately, investors must be aware of all the unknowns, be braced for high risk and volatility, and only invest within their means.

Currencies remain hostage to the global vaccination race

Posted on by itsupport

Just over a year ago, financial markets were staring into a dark abyss. Entire nations had been locked down, the retail industry was on its knees and an unemployment apocalypse was raging. Fear was king and the world economy seemed destined for another Great Depression. But it turns out that even a global pandemic is no match when governments and central banks join forces to fight a crisis.

The combination of extravagant government spending and ultra-low interest rates was so incredibly powerful that it eclipsed everything else, restoring peace to global markets. Once the vaccines were announced too, investors could finally see the light at the end of this nightmare and a sense of euphoria took over.

Fast forward to today. Most economies are healing their wounds, yet some are recovering faster than others, thanks to a divergence in the amount of fiscal firepower deployed and the speed of their vaccination programmes. Among the major regions, Britain and America are miles ahead of Europe and Japan in the immunisation race. This discrepancy is increasingly being reflected in the performance of their respective currencies, as markets recalibrate their expectations for economic growth and the timeline of monetary policy normalisation.

 

Pandemic heroes to vaccine zeros?
Shortly after the pandemic rocked the world, Europe was being praised as having one of the most effective responses. Early and tight lockdowns went into force across the continent, while governments enacted powerful relief programs to support businesses and jobs. It seemed as though the euro area would weather the storm much better than anyone else.
This rosy narrative didn’t age well. Most of the Eurozone was soon hit by a bigger wave of infections, resulting in a fresh round of shutdowns that were not accompanied by the powerful stimulus measures we saw the first time around, crippling several economies. Adding insult to injury, the EU Recovery Fund money still hasn’t been distributed to struggling member states, and Europe’s vaccine rollout has been a catastrophe mired in setbacks and inconsistencies. European regulators were slow to authorise vaccines for use and the EU was slow to negotiate contracts with manufacturers, sparking severe supply problems and delays.

Naturally, all this has taken the wind out of the euro’s sails. Market participants seem to have concluded that the Eurozone’s economic recovery will be lacklustre compared to other regions, which ultimately translates into the European Central Bank being among the last to raise interest rates again. Whether the euro can stage a comeback will depend mostly on how much the pace of immunisations is ramped up over the coming months and whether consumers truly go on a spending spree once the lockdowns are finally lifted.

The yen is in the same boat as the euro. The Japanese currency has taken a beating so far in 2021 as yield differentials widened against it, diminishing its appeal. The biggest theme in the markets this year has been the relentless rally in bond yields, driven by expectations for a robust global recovery. Unfortunately for the yen, the Bank of Japan keeps a ceiling on domestic yields through its yield curve control strategy, so the currency tends to suffer in an environment of rising foreign yields as interest rate differentials widen against it.

Furthermore, the ecstatic mood in stock markets is a curse for the yen, which has a reputation for being a safe-haven asset. But perhaps more importantly, Japan’s vaccine rollout has been even slower than Europe’s. Even though the nation weathered the pandemic quite well, with infections and deaths being far lower than most Western countries, it was painfully slow in giving the regulatory green light to vaccination shots. Consequently, it lagged behind in placing orders for vaccines, which are in short supply as nations compete to secure them (see Fig 1).

In the end, this implies that Japanese businesses and shoppers are going to live under the shadow of the pandemic for much longer than anyone else, even if the severity of the domestic health crisis wasn’t as great. Outside of a new virus mutation that is highly resistant to the existing vaccines, or some other unforeseen shock that hits global markets and sparks panic, it is difficult to envision what can turn the yen’s fortunes around.

 

 

UK crowned vaccine champion
Among the G10 players, the UK has earned the title of undisputed champion in the immunisation race. British authorities ‘bent’ several regulatory rules to expedite the approval of the vaccines, which allowed the country to be almost first in line when placing orders with manufacturers. The National Health Service did the rest, delivering a stunning number of jabs in just a few months. At this pace, the nation’s entire adult population will have received at least one shot by the middle of the summer.

Even though the domestic economy has been struggling thanks to the prolonged shutdowns, the incredible speed of vaccinations has convinced investors that better days lie ahead. This has catapulted the pound higher this year, with fading expectations for any further Bank of England rate cuts and receding Brexit risks adding fuel to the rally. Sadly though, political risks haven’t disappeared and may still come back to haunt the sterling. A deal on financial services with the EU hasn’t been reached yet, and voices for another independence referendum are growing louder again in Scotland after recent local elections.

Another under-appreciated risk hovering over the pound is the quality of vaccinations. Coronavirus vaccines are not created equal, and while the island nation is on track to immunise its citizens quickly, it has done so mainly with the Oxford/AstraZeneca vaccine that is less effective against the new variants. Hence, there’s a threat of cases exploding again as Britons return from their vacations abroad, which may catch markets by surprise. Even in this case though, it is questionable whether that would be enough to derail the overall uptrend in sterling.

 

The return of ‘king dollar’
The US initially experienced one of the worst outbreaks in the developed world, yet its economy remained resilient throughout this calamity. The Fed was one of the few central banks that had any real room to cut interest rates, and it also acted boldly through its enormous asset purchases to ensure that the economic crisis did not mutate into another financial crisis. Additionally, the politicians in Congress unleashed an overload of federal spending to shield the economy, and the Biden administration is working on delivering even more.

The sheer amount of stimulus that has been rolled out is simply unprecedented outside of wartime. Helping matters further, the lockdowns of most American states were fewer and shorter compared to those in Europe, allowing businesses to stay on their feet. But perhaps the best part is that the nation’s inoculation programme is firing on all cylinders. At this rate, most Americans will have received at least one vaccine jab by early summer, which is a tremendous logistical victory for a country of such size.

It’s not just the impressive speed of US vaccinations, it is also the quality. Unlike Britain and Europe, the US has deployed only the very best vaccines, which have proved effective against almost all variants so far. Therefore, America’s immunisation programme seems to be the most ‘bulletproof,’ allowing for a sustainable reopening of the world’s largest economy. It will probably be a stellar summer in economic data, as the colossal stimulus measures and all the pent-up demand from unchained consumers come together to unleash a powerful spending boom.

Blending all these encouraging developments together, markets have become convinced that the Federal Reserve will be forced to raise interest rates by next year already to keep inflation under control, despite the Fed itself insisting that rates will stay on the floor until 2024. This has propelled Treasury yields higher, turbocharging the dollar in the process as interest rate differentials widen to its advantage once again. Looking ahead, whether the Fed sticks to its word or whether investors are proven right will be determined by how persistent the coming inflation episode will be. Ultimately, this will also decide the dollar’s fate.

 

Markets dance to the beat of vaccinations
All told, we seem to be in an environment where market participants reward the currencies of economies that have done the best job with the immunisation programmes and punish those that have lagged behind. So far, Europe and Japan have eaten the dust of Britain and America. The divergence has inevitably been reflected in the charts. Currency trading is a relative game after all. Until the world returns to something resembling normal, this dynamic is likely to persist. It’s all about vaccinations, and financial markets are now a hostage to this paradigm.

Prominence of alternative assets for investors rises

Posted on by itsupport

The beginning of 2020 was impacted by an unanticipated event that will have profound consequences for the decade to come. The COVID-19 outbreak is an unprecedented crisis that stopped much of the world economy at various times during that year, and the pandemic will have reshaped consumers’ behaviour and the way in which business activities are carried out across the world. Hindering large parts of the economic activities of most countries, the first effect of the pandemic was a sharp decline in most financial markets with the notable exception of less liquid assets, such as alternative assets. As allocations of investors grow and diversification becomes of utmost importance, alternative investments play an increasingly critical role in portfolios. Investae is a boutique investment firm specialising in alternative investments. We strive to bring to financial professionals – financial advisors, family offices, wealth management companies and even private banks – best-in-class ideas for the portfolio of their clients.

 

The alternative assets
We work mainly with private debt instruments. The growth of private debt arose out of the 2008 financial crisis, when government authorities consolidated the regulation of international banking. The Basel III agreements published in December 2010, aimed at strengthening the financial system, have tightened up access to credit.

Believing that the severity of the crisis was in part due to the growth of excessive bank financing, regulators concluded that restrictions on certain types of financing were the solution to limit further systemic risks to the banking system. From then on, banks were required to keep more cash in reserve for lending to businesses, unlike loans to governments. The direct consequence of this regulation is that some businesses have less access to credit, or indeed no access at all.

Even with healthy balance sheets and positive cash flows, the guarantees that these businesses can offer may no longer be acceptable to banks. This has opened up an opportunity for investors, both institutional and private, to fill the vacuum. Private debt instruments have some notable advantages for the portfolio of investors, namely higher yield and absence of correlation to the market fluctuations.

We built our platform for financial advisors and family offices with one simple goal in mind: to offer alternative asset opportunities that are easier to understand for their investors

However, there is one substantial drawback, limited or no liquidity, even though these instruments are traded on European stock exchanges. Investing in private debt comes down to sacrificing liquidity for a higher return and capital stability. In the financial world, it’s important to pay special attention to proper due diligence when it comes to selecting investment opportunities. Investae reviews over 30 investment opportunities annually in the field of alternative assets.

We identify opportunities with characteristics that are aligned with investors’ expectations and preferences, we compare the yield to the market, assessing how much this particular investment is better or worse than others, and how attractive the investment opportunity is.

Usually, the credit rating reliability is set by rating agencies (S&P, Fitch, Moodys, ARC Ratings, CreditSpectrum, Euroratings, etc). When available we will review the credit rating. We will explain how this investment opportunity can be a suitable fit to investors’ portfolios and how it affects investors’ asset allocation. We will assess how the investment opportunity is protecting investors’ interests. We will identify risk factors and how the company is mitigating these risks, and we will assess the different scenarios and outcomes that may develop over the life of the investment. We will assess the different exit routes available to the investment managers. Whenever necessary, we will require a legal opinion from a law firm. A law firm may, for example, examine the structure of the investment and issue a legal opinion that describes whether the transaction is legally structured and which type of investors are permitted to purchase it. We will organise a face-to-face or online meeting with the firm’s management. We will constantly be monitoring the investment in the news and other reports, in light of market ratios and return expectations. Whenever necessary, rebalancing may be suggested.

 

Making Investae stand out
We perfectly understand that for many financial professionals, and even more so for their clients, alternative investments are a relatively new asset class. Investae has built a fully integrated marketing platform, including a learning centre for financial professionals. The goal of this platform is to make the world of alternative investments simple and accessible to financial professionals.

Financial education is the key to the success of both financial professionals and their clients. Indecision in prospective investors is usually a sign that indicates that the offer would benefit from extra explanation. Most of the time, prospective investors will be very open about their concerns, but in some cases, they do not provide much feedback. When an investor delays their investment decision, this is usually the sign that part of the investment’s characteristics may be confusing or unclear, or that he or she fears making the wrong decision.

Sometimes investors may even ignore the true reason for their indecisiveness, which they call a ‘gut feeling.’ This is usually the sign that questions related to the offer are being left unanswered.

The prospective investor might not even be aware of the hidden fear that impedes them from going further. We built our platform for financial advisors and family offices with one simple goal in mind: to offer alternative asset opportunities that are easier to understand for their investors. We have achieved this by creating marketing tools to educate both investors and financial professionals. For example, for each opportunity on the platform, we create short, animated videos that will explain the investment proposal. Nowadays, investors are bombarded by investment opportunities. If the first interaction they get with an investment opportunity is a 25-page presentation or any written material, there is a good chance they won’t even look at it.

Whenever a financial professional starts an interaction with a prospective investor, the aim should be to grab their attention and generate interest and curiosity. This is where short, animated videos are helpful. They are the perfect tool to explain an investment opportunity in less than two minutes. They are also extremely useful in the post-COVID-19 world when most professionals are asked to work remotely because they can be shared via instant messaging.

Moreover, our platform also offers what we call an ‘objection centre,’ which is a resource to help resolve the most frequent objections and questions that prospective investors have. In some instances, a prospective investor may ask a good question about how the investment opportunity might perform in certain economic circumstances. We deal with the question directly with the issuer or investment manager and provide the answer via this resource.

 

Financial mechanics
Lastly, our platform provides ongoing support and coaching to all financial professionals. It is becoming increasingly difficult to get investors’ attention in an overcrowded financial world. Investors lead busy lives and don’t always have time to get to the core of every opportunity presented to them. It is the professionals’ job to make the investment offer clear and understandable. We know that investors are very keen on learning more about the mechanics of the financial markets, but this should be done in a way that takes into account their limited knowledge of the financial world.

We empower investors with knowledge to evaluate different financial products, help them make informed decisions and enable them to correctly understand and manage risk. This reduces investors’ vulnerability. This is how Ben Franklin’s famous quote; “An investment in knowledge pays the best interest” should be understood.

Education is key to the success of both financial professionals and their clients. Our objective is to become the outsourced alternative investment desk for financial professionals. We believe that the quality of our due diligence and the marketing and educational tools that we provide really set us apart in a crowded and competitive field.

Gerald Autier
By Gerald Autier

Gerald Autier is the Managing Director at Investae

World Finance Corporate Governance Awards 2021

Posted on by itsupport

Every so often, the corporate world is faced with apocalyptic societal events in which burying your head in the sand, as a strategy, becomes suicidal. In recent times, the COVID-19 pandemic and the time bomb of racism that finally exploded have shaken the mantle of corporate governance like never before. While companies tend to sit on the fence in moments of public upheaval, in the current crises remaining neutral could have been perceived as a sign of excessive pride and failure in governance.

On COVID-19, companies have been forced to respond boldly to a crisis that started as a health problem but quickly metamorphosed into a financial and economic nightmare threatening even their own existence. Across the globe, companies appreciated the need to forego the pursuit of profits to put the safety of customers and employees first. They even went further in committing resources to support government measures to contain the pandemic. In all aspects, companies had to bring out their human face.

On racism, the brutal murder of George Floyd in the US reawakened ghosts that corporates across the world can no longer ignore – the need for diversity. The ripple effects have been unprecedented. Not only are companies appreciating the need for diversity particularly in mid-level and upper echelons of management but programmes are being put in place to empower the less fortunate. In fact, being hesitant to take a political stand for fear of alienating customers has become secondary.

The PwC annual corporate directors survey 2020 amplifies this reality. Following the Black Lives Matter protests, corporates are changing policies and renewing commitments to diversity. About 84 percent of directors think companies should do more to promote diversity in the workplace. Retail giant Walmart CEO Doug McMillon spoke for many when he said, “we must work together to actively shape our culture to be more inclusive.”

An active role in diversity awareness
The need to be at the forefront in responding to challenges facing society has become the new normal. By all accounts, it is a powerful scale for measuring the belief, and commitment, to the principles of sound corporate governance. The days when companies used corporate social responsibility to camouflage their empathy on societal issues are long gone. In its place, the need to create shared value through environmental, social and governance (ESG) standards is playing a role in narrowing the gap between corporates and the societies in which they operate. In effect, it is helping to eliminate society’s near universal hatred of big companies that are often perceived to be self-serving and self-dealing.

The conscious decision by board leaderships to put the interests of the wider society at the heart of their existence comes with substantial rewards

The conscious decision by board leaderships to put the interests of the wider society at the heart of their existence comes with substantial rewards. In fact, society’s goodwill has proven to have a direct correlation with a company’s success or lack thereof. While it is one of the many factors at play in a company’s success, not currying favour in society can accelerate a downfall. The 18th-century American entrepreneur Marshall Field understood the power of goodwill when he opined that it “is the one and only asset that competition cannot undersell or destroy.”

The COVID-19 disruption and social unrest have also come with vital lessons for C-suite executives. Technology now defines the way of life. In the aftermath of Floyd’s murder, social media provided the tools for venting and calling the world to action. In the aspects of COVID-19, technology’s role was just as profound. Where boards were used to congregating in a boardroom to craft strategies, they are now being forced to meet remotely. Where manual processes seemed to work just fine before, now it’s a race towards digitisation.

A digital world
In fact, digital transformation has quickly become an issue of organisational survival because even post-COVID-19, the world will never be the same again. Bank customers, for instance, will maintain the trend of transacting online or through mobile phones. E-commerce, e-health, e-education and streaming entertainment among other trends will continue gaining prominence. For many companies, employees will continue working from home.

In its future of work after COVID-19 report, McKinsey reckons the pandemic has pushed companies and consumers to rapidly adopt new behaviours that are likely to stick. In essence, remote work and virtual meetings are likely to continue with some companies intending to reduce office space by 30 percent and companies will witness faster adoption of automation and artificial intelligence in their operations and processes. The ripple effects will lead to significant disruption of the labour markets.

For the board of directors, job security is always a live wire. No doubt that technology is forcing realignments of the workplace and in many cases instigating the need for downsizing. But balancing the need to maintain employees and adopt technology to enhance efficiency is never clear cut and is often a hornet’s nest for companies. Yet this is the reality facing boards in the modern era and going into the future. How they navigate could have far-reaching ramifications.

While it’s a no-brainer that technology and digitisation is a game-changer, it is also vital in enhancing transparency and accountability, which are critical components of sound corporate governance. In the wake of minimal physical interactions, the need for watertight checks and balances is paramount internally. Externally, companies must be open to shareholders, customers and other stakeholders. The bar is even higher for publicly traded companies.

Technology giant Apple is a classic case of companies grappling with the morality of transparency. Last year the company agreed to pay $113m to settle consumer fraud lawsuits over allegations that it secretly slowed down old iPhones in the ‘batterygate’ controversy. The company had first denied that it purposely slowed down the batteries only to later concede to deception.

Transparent, accountable and fair
It is important to acknowledge that although companies are taking deliberate measures to entrench corporate governance, policymakers and regulators are effectively playing the watchdog role. Left unchecked, companies can easily cross into ethically questionable territory. In China, fintech firms are feeling the heat of regulatory crackdown ostensibly due to poor corporate governance, regulatory arbitrage, unfair competition and damaging consumer interests.

The Chinese case, to an extent, must be taken in isolation. However, the role of regulators in improving corporate governance cannot be denied. This explains why regulators across the globe are in a constant motion of enacting and reviewing laws to curb poor corporate governance. In recent times, one area that regulators have come out strongly is in enforcing antitrust laws.

Faced with a changing world, and rigid regulators, companies are increasingly acknowledging that what is good for the goose is good for the gander. In essence, by being at the forefront of advancing the betterment of society and helping tackle adversities that threaten humanity, companies are bound to accrue handsome returns. This is well epitomised by the companies awarded in the World Finance Corporate Governance Awards 2021.

World Finance Corporate Governance Awards 2021

Angola
Sonangol

Brazil
CPFL

China
Nanjing Iron & Steel

Colombia
Grupo Nutresa

Denmark
Vestas Wind Systems

France
BNP Paribas

Germany
SAP

Ghana
Stanbic Bank Ghana

Greece
Mytilineos

India
WIPRO

Indonesia
Inalum

Italy
Nexi

Japan
Sony

Jordan
Jordan Islamic Bank

Kuwait
Zain Group

Mexico
Banorte

Myanmar
YOMA Group

Netherlands
Royal Dutch Shell

Nigeria
FBN Holdings

Portugal
Galp Energia

Qatar
Ooredoo Group

Saudi Arabia
The Red Sea Development Company

South Korea
Hana Financial Group

Spain
Iberdrola

Taiwan
U-Ming Marine

Tunisia
Banque Internationale Arabe de Tunisie

Turkey
Enerjisa Enerji

UAE
The Federal Authority for Identity & Citizenship

UK
Candrium

US
Avangrid

Vietnam
Petrolimex

World Finance Pension Fund Awards 2021

Posted on by itsupport

Global institutional pension fund assets in the 22 largest major markets (the P22) continued to climb in 2020 despite the impact of the pandemic, rising 11 percent to $52.5trn at year-end, according to the latest figures in the Thinking Ahead Institute’s global pension assets study. This growth in pension funds was underpinned by ongoing multi-decade themes, such as the shift from equities to alternatives and the rise of defined contribution (DC) pension assets, which now represent the dominant global pensions model.

The seven largest markets for pension assets (the P7) – Australia, Canada, Japan, the Netherlands, Switzerland, the UK and the US – account for 92 percent of the P22, unchanged from the previous year. The US is the largest pension market, representing 62 percent of the pension assets worldwide, followed by Japan and the UK, with 6.9 percent and 6.8 percent respectively. At the end of 2020, the study found that there was a significant rise in the ratio of pension assets to average GDP, up 11.2 percent to 80 percent, marking the largest year-on-year rise since the study began in 1998. The shift to alternative assets continues, with two decades of change in pension fund asset allocation globally.

In 2020, over a quarter of P7 pension fund assets (26 percent) were allocated to private markets and other alternatives, compared with seven percent of assets in 2000. This large shift is due to the expense of equities, down to 43 percent from 60 percent in the period, while bond allocations declined marginally to 29 percent from 31 percent. In P7, defined contribution (DC) assets are now estimated to represent almost 53 percent of total pension assets compared with 35 percent in 2000. Over the past 10 years, DC assets have grown at 8.2 percent yearly, while defined benefit (DB) assets have grown at a slower pace of 4.3 percent.

DC and DB pension assets see their highest proportion in Australia (86 percent), while in the UK the proportion stands at 81 percent, with a dominance of DB pension assets. Marisa Hall, co-head of the Thinking Ahead Institute, said that one of the main challenges for pension funds is the effective stewardship of their assets. “It is clear that the unstoppable ‘ESG train’ is picking up pace and in some cases is being turbo-charged by climate change and the accelerating path to net zero. It is this focus on sustainability that will truly shape the pensions industry in the coming decades.”

“A significant reallocation of capital is expected as the investment world undergoes a paradigm shift in extending its traditional two-dimensional focus on risk and return to one of risk, return and impact,” she added. Better-funded and better-hedged defined benefit (DB) pension schemes, and their sponsoring employers, may have had the opportunity in the last 12 months to buy out benefits, or otherwise take pensions cost and risk off the table. This may have been possible on more beneficial terms than usual owing to the abnormal economic circumstances.

Less well-funded and less well-hedged DB schemes are likely to have seen a hit to their funding position. Where the sponsoring employer’s business has also been adversely affected by lockdown restrictions, employer pension contributions may have been unaffordable for a period and DRCs may have been suspended. DB scheme trustees have had to balance the need for support for the scheme against the need for a sustainable sponsoring employer, where the scheme is not self-sufficient.

John Towner, head of new business at Legal & General Retirement Institutional, said that over the past two years, companies have transferred record amounts of their pension obligations to insurance companies, enabling them to secure the promises they have made to their employees while freeing up internal resources to focus on their core businesses. “With the markets moving as they did in response to the pandemic, we saw increasing numbers of pension plans looking to take advantage of favourable pricing opportunities. This involved engaging directly and collaboratively with insurers such as Legal & General. Working together, we were able to deliver great pricing to pension plans not only in the UK but also in the US,” Towner said.

New challenges
Across DB pension schemes as a whole, there seems to have been increasing use of contingent assets, such as group company guarantees and escrow accounts. Cybersecurity has involved a heightened risk for DB and DC pension schemes in the last 12 months, given an increase in attempted pension scams over the lockdown period. Also, climate change, and the need to take account of the risks and opportunities afforded by climate change, is becoming increasingly important for both DB and DC pension schemes, particularly for the largest schemes. Trustees are giving closer scrutiny to their investment portfolios for the impact on carbon emissions.

However, while an increasing number of companies are aligning their business activities with the UK’s target of reaching net-zero emissions by 2050, pension investments are lagging and significant figures in climate activism have urged that pension funds must set a target of net-zero emissions for their investments if the UK is to meet its climate goals.

As the UK prepares to host the UN climate talks, COP26, in Glasgow this November, several prominent climate campaigners have called for pensions companies to sign up to green investment principles.

Pandemic reaction
The pension protection fund (PPF), a statutory fund in the UK, revealed that on March 31, 2020 its reserves decreased to £5.1bn, reflecting the impact of the markets’ reaction to the pandemic on the PPF’s return-seeking assets. Investments return 5.2 percent – the same as in 2018/2019 – despite market turbulence caused by the COVID-19 pandemic, and assets grew from £32.1bn to £36.1bn. However, Lisa McCrory, the chief financial officer of PPF, said that the PPF expects the macroeconomic situation to be tough for the foreseeable future, after having seen a good recovery in the current financial year. According to the latest data released by the Office for National Statistics, employee contributions to private-sector defined contribution (DC) schemes in the UK grew by 12 percent between Q2 and Q3 2020.

The study found that the market value of pension funds increased by less than one percent from June 30 and September 30, 2020. In the same period, gross assets excluding derivatives of private-sector DC schemes rose by nine percent, whereas DC schemes invested almost entirely via pooled investment vehicles (PIV). Gross assets excluding derivatives of private-sector defined benefit and hybrid (DBH) schemes were £2trn at the end of the third quarter, whose 57 percent were direct investments, 37 percent were via PIV and the rest were in the form of insurance policies.

Increasing metal allocation
Not many pension funds invested in base metals in the past and now they are looking to shift to a five to seven percent allocation towards the industry. According to a recent study conducted by NTree International and its sister brand Metal Digital, over the next 12 months, 64 percent of UK pension funds expect to go overweight in their allocation to gold, while 42 percent expect to overweight silver.

Around 18 percent of pension firms said they should hold around three to five percent in precious metals, and 66 percent between five to seven percent. For industrial metals, 44 percent said their exposure should be three to five percent, 24 percent said between five and seven percent and 24 percent said seven to nine percent. Founder of Ntree Timothy Harvey said he spoke to 150 EU pension companies with an AUM of $213bn and only two percent of respondents said they thought gold would fall this year, whereas 85 percent of respondents thought nickel would rise and 80 percent thought copper would see gains.

A list of the companies awarded in the World Finance Pension Fund awards 2021 can be seen below.

 

World Finance Pension Fund Awards 2021

Armenia
Ampega Asset Management

Austria
AKP

Belgium
Pensioenfonds KBC

Bolivia
BISA Seguros y Reaseguros

Brazil
Bradesco Seguros

Canada
OMERS

Caribbean
NCB Insurance

Chile
Grupo Sura

Colombia
Grupo Sura

Croatia
PBZ Croatia Osiguranje

Czech Republic
CSOB

Denmark
PensionDenmark

Estonia
Swedbank

Finland
Elo

France
AG2R La Mondiale

Germany
Allianz

Ghana
Pensions Alliance Trust

Greece
Alpha Trust

Iceland
Almenni Pension Fund

Ireland
CWPS

Italy
Solidarietà Veneto Fondo Pensione

Macedonia
Sava Penzisko

Malaysia
Gibraltar BSN

Mexico
Afore XXI-Banorte

Mozambique
Moçambique Previdente

Netherlands
Pensionfonds PGB

Nigeria
Fidelity Pension Managers

Norway
KLP

Peru
Prima AFP

Poland
Pocztylion-Arka

Portugal
Ocidental Pensoes

Serbia
Dunav Voluntary Pension Fund

South Korea
National Pension Service

Spain
DuPont Pension Plan

Sweden
SEB Pension och Forsakring

Switzerland
CERN Pension Fund

Thailand
Kasikorn Asset Management

Turkey
Yapi Kredi Asset Management

US
Teacher Retirement System of Texas

World Finance Islamic Finance Awards 2021

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Nothing on the planet has avoided the impact of the COVID-19 pandemic, and the Islamic finance sector is no exception. As a working paper from the Islamic Financial Services Board (IFSB) reported earlier this year: “Although it is essentially a health crisis, the pandemic has had a devastating effect on the real sector – sectors that produce goods and services – to which the Islamic banking industry is highly exposed. There has been significant disruption to production and sales activities, as well as supply chains, due to movement and travel restrictions, job losses, reduced demand for goods and services, reduced commodity prices etc.”

Pre-Covid, the Islamic finance industry had returned to strong growth, with assets rising by 14 percent in 2019 to $2.88trn, after a slowdown in 2018, when the industry expanded by a more moderate two percent. That level of growth looks unlikely to be repeated in 2020, or 2021. Ayman Amin Sejiny, chief executive of the Islamic Corporation for the Development of the Private Sector (ICD), part of the Islamic Development Bank, said: “The COVID-19 pandemic will have a more severe and deeper impact on Islamic finance, as the current crisis is affecting aggregate demand, small and medium enterprises (SMEs), and low-income individuals particularly hard. Compared to conventional banking, Islamic finance has a larger exposure to SMEs, microfinance and retail lending, especially in Asia. With SMEs facing multiple issues – lower revenues, cash flow issues, high levels of leverage, short-term financing obligations, etc – this will increase the quantum of non-performing financings and vulnerability of Islamic banks’ portfolios.”

However, the comprehensive reforms introduced after the last major catastrophe to shake the world, the global financial crisis of 2008, meant that Islamic banks entered the financial emergency induced by the pandemic relatively better capitalised, more profitable and more liquid than they were 14 years ago. The prediction is that they are likely to exit the crisis stronger than ever, with Islamic finance continuing to expand in Islamic banking, sukuk, takaful and Islamic funds, helped by supportive government policies, strong product demand and deeper market penetration.

Ashraf Madani, a vice-president and senior analyst at Moody’s Investors Service in Dubai, said: “We expect Islamic finance to continue rising in 2021 and beyond, maintaining its now long-established growth trend. The industry generally remains under-represented in countries with large Muslim populations, providing ample room to expand. We forecast global sukuk issuance will stabilise in 2021 to around $190bn–$200bn, following record issuance of nearly $205bn in 2020.”

Moody’s said it expected the takaful insurance market to expand steadily as premiums rise moderately in the next two to three years in newly penetrated markets. Digitisation efforts by banks and regulatory improvements will also help to lift growth. It predicted that the growth in global Islamic funds under management will continue at an annual rate of four percent to five percent in 2021–22, boosted by the growth of Shariah capital markets and resilient demand for Shariah-compliant investments.

Picking up during the year
A report by the ICD and Refinitiv, the market data supplier, said that while there has been a slowdown in corporate sukuk issuance, as the pandemic has made them appear high-risk, issuance is expected to pick up again before the end of the year, given low borrowing costs and mounting economic pressure on corporate entities including Islamic financial institutions. The Maldives, for one, is considering issuing a sovereign sukuk to cushion the economic blow from massively reduced tourism.

All the same, the IFSB revealed that despite high demand for their services, the pandemic has meant that Islamic banks have needed help in coping with the pressures caused by the pandemic. “Regulatory forebearance” by banking authorities in different countries, for example allowing the temporary breach of capital, solvency or liquidity requirements, will ease the pressures on banks caused by the crisis.

The board said that despite the gradual easing of lockdown restrictions and the resumption of economic activities in many countries, most small and medium-sized enterprises’ operational resilience “is being put to the test and many have ceased operation completely.

Households that have been subjected to compulsory leave, pay cuts, job losses or constrained employment opportunities could also default. These implications will only crystallise when the moratorium period is over and governments ultimately withdraw their stimulus packages.” At that point, the IFSB said, Islamic banks “will face increasing non-performing finance volumes, rising costs of risk, declining asset quality and a likely consequential rise in risk-weighted assets, which could also have implications for capital adequacy.”

A changing landscape
The after-effects of the pandemic could also affect the Islamic banking sector in perhaps unexpected ways, the board warned. For example, increasing digitalisation and the wider adoption of the “new normal” of working from home will have substantial implications for the viability of the real estate and construction sectors, which account for about 12 percent of Shariah-compliant financing.

Working from home and digitisation will also directly affect Islamic banks themselves. A survey by the IFSB found that more than 90 percent of Islamic banks said the proportion of their spending on digital transformation was likely to increase because of the pandemic.

This, the board said, “will put immediate pressure on the cost-to-income ratios of the Islamic banking sector.” At the same time, it said, “the digital transformation process requires highly specialised human capital and domain experts. Therefore, Islamic banks will need to retrain and reskill existing talent – staff reduction at this time may trigger reputational risk – even as they make efforts to attract new ones that fit the imminent digital transformation of the banking workforce.”

The ICD-Refinitiv report revealed that several Islamic financial institutions have moved to offer their products via digital platforms so as to better serve their locked-down customers, speeding the advance of technology within Islamic finance. It also said that Islamic challenger or digital-only banks are emerging in non-core markets such as the UK, Malaysia, Kenya and Australia. A new insurance technology development in Malaysia uses blockchain to channel waqf (charitable endowment) funds towards making takaful more affordable to lower-income consumers.

Another perhaps unexpected development has seen Islamic finance education increasingly offered online or through distance learning as the COVID-19 pandemic makes it harder for students to attend classes. Events such as conferences and seminars are also increasingly being hosted online. This makes it easier for students or industry stakeholders from other countries to take online courses or attend Islamic finance events, which will help the industry to grow.

Ultimately, as all good businesspeople know, every threat is also an opportunity. According to Ayman Amin Sejiny, the pandemic is “an opportunity for the re-emergence of certain strong Islamic instruments, such as zakat [alms] and waqf, which could once again play a role in reducing the impact on the most vulnerable segments of the population or on poor countries.

This would not only be in line with the ultimate goals of Shariah but also create a new growth channel for the industry. “The pandemic may serve as an impetus for further innovation in the Islamic capital markets, with instruments specifically ring-fenced to mitigate the health and economic impact of the coronavirus and aid recovery.”

A list of the companies awarded in the World Finance Islamic Finance awards 2021 can be seen below.

 

World Finance Islamic Finance Awards 2021

Best Islamic Bank by Country

Algeria
Al Salam Bank

Bahrain
Al Baraka Islamic Bank

Bangladesh
Islami Bank Bangladesh

Egypt
Faisal Bank

Indonesia
Maybank Syariah Indonesia

Iran
Ansar Bank

Jordan
Jordan Islamic Bank

Kazakhstan
Al Hilal Bank

Kenya
National Bank of Kenya – National Amanah

Kuwait
Kuwait International Bank (KIB)

Lebanon
Al Baraka Bank Lebanon

Malaysia
CIMB Islamic

Morocco
Bank Assafa

Nigeria
Taj Bank

Oman
Bank Nizwa

Pakistan
Meezan Bank

Palestine
Arab Islamic Bank

Qatar
Qatar Islamic Bank

Saudi Arabia
Al Rajhi Bank

Sri Lanka
MCB Bank

Tunisia
AlBaraka Tunisia

Turkey
AlBaraka Turk

UAE
Abu Dhabi Islamic Bank

UK
Gatehouse Bank

 

Individual Awards

Lifetime Achievement in Islamic Banking and Dedication to Community
Sheikh Mohammed Al-Jarrah Al-Sabah, Chairman of KIB

Lifetime Achievement in Financial Technology Innovation
Robert Hazboun, ICSFS Group CEO & MD

Business Leadership and Outstanding Contribution to Islamic Finance
Musa Shihadeh, Chairman of the Board of Directors, Jordan Islamic Bank

Islamic Banker of the Year
Ahmad Shahriman Mohd Shariff, CEO of CIMB Islamic

Kuwaiti Visionary CEO – Development & Growth Driver
Raed Jawad Bukhamseen Vice Chairman & CEO of KIB

 

Corporate Awards

Best Islamic Bank for Treasury Management
CIMB Islamic

Best Stock Exchange for Islamic Listings
Boursa Kuwait

Best Islamic Private Bank
Abu Dhabi Islamic Bank

Best Islamic Bank for Customer Experience
Emirates Islamic

Best Islamic Banking & Finance Software Provider
ICS Financial Systems (ICSFS)

Best Core Banking Systems Implementer, Middle East
Masaref Consulting

 

Special Recognitions

Best Employee Development and Empowerment in Kuwait
Kuwait International Bank (KIB)

Best Customer-focused Islamic Banking Products & Services in Kuwait
Kuwait International Bank (KIB)

Best Credit Card in the UAE
Skywards Black Credit Card of Emirates Islamic

Best Participating Bank for Customer Service Quality in Morocco
Bank Assafa

Best Participating Bank for Customer Service Quality in Turkey
Ziraat Katılım Bankası

Most Innovative Participating Bank in Morocco
Bank Al Yousr

Most Reliable Participating Takaful Insurance Company in Turkey
Bereket Katılım Sigorta

CSR Excellence and Dedication to Community in Turkey
Bereket Katılım Sigorta

Best Takaful Insurance Company in Jordan
Islamic Insurance Company

Best Takaful Insurance Company in Kuwait
KFH Takaful Insurance Company

Best Takaful Insurance Company in Qatar
AlKhaleej Takaful Insurance

Best Takaful Insurance Company in Saudi Arabia
Tawuniya

World Finance Forex Awards 2021

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The world may have been forced to sit at home since March last year, with foreign travel all but halted, but perhaps paradoxically, foreign exchange markets have been booming. The FX and precious metals streaming price provider FXSpotStream said in May that volume figures in foreign exchange markets for the previous month over its network of 15 banks, which include such global giants as Bank of America, Barclays, BNP Paribas, Citi and Commerzbank, hit $48.7bn, up more than 43 percent compared to April 2020.

At least part of the explanation seems to be that because people have been sitting at home, they have been drawn to online dealing out of ‘lockdown boredom.’ Hargreaves Lansdown, the UK’s largest investment platform, revealed a 40 percent jump in net new business for the last half of 2020, adding 84,000 new users, as people stuck at home turned to retail trading platforms. The company’s chief executive, Chris Hill, said a rush of younger investors had pushed the average age of the company’s platform users down from 54 in 2012 to 47, with the average age of people taking out accounts for the first half of the financial year just 37.

The rise of mobile trading
In February, Trading 212, founded in Bulgaria in 2005, which today claims to be the UK’s number one trading and investing app by number of downloads, announced that it had become the most downloaded app overall in the UK, and it would be temporarily pausing new account openings because of the huge demand. Online forex trading platforms have opened up the market to retail investors, with nothing more required to start trading than a mobile phone and an internet connection – it is reckoned that more than a third of all retail FX traders use smartphones or tablets to conduct their business. The size of the market and the ease of making foreign exchange trades, with brokers happy to provide would-be traders with low costs of entry, mean that the number of global players in the FX market is huge.

From an era when forex trading was exclusively in the hands of Savile Row-suited investment bankers and brokers, we are now, in the third decade of the 21st century, looking at a world where technology has democratised the foreign exchange market, and traders in countries such as China and India are able to enter the market on an equal footing with operators on Wall Street or in the City of London.

Investment in infrastructure
The roll-out of 5G mobile network technology is also going to boost the prospects of small traders, with an increase to the speed of transactions, and a better and more quickly updated picture of the global market available on the screens of smartphones.

The pandemic resulted in a huge rise in internet traffic, with hundreds of millions at home, either working or watching movies streamed to their computers, phones and tablets, and the system buckled, with, it is said, average daily traffic volume equal to the weekly volume of the previous year.

Telecommunications companies learnt the lesson and are increasing investments in infrastructure, with developments such as a new optical fibre network based on graphene technology. This will mean an easier life for internet traders, with less risk of missing the right moment to close a position because your connection has suddenly gone down.

But the risks can still be high – and one study found that just 0.4 percent of retail forex traders achieved more than four back-to-back profitable quarters. This means that for every 1,000 traders, 996 will make losses at some point during any given year. The best brokers are those that explain the risks to would-be traders and provide them with the most sophisticated tools, including risk prediction software, automated trading programs, top-notch analytics and the like. This thorough education in the best strategies to adopt helps ensure their clients do not get out of their depth, not least by making sure their investments are properly protected.

They also have the server and data centre technology in place to ensure clients never lose out because of technological problems, for example, if one data centre is overloaded, a client’s trading platform automatically switches to a less busy one. Unfortunately, there are a number of firms around happy to exploit would-be traders, who have been told that involvement in the FX market is the way to make your fortune. With forex markets open 24 hours a day, there is always a deal to be made somewhere, and the sheer size of the market – $6.6trn in 2019, according to the Bank for International Settlements’ last triennial survey – means the temptation for those who enjoy a gamble is enormous.

The results, for those who do not do their homework when it comes to ensuring that they are dealing with someone trustworthy, and that the proper protections and safeguards are in place, can be disastrous. Joanna Bailey of Giambrone Law, which has offices across Europe, from Oporto to Munich, including Glasgow and London, said her firm has more than 3,000 case files related to alleged forex scams. Individual losses ranged from £10,000 to £4m with almost all investors believing their money was protected by the UK regulatory setup, only to discover, after having been hit with big losses, that their investment was made through an offshore company with no UK legal protection in place.

These sorts of rogue operators add to the problems faced by retail traders, who already have to overcome a multitude of problems trying to buck the market and make a profit, when it is estimated that 70–80 percent of retail traders lose money overall while trading forex and other leveraged contract-for-differences instruments. There is a very good chance, therefore, that a trader could lose their entire capital if they do not conduct proper risk management, and even end up owing more than they started with.

Small traders are also likely to come under increasing pressure as big banks, trying to cope with the competition for the fastest speeds and tightest prices in a world of electronic and algorithmic trading, look to outsource their foreign exchange businesses. Observers say this could increase big lenders’ dominance of global currency trading. There is already an increasing concentration in FX market share, with the five top banks taking a 41 percent slice in the first half of 2020, up from 37 percent in 2016.

London calling
However, one aspect of the global forex market that looks unlikely to change is the dominance of London, despite Brexit. Professor David McMillan of the University of Stirling said: “The UK has 43 percent of the global forex market, and this has increased by six percentage points in three years. In forex, London has several important advantages. The location and time zone are a midpoint between the US and Asia. It has scale in having such a significant number of international banks in one city, plus the network of supporting services.” With EU expertise scattered across cities such as Amsterdam, Frankfurt and Dublin, London also has the infrastructure required for state-of-the-art high-frequency trading, not least the transatlantic cabling landing stations and data centres. As a result, Professor McMillan said, London “will probably continue to dominate this market.”

A list of the companies awarded in the World Finance Forex awards 2021 can be seen below.

 

World Finance Forex Awards 2021

Best FX Broker, Europe
XM

Best FX Broker, Asia
FirewoodFX

Best FX Broker, Middle East
HYCM

Best FX Broker, Australasia
XM

Best FX Research & Education Provider
BDSwiss

Best Mobile Trading Platform
Olymp Trade

Best Partnership Program
Just2Trade Online

Best Trading Experience
Exinity

Best Crypto Broker
Stormgain

Best ECN Broker
OctaFX

Banking Awards 2021

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It seems like every 10 years there is a singular, transformative event that dramatically shifts how the entire world works and lives. In 2020 we learnt exactly what that moment is for the coming decade. The COVID-19 pandemic was both completely predictable and totally unexpected; there had been many years of warnings that such an event was possible, but the timing and scale came as a shock. As the virus crept around the world, shutting down economies in its wake, many could only watch and wait until the unstoppable tide reached them.

Banking Guide 2021

Click here to view the World Finance Banking Guide 2021

Today, however, things are starting to look different. Vaccine rollouts are well under way and there is light at the end of the tunnel. While there are certainly months, if not years, of management and mitigation to go, a predictable outcome is emerging that necessitates future planning, particularly in the financial sector. However, the world’s banks have a lot of challenges to contend with. Recognising the extreme financial toll that was put on people and businesses, governments across the globe deployed a multitude of financial stimulus policies to keep economies ticking over.

In many ways, the situation is somewhat similar to what was seen a decade ago during the Global Financial Crisis. While the GFC was self-inflicted by the financial sector, with long-term fixes being largely focused on regulatory changes, the industry-wide scale of the threat is comparable. Although, this financial stimulus cannot go on forever, which poses significant challenges that only the best banks will be able to successfully navigate.

Close a window, open a door
While there are plenty of reasons to be optimistic about the future, it is not without difficulties. A major one is potential credit losses combined with a muted economic recovery. According to McKinsey’s 2020 Global Banking Annual Review, depending on the recovery rate, between $1.5trn and $4.7trn in banking revenue could be lost between 2020 and 2024. This suggests that global banking’s return on investments will not return to pre-crisis levels for at least five years. This poses significant challenges in the medium term.

Another factor is how long the stimulus being provided by governments can continue. Writing for AMP Capital’s 2021 global banks outlook, Andrea Jaehne explained that stimulus packages and regulatory flexibility have played an instrumental role in keeping banks afloat, but at a cost: “However, we believe the unnecessary extension of looser regulation or even a final removal of the improved standards since the GFC could fuel risks that may eventuate over the next years and could lead to negative rating actions, although we expect banks’ management teams to be mindful of the rating implications,” Jaehne wrote. “We believe that current strong capital levels of the largest European and North American banks could weaken once we see actual credit losses start to materialise.”

Calvin Zeng, Deloitte China financial services industry Audit & Assurance partner issued a similar forecast. “According to our forecasts, global banks are expected to provision for $318bn in net loan losses between 2020 and 2022. Unemployment is expected to climb much higher than during the global financial crisis of 2008–2010 as the pandemic continues,” Zend said at the release of Deloitte’s 2021 banking and capital markets outlook: Strengthening resilience, accelerating transformation report. “Meanwhile, yields are anticipated to remain below historical levels. The pandemic is set to pose an unprecedented challenge to banks’ asset quality and profitability. Banks in North America and Europe won’t recover to 2019 levels anytime soon, with APAC banks only getting near 2019’s pre-COVID return on equity of 9.2 percent by 2022.” While banks should be able to rebuild their lost capital, the situation will be challenging in the years ahead .

Exposing the cracks
With in-person business rendered impossible for many throughout the pandemic, people turned to digital systems to get jobs done. While digital transformation has been a work-in-progress at banks for many years now, the pandemic provided an imperative to speed it up. It quickly became apparent which businesses had been successful in their transformations, and which had not. According to Deloitte’s 2021 survey of senior banking and capital markets executives, 79 percent of respondents agreed that the pandemic uncovered shortcomings in their digital capabilities. Additionally, 95 percent of respondents said their institutions are already implementing or planning to accelerate a digital transformation of their services to maintain operational resilience.

You Zhong Bin, Deloitte Consulting Data Science Center of Excellence leader, said the pandemic has been something of a litmus test. “Institutions that made strategic investments in technology will come out stronger, but laggards might still be able to leap ahead if they take swift action to accelerate tech modernisation. In many institutions, digital inertia has faded: there is now more appetite for technology-driven transformation, especially in core systems.”

Still, the value of front-end digital systems remains high, particularly as regulators continue to look at the expansion of financial services provided by non-financial institutions. “If banks can grasp this opportunity and provide seamless digital experiences, in addition to their existing advantages in capital and credibility, they will be able to take the lead in competition,” You Zhong Bin said. Ultimately, it will be up to each individual bank to decide where their digital evolution needs to be prioritised.

Preparedness for the future is a concern for all banks, but the winners in this year’s World Finance Banking Awards are particularly notable in their regions. All of the winners have demonstrated years of best practice, and are in an ideal situation to meet the coming challenges head on. Congratulations to the winners.

World Finance Banking Awards 2021

Best Banking Groups

BruneiBaiduri Bank
ChileBanco Internacional
Dominican RepublicBanco Popular Dominicano
EgyptBanque Misr
FranceCrédit Mutuel
GermanyCommerzbank
GhanaZenith Bank Ghana
Hong KongHSBC
IsraelIsrael Discount Bank
JordanJordan Islamic Bank
KosovoBKT
MacauICBC (Macau)
NigeriaGuaranty Trust Bank
PakistanMeezan Bank
Saudi ArabiaRiyad Bank
TurkeyAkbank
UKBarclays

 

Best Investment Banks

BrazilBTG Pactual
ChileBTG Pactual
Colombia BTG Pactual
Dominican RepublicBanreservas
Hong KongJefferies
KazakhstanTengri Partners
NigeriaCoronation Merchant Bank

 

Best Private Banks

AustriaErste Private Banking
BelgiumKBC Private Banking
BrazilBTG Pactual
CanadaBMO Private Wealth
Czech RepublicCSOB Private Banking
DenmarkJyske Bank
FranceBNP Paribas Banque Privée
GermanyBerenberg
GreeceEurobank
HungaryErste Bank
IsraelCredit Suisse
ItalyBNL BNP Paribas
LiechtensteinKaiser Partner
MonacoCMB Monaco
NetherlandsING
PolandBank Pekao
SpainCaixaBank
SwedenCarnegie Private Banking
SwitzerlandPictet
TurkeyTEB Private Banking
UKHSBC
USBank of America Private Bank

 

Best Commercial Banks

AustriaRaiffeisen Bank International
BelarusBelagroprombank
BelgiumKBC
CanadaBMO Bank of Montreal
ColombiaDavivienda
Czech RepublicCeska Sporitelna
DenmarkNykredit
Dominican RepublicBanreservas
FranceBNP Paribas
GermanyLandesbank Baden-Wurttemberg
HungaryOTP Bank
MacauBank of China
NetherlandsING
NigeriaZenith Bank
NorwayHandelsbanken
PolandBank Pekao
Sri LankaSampath Bank
SwedenHandelsbanken
Turkey (Most Sustainable Bank)Industrial Development Bank of Turkey
United StatesBank of the West
VietnamSai Gon J.S. Commercial Bank

 

Best Retail Banks

AustriaBAWAG Group
AzerbaijanAccessBank
BelarusBelarusbank
BelgiumKBC
BulgariaPostbank
DenmarkNykredit
Dominican RepublicBanreservas
FranceBNP Paribas
GermanyDKB
GreeceEurobank
HungaryOTP Bank
ItalyIntesa Sanpaolo
MacauBank of China
MexicoBanorte
NetherlandsING
NigeriaGuaranty Trust Bank
NorwayHandelsbanken
PakistanMeezan Bank
PolandBank Pekao
PortugalSantander Portugal
SpainBanco Bilbao Vizcaya Argentaria
Sri LankaSampath Bank
TurkeyGaranti BBVA
UzbekistanAsakabank

 

Most Innovative Banks

AfricaGuaranty Trust Bank
Asia Hong Leong Bank
Europe QNB Finansbank
Latin America Banco Popular Dominicano
Middle EastMashreq
Greece Most Innovative Savings BankEurobank
Macau Best Cash Management ServicesBank of China
Nigeria (Most Sustainable Bank)Access Bank
Thailand (Most Sustainable Bank)Krungthai Bank

 

Banker of the Year

AfricaSegun Agbaje, Guaranty Trust Bank
Latin AmericaRoberto Sallouti, BTG Pactual

Sustainability Awards 2021

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If the pandemic has taught us anything, it is that all kinds of organisations can collaborate to achieve near-miracles if the situation demands it. As the Bank of England’s Sarah Breeden, an authority on climate scenario analysis, pointed out in a speech in mid-May 2021, in a remarkable endeavour, scientists, academics and universities joined forces with pharmaceutical companies and governments to develop COVID-19 vaccines “at unprecedented speed.”

Back in March 2020, this task was seen as nigh on impossible, but it happened because the partners brought to it “urgency, innovation and collective action.” Now though, the same resourcefulness and urgency needs to be invested in the race to net-zero emissions by 2050 in what she describes as “a multi-decade marathon in which we need everyone to finish.”

And the financial sector finds itself right in the middle of this marathon, not as an observer but as a participant with almost immeasurable responsibilities. As Breeden explains, the world is relying on banks and insurers to manage the transition of high-emitting businesses to net-zero by providing not just finance but also risk-management solutions while also supporting new green companies and technologies that take the world in the right direction.

There’s only 30 years to go, but what might be called the Biden factor is accelerating the momentum towards the kind of sustainable financing that the state of the planet requires. Within the first 100 days in office, his administration approved a nearly $2trn spend on climate-virtuous actions in the next four years and recommitted the US to the Paris goals in a complete reversal of President Trump’s repudiation of them.

Washington is backing up this gigantic budget with some serious human firepower. The new president’s climate executive is Brian Deese, the director of the National Economic Council, who was one of the architects of the original Paris Agreement. And his ‘climate czar’ is John Kerry, the special presidential envoy for climate change who has made it his job to ginger up laggard nations.

Right on cue, the market for sustainable investment has held well through the pandemic and looks set to grow rapidly. ESG-focused assets significantly outperformed the market in the wake of the COVID-19 crisis, according to Bloomberg. Of the more than 2,800 ESG-themed funds that it tracks, the average year-to-date decline by March 13, 2020 – approximately the mid-point of the big pandemic-triggered sell-off – was 12.2 percent, less than half the decline of the S&P 500.

But that was in the early stages of the pandemic. Later data interpreted by FE Analytics, a research organisation, confirms that trend. The average ESG fund delivered a 10.1 percent total return during the latter half of 2020 while non-ESG assets averaged a total return of just 4.09 percent.

A sense of urgency
The message is clear. As the Biden administration, the EU, UK, Scandinavian and other enlightened governments embed net-zero goals into all their actions, ESG investment will gather momentum. “Companies will undoubtedly be subjected to an increasing set of non-financial reporting requirements – such as disclosing their ESG impact – which will in all likelihood adversely affect the ability of poorer performers to raise capital,” argues a thoughtful white paper, released in early 2021, by global asset manager Janus Henderson Investors.

Triggered by investor demand, the volume of ESG-type assets is growing. According to PwC, in the third quarter of 2020, 105 new ESG funds were launched, bringing the total to 333, a record. There’s no sign of the momentum slowing. By 2025, ESG funds are predicted to have a higher value of assets under management than their conventional counterparts. If that happens, it would represent a 28.8 percent compound annual growth from 2019.

Yet as private enterprise struggles free of the pandemic, there is a grave danger it could be deflected from planet-saving behaviours. That’s because there are so many irons in the fire of sustainability that the biggest threat may not get the total attention it requires. Namely climate change. Currently, the definition of sustainability is so broad that it comprises the integrity of supply chains, employee welfare, social responsibility, levels of remuneration, gender balance and enlightened governance as well as the all-important environmental considerations.

With the best of intentions, a variety of global organisations are contributing to this confusion. For instance, the World Health Organisation insists that businesses have a responsibility to eradicate depression and anxiety among their employees, which, it estimates, costs about $1trn in global productivity every year. But private enterprise cannot be held responsible for everything that is wrong with the world. After all, its primary responsibility is to turn a profit, which is nothing more nor less than the price of survival, as Peter Drucker, the founder of management theory, always pointed out.

If lenders get it right, they can make a huge contribution to net-zero while boosting employment, productivity and profits

Banks and insurers cannot afford to be distracted though. As Breeden explains, the financial sector needs to look a lot further ahead than they have been accustomed to doing. In practice, central banks will insist that it takes a much more proactive and thoughtful view of lending practices so that climate-damaging projects don’t attract funds.

The scale of the financial sector’s new-found role is enormous. By 2050, emissions from the biggest activities on earth – surface transport, heating of buildings, manufacturing, food production and electricity grids – must be almost completely eliminated. Simultaneously, the earth’s breathing power must be massively increased, for instance by planting more trees. This means that banks and insurers will be required to pour credit into projects that involve renewables, substitute fuels such as hydrogen and carbon capture among numerous others while steadily phasing out support for harmful activities.

If lenders get it right, they can make a huge contribution to net-zero while boosting employment, productivity and profits. However, the challenges are daunting. As Breeden notes, there will be uncertainty about which are the best green investments. “Markets will not allocate capital perfectly and, without certainty about policy and technological outcomes, there may be bumps in the road as they absorb news about our path,” she warns.

Committing to net-zero
The clear implication is that lenders can’t be just lenders, merely allocating capital in the expectation of a return. Fundamental to the task will be an understanding of science and technology so they can reach an informed assessment of the likely contribution of a particular project to the ultimate goal of net-zero. Also, it is inevitable that some projects, particularly those based on evolving technologies, will be difficult to evaluate.

Help is at hand though. In the UK and elsewhere, the financial sector is working closely with government organisations to understand the science and technology that will underpin the race to net-zero. As Bill Gates has said, some of the solutions will emerge from technologies we have not yet heard of.

After all, as recently as a decade ago few gave much credence to the emergence in sufficient scale of electrically powered vehicles, the production of biofuels, hydrogen-driven trucks and trains, or wind-powered ships. Yet all of these ‘green swan’ events are happening as the transport revolution gathers pace.

Enlightened shareholders are also contributing to this mission. As Hortense Bioy, director of sustainability research at Morningstar, points out, investors are pouring into assets that rate well on ESG measurements. According to Morningstar, nearly 60 percent of sustainable funds delivered higher returns than their conventional counterparts over the last decade. It’s sobering to reflect that sustainable investment, originally labelled socially responsible investment, was considered wacky even as late as the millennium.

Collective push
Prodded by shareholders, some of the world’s biggest companies have made a pledge to convert to climate sustainability. The RE100 initiative, a group of global companies pledged to be powered entirely by renewable electricity by 2050, is growing rapidly. Membership has rocketed from a little over 200 in 2019 to more than 300 in April 2021.

Countries are signing up too. No fewer than 110 countries have committed to net-zero. Some 60 central banks are on the case, working with climate scientists and global organisations such as the network for greening the financial system (NGFS) to make scenario planning work in the real world. The more engaged governments are wielding formidable weapons such as fiscal policy (taxes and subsidies) while supporting public and private research. Although not all governments are moving at the same speed, the leadership of the US, following the departure of climate-change denier Donald Trump, is expected to rally the laggards. As Breeden notes, some nations will need help. And here the financial sector, which is by default an international activity, will be called upon to keep governments honest.

Responsible central banks will expect lenders to develop their own climate scenario as part of “business-as-usual risk management,” in Breeden’s words, and embed climate risk management within day-to-day decision making. Thus there is the strong likelihood that the financial sector will provide some useful and practical insights into the global net-zero project. In short, agents of change. And the race has already started. “Time is running out,” says Breeden. “Perfection tomorrow cannot be the enemy of progress today.” A list of the companies awarded in the World Finance Sustainability awards 2021 can be seen below:

World Finance Sustainability Awards 2021

Airline
Wizz Air

Aviation Communication Technology
SITA

Beauty
UpCircle Beauty

Biomass
Enviva

Brewing
Molson Coors Beverage Company

Building Products Supplier
AZEK

Coffee Processing
Nespresso

Dairy
Aurivo

Electronics
TE Connectivity

Engineering
WSP Global

Financial Services
Infrastructure Guarantee Credit Company

Food Processing
JBS

Footwear
CCC

Glass
BA Glass

Life Sciences
Getinge

Lighting
OSRAM

Logistics
Convoy

Mining
Hindustan Zinc

Mobility
SA Taxi

Pharmaceutical
Drogaria Santo Remédio

Pulp & Paper
Suzano

Real Estate
EQ Office

Semiconductor
ON Semiconductor

Solar
Goldbeck Solar

Sports Apparel
Bjorn Borg

Transportation
Canadian Pacific Railway

Tropical Fruit Supplier
Mission Produce

Utilities
EDP Energias de Portugal

Waste Food Technology
Munch Europe

Waste Management
Ideas For Us (Mauritius)

Water Treatment Technology
European WaterCare

Wine Products
Corticeira Amorim