In an industry defined by rapid change and consistent challenges, 15 years is not just a milestone — it’s a statement of resilience, adaptability, and ambition.
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15 years of award-winning trading
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Disclaimer: Promotions and bonuses are not available for accounts registered under our EU-based entity. The XM Group operates globally under various entities, so products, services, and features listed here vary between XM entities. For further information, please visit the XM website.
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Today’s world is changing at an unprecedented pace. Driven by urbanisation and population growth, demand for affordable housing and resilient cities and infrastructure is increasing. The advances in data and connectivity, analytics and human-machine interaction are disrupting every sector in every part of the world. Climate change and resource scarcity call for a transition to durable and sustainable solutions.
With the innovation drive in the US and in Europe with the new Industrial EU Green Deal, the building materials’ sector is changing fast across its value chain, requiring new technologies and investments in AI and in building new capabilities.
Against this backdrop, businesses like TITAN – a global leader in the building materials industry – cannot merely react and adapt. They need to anticipate, lead and act. And that is exactly what TITAN is doing through innovation, digitalisation and new investments. We are transforming our materials and product range across more than 25 countries to address evolving customer needs, tackle modern construction challenges and help build faster, durable and resilient cities. Challenges and ambitious goals don’t daunt us; they energise us, and our purpose – making the world around us a safe, sustainable and enjoyable place to live – is deeply embedded in everything we do.
Innovating towards durability
We are fully aware of our responsibility to meet the increasing performance needs of our customers and at the same time we are committed to lower the carbon footprint of our materials and operations, with the target of keeping global warming under 1.5°C. To rise to the challenge, we are implementing a comprehensive growth and sustainability strategy, targeted at achieving net-zero greenhouse gas emissions across our entire value chain by 2050. We have set additional near-term targets for 2026; these include doubling our innovative low-carbon product portfolio, so that it will account for at least 40 percent of our total portfolio, by integrating more alternative cementitious materials; reducing specific, net-direct carbon emissions to below 550kg per tonne of cementitious product; and more than doubling our use of low-carbon alternative fuels and renewable electricity. The relevant roadmap of actions is already in motion, backed by over 100 value-adding initiatives and growth investments across all our geographies and value chain.
We are active on multiple fronts: In 2023, our teams launched the development of a pioneering carbon capture project in Greece, near Athens, which is partly financed by the EU Innovation Fund. The project is designed to capture 20 percent of the group’s carbon emissions and enable the production of more than three million tonnes of innovative zero-carbon cement for future concrete construction across Europe.
Meanwhile, at our plant in Roanoke, Virginia, we are developing a first-of-its-kind calcined clay production line that expected to offer our customers an innovative alternative material with superior performance, while reducing carbon emissions by up to 50 percent. This is partly financed by an award from the US Department of Energy.
In addition, we are making significant investments to support the introduction of alternative cementitious materials to our markets. After activating partnerships in pozzolanic natural materials in Greece and Turkey, in slag waste from the steel industry in Indonesia, as well as in clay in the US earlier this year, we launched new joint ventures, this time focused on fly ash in India and the UK.
Last year, we launched TITAN Edge, our family of innovative, high-performance, low-carbon cementitious products. These include limestone-based and pozzolanic cements, which can replace a large part of clinker in traditional cement, further helping to reduce carbon emissions. New innovative products like VELTER concrete, introduced in Greece, also demonstrate how we are advancing performance in superior low-carbon construction.
These innovations are already being used. Current iconic projects we are providing materials for include Ellinikon – the largest urban regeneration project in Europe, set to be built on the site of Athens’ former airport. It will comprise a series of low-carbon, energy-efficient buildings, including Greece’s tallest skyscraper, alongside a huge park, new coastal waterfront area, as well as resilient infrastructure. We are also supplying innovative low-carbon, high-durability concrete to next-generation data centres in Virginia, and to new construction projects in Florida that demand stringent standards.
Our responsible growth strategy is bearing fruit. We made considerable progress in reducing our carbon footprint in 2024, cutting carbon emissions to less than 600kg per tonne of cementitious product. We achieved this through a record 21 percent use of low-carbon alternative fuels and through the integration of over two million tonnes of cementitious and alternative materials in our supply chain. Our innovative cementitious products accounted for almost 30 percent of our production volumes.
Our efforts to date have earned the loyalty of our customers and partners and global recognition; in 2024, the Financial Times named us one of Europe’s Climate Leaders, and we were awarded Leadership Status on climate change by the CDP (formerly the Carbon Disclosure Project) for the fourth consecutive year. The same year, the FTSE4Good Index Series also acknowledged our performance.
Calciner at TITAN Group integrated cement plant in Kamari, Greece
Investing in new ventures
Digital innovation is also a key driver of TITAN’s success and growth, and we are accelerating our efforts in this space. To this end, in 2024 we continued our investments in research and innovation and significantly advanced our Venture Capital initiative, launched in 2023. We are planning to invest up to €40m in relevant start-ups over a three-year period, targeting ventures that can create business value and advance innovation with and for our customers and stakeholders.
Digital innovation is also a key driver of titan’s success and growth
Our first four investments focused on coastal protection materials and solutions, next-generation cementitious materials and energy storage technologies. We also invested in a global, early-stage VC fund focused on innovative sustainable construction in the built environment. More recently, we made three new investments in companies working on artificial intelligence, waste upcycling, and PropTech and ClimateTech. We also invested in a leading venture capital firm focused on technology for the real estate industry.
These collaborations underscore our commitment to supporting innovative technologies and start-ups that have the potential to enhance the competitiveness of our industry, address challenges in the building materials sector and promote innovative and sustainable construction. At the same time, they are designed to enhance our exposure to disruptive technologies and bolster our growth strategy through innovative products, services and materials.
The industry’s digital transformation
We are also investing heavily in our own technology, and embracing digitalisation to support our growth goals, boost our overall efficiency and enhance the experience of our customers through value-added services. Driven by our deep-rooted, entrepreneurial spirit, TITAN was among the first companies in the global cement industry to explore and leverage the opportunities and advantages created by digital technology and AI. We started early – back in 2017 – and have since conceived, designed and implemented numerous digital technologies and solutions.
Digitalisation is now one of our key strategic priorities. We envisage a fully digitalised, customer-oriented, and flexible operating model by 2026. We have implemented digital innovations across all our plants and in many of our processes. Leveraging digital technologies, we are optimising our manufacturing operations and supply chain, while increasing productivity, enhancing reliability of our assets, improving energy efficiency, reducing building costs, boosting circularity and enhancing customer service.
Data management is a key focus for digitalisation. Using thousands of specially designed sensors embedded in our cement plants and our logistics infrastructure, we collect vast amounts of data generated during the manufacturing process and develop artificial intelligence models that optimise plant and supply-chain operations.
Our vision is to foster a broader entrepreneurial mindset that helps lead growth in the business
Among these are AI-based, autonomous real-time optimisers, pioneering in the cement industry, which have now been installed in two thirds of our equipment. Benefits include boosting productivity by over 10 percent, improving product quality and helping us reduce energy consumption and carbon emissions (over 40,000 tonnes of CO2 emissions prevented in less than two years) – with minimal investments.
Our predictive and prescriptive maintenance solution, which detects issues and prevents failures, is now live at all our plants, increasing reliability and maximising operational efficiency. As a result, we have avoided over 20,000 hours of potential manufacturing downtime in recent years.
Among other initiatives, we have also developed a Dynamic Logistics solution to harness the power of data and optimise the distribution of ready-mix concrete – from order placement to scheduling and dispatch. This solution is now used across most of our US operations, resulting in substantial increase in productivity and improvement in customer service through live notifications.
We have also launched pilot tests aimed at automating the extraction and processing of raw materials, and at predicting cement quality months before the product is applied on the construction site. Six of our plants are now fully digitalised, leveraging solutions for both manufacturing optimisation in real time and predictive maintenance.
Impact in the wider industry
It’s not only within our own business that we are making waves, though. We believe knowledge and innovation grow when shared, so in 2022, we made the decision to establish CemAI in the US – a spin-off that offers other companies next-generation solutions for predictive plant maintenance and real-time optimisation of manufacturing process.
Under CemAI, our solutions are now available to the entire global building materials industry, allowing others to optimise processes and ensure issues are resolved before they affect a plant’s operation. Our objective is to contribute to a broader ecosystem of digital innovation – and one of our most exciting ventures in this space is the TITAN Digital Accelerator. Launched in collaboration with the Centre for Research & Technology Hellas (CERTH) and the International Hellenic University in Greece, this initiative aims at developing cutting-edge digital tools that will revolutionise the building materials industry, benefiting both TITAN and the wider industrial ecosystem. We are currently developing innovative robotic and GenAI solutions for cement manufacturing, leveraging the infrastructure and partnerships of the Digital Accelerator.
Beyond this, we have also established Innovation Hubs in the US and other locations to further promote joint value-creation processes, developing partnerships with customers, scientists and the wider start-up ecosystem.
TITAN Group integrated cement plant in Patras, Greece
Fostering a culture of innovation
At TITAN, everything is about people. So is innovation of any kind, which we leverage for the growth, enablement and empowerment of our people. We believe the real value of technology comes from what people do with it. We want employees to be able to focus on high-value tasks that call for strategic thinking, creativity, intuition and emotion, while technology boosts efficiency on simpler tasks.
And we want to ensure nobody gets left behind. To that end, last year we launched a learning tool to help our employees assess and elevate their digital skills; all 6,000 TITAN employees will soon be able to become certified digital enthusiasts, ready for the next phase of the industrial-meets-digital transformation.
Through a broad range of other learning programmes and initiatives – tailored to address the differing needs of employees from diverse backgrounds and roles – our aim is to support employees to leverage digital technologies, making sure their skills keep apace with the rate of transformation underway. We will also offer ongoing training around the benefits, uses and limitations of AI to ensure its optimal use.
It is not just AI skills that we want our employees to develop, of course; our vision is to foster a broader entrepreneurial mindset that helps lead growth in the business. We believe everyone can innovate, as long as they have the tools, motivation and support. With that in mind, in 2023 we introduced ‘Ideation Challenge’ – an internal ideas competition that promotes, encourages and rewards innovation among our employees, regardless of their role, position or level.
The response to this was impressive; the first challenge saw more than 220 ideas submitted. Our second Ideation Challenge, launched in 2024, saw nearly 10 percent of our people participate, covering all areas of innovation – from manufacturing, products and services to brand awareness, the customer experience, workplace environment and beyond. It’s another way to embrace innovation across the organisation, while empowering employees to have a genuine impact.
Empowering employees & communities
But our focus on employee development goes beyond technology and innovation. We believe people are the cornerstone of our long-term success, and continuous learning in every area is a vital part of our approach. In recent years, we have accelerated the rollout of innovative and increasingly personalised learning tools across our business. These programmes are designed to develop technical expertise, strengthen leadership behaviours and foster a mindset of curiosity and accountability. We want to attract top-tier talent and ensure continuous development opportunities for every employee.
To help achieve this, last year we launched the TITAN Leadership Model, a framework designed to support leadership growth across every level of the organisation. This reflects our belief that everyone should have the opportunity to lead, grow and leave their mark. By investing in people, we want to unlock their full potential and strengthen the foundations of our business for the long term.
This focus on people isn’t limited to employees; it also translates into working with local communities around our operations. Ensuring we make a meaningful and sustainable contribution to all our stakeholders is an integral part of our history, and it’s still a key commitment today.
We conduct local assessments to help us understand the issues that matter most to each community and contribute resources to help build solid foundations. These efforts focus on the environment, health and safety, employability, entrepreneurship, social inclusion, education and poverty reduction, with a particular focus on helping young people to develop their professional skills. In 2024, we offered 365 internships in different regions across the world.
Key examples of value-creating initiatives include our partnership with ReGeneration, the largest paid placement, professional and personal development programme in Greece; the launch of various programmes promoting the development of digital skills; and initiatives in the US designed to provide young women with the skills needed to work in the industry in the future; and programs in Brazil introducing young minds to the world of robotics.
Concrete mixer truck of Interbeton, a member of TITAN Group
Positive results meet future challenges
Financial results show our efforts are paying off. Last year, we achieved record sales of €2.64bn as net profit reached €315m, and earnings per share exceeded €4.20 (on a like-for-like basis). These achievements were driven by higher performance across all product lines, pricing performance and enhanced operational and cost efficiencies.
In another key milestone, our US business, Titan America, was also successfully listed on the New York Stock Exchange – a bold step that underscores our commitment to unlocking value and expanding our reach. We expect a further improved financial performance in 2025. The need for construction materials and solutions remains robust for the long term, as urbanisation and population growth drive demand for housing and infrastructure.
There are challenges to face, however. Energy prices remain volatile, calling for greater efficiency and innovation. At the same time, housing deficits are pressing – especially in the social sector. We have the tools and technology needed to help meet demand, but we need to move faster. Building performance requirements, such as circularity, insulation and energy efficiency, are also growing fast.
Amid heightened uncertainty, TITAN remains focused on what it does best. We are proud to have built a culture of collaboration, bold thinking and continuous improvement everywhere we operate – and we believe innovation, digitalisation, AI and technology can help us and the wider industry meet performance and environmental goals.
How industries across the board fare remains to be seen. But whether through innovative sustainable solutions, advanced digitalisation or strategic expansion, we remain committed to growing and shaping a better, more sustainable world – and we are excited to help forge a path into the future, both within our sector and beyond it.
All this, while sticking to our values: At TITAN we care, we dare, we build to last, and we walk the talk. These have always been and will remain our guiding principles.
Sustainability in 2024 remained both a top priority and an immense global challenge. According to the UN’s Sustainable Development Goals (SDG) Progress Report, only 15 percent of targets are currently on track to be met by 2030 – a stark warning that underscores the need for urgent, coordinated action. Climate change-related disasters, including record-breaking wildfires and biodiversity loss, continued to pose serious threats to environmental stability and human health.
Yet amid these challenges, there were notable areas of progress. Southeast Asia and parts of Africa made important strides through reforestation efforts and community-led conservation. In the corporate world, sustainability reporting standards became more aligned, with the International Sustainability Standards Board’s (ISSB) global baseline gaining traction among multinational companies.
Additionally, financial institutions and corporations increased their commitments to net-zero targets and science-based climate action plans. Forward-looking organisations recognised that sustainability is not a side project but a strategic imperative.
A 2024 McKinsey study found that companies integrating ESG into core decision-making reported improved resilience and stakeholder trust. However, success depends on credible data, transparency, and long-term accountability – not greenwashing or symbolic gestures. This year’s World Finance Sustainability Awards 2025 winners stand out for their ability to lead by example in such a critical domain. They have embedded sustainability at the heart of their operations and are driving real-world impact across environmental, social, and economic dimensions.
We honour the leaders in this industry not just for meeting regulatory expectations, but for setting new standards in climate responsibility, social equity, and sustainable innovation. Their work inspires the global shift toward a more resilient and equitable future.
Most Sustainable Companies in 2025, by industry
Airport
Aeroporti di Roma
Asset Management
KBC Asset Management
Automotive Interior Design
Antolin
Beauty
AS Watson
Computer Hardware Industry
Lenovo Group
Data Centres
QTS
Digital Asset Compute
MARA
Engineering
WSP Gobal
Feminine Hygiene Products
Saathi Pads
Flag Carrier Airline
Turkish Airlines
Food Production and Distribution
Fresh Del Monte
For Gender Equality in Wealth Tech
EXANTE
Furniture Design
MillerKnoll
Glass
BA Glass
Hospitality & Leisure Industry
Radisson Hotel Group
The global pension fund sector in 2024 operated at the intersection of long-term responsibility and short-term economic pressures. High inflation, volatile markets, and shifting demographic trends challenged funds to deliver steady returns while maintaining intergenerational equity.
According to a report by Mercer, pension funds globally have been rebalancing their portfolios to reduce exposure to underperforming assets and increase resilience in the face of economic shocks. A major theme this year was the acceleration of sustainable investing.
The PRI reported that over 90 percent of signatories now incorporate ESG factors into investment analysis and decision-making. At the same time, regulatory expectations have grown more complex. Funds are under pressure to improve transparency, address climate risk disclosures, and demonstrate alignment with international sustainability goals.
Technology, too, is transforming how funds manage risk, communicate with beneficiaries, and track performance. Despite these challenges, this year’s winners of the World Finance Pension Fund Awards 2025 have demonstrated outstanding leadership in the sector.
Best Pension Funds in 2025, by country
Australia
Unisuper
Austria
VAPK Pensionakasse
Azerbaijan
State Social Protection Fund of Azerbaijan
Corporate governance continued to evolve rapidly in 2024, responding to both growing stakeholder expectations and systemic challenges across global markets.
According to PwC and the World Economic Forum, companies faced increasing scrutiny over board accountability, climate governance, cybersecurity resilience, and ethical leadership. The line between governance and sustainability has increasingly blurred, with more than 50 countries now mandating climate expertise on corporate boards – a sign of the changing fiduciary landscape. Beyond compliance, leading organisations are embedding ESG oversight into boardroom strategy, aligning remuneration with climate and DEI goals, and fostering diversity of thought.
The Parker and FTSE Women Leaders reviews, although UK-specific, reflect a broader global trend: diversity in governance isn’t just a moral imperative – it enhances decision quality and risk oversight. The focus is shifting from box-ticking to authentic engagement, ethical culture, and long-term value creation.
Another key development has been the rise of digital governance. As AI and data analytics reshape industries, boards are being challenged to understand and supervise tech risks and opportunities – an area where many still lack sufficient fluency.
The global banking industry in the past year has operated within an environment of significant complexity. Economic headwinds, high interest rates, persistent inflation, and geopolitical tensions have all shaped banking strategies worldwide. According to Deloitte’s 2024 outlook, financial institutions contended with diverging regional economic growth – sluggish expansion in developed markets contrasted with robust growth in parts of Asia and Latin America.
Meanwhile, banking leaders increasingly recognised the need to adapt legacy operating models to remain competitive and relevant.
At the same time, digital transformation continued to accelerate. Artificial intelligence and automation have shifted from being differentiators to essentials. Banks are investing heavily in cloud-native systems and real-time data capabilities to meet evolving customer expectations. Yet with these digital advances come rising concerns around cybersecurity, data governance, and regulatory compliance – challenges that demand agile, cross-functional leadership.
Talent gaps have become another pressing issue, particularly as banks compete with tech firms for professionals skilled in areas like data science and cybersecurity. Institutions that succeed are those taking proactive steps to upskill internal talent and embed innovation into their culture.
World Finance Banking Awards 2025
Best Investment Banks
Brazil Itau Unibanco Chile BTG Pactual Colombia BTG Pactual Dominican Republic Banreservas France BNP Paribas Georgia TBC Bank Germany Deutsche Bank Hong Kong Morgan Stanley Jordan Arab Bank Kazakhstan Tengri Partners Investment Banking Kuwait National Investments Company Mexico BBVA Mexico Netherlands ABN AMRO Nigeria Coronation Merchant Bank Oman Bank Muscat Pakistan HBL Taiwan Fubon Financial Thailand Siam Commercial Bank Turkey QNB Finansinvest US JPMorgan Chase & Co
Best Banking Groups
Austria BAWAG Group Brunei Baiduri Bank Chile Banco Internacional Denmark Nordea Dominican Republic Banreservas Egypt Banque Misr Finland Nordea France Crédit Mutuel Germany Commerzbank Ghana Zenith Bank Ghana Hong Kong HSBC India Bank of Baroda Jordan Jordan Islamic Bank Kosovo BKT Macau ICBC (Macau) Nigeria Guaranty Trust Bank Pakistan Meezan Bank Saudi Arabia Al-Rahji Bank Turkey Akbank UK Lloyds Banking Group Vietnam Techombank
Best Private Banks
Afghanistan Ghazanfar Bank Armenia Ardshinbank Austria Erste Bank Group Belgium BNP Paribas Fortis Brazil BTG Pactual Bulgaria Postbank Canada BMO Cyprus Bank of Cyprus Czech Republic Raiffeisen Private Banking Denmark Danske Bank Dominican Republic Banco Popular Dominicano France BNP Paribas Banque Privée Germany Deutsche Bank Greece Eurobank Hungary MBH Private Banking India Kotak Mahindra Bank Italy BNL BNP Paribas Kazakhstan FortePremier Liechtenstein Kaiser Partner Luxembourg BGL BNP Paribas Monaco Banque Richelieu Netherlands Insinger Gilissen Norway Nordea Private Banking Pakistan Easypaisa Poland Santander Bank Polska Portugal Santander Private Banking Romania Raiffeisen Private Banking Slovakia Tatra banka Spain Santander Private Banking Sweden SEB Switzerland BNP Paribas Wealth Management Turkey TEB Private Banking UAE Mashreq UK HSBC Global Private Bank and Wealth Uruguay Puente US BMO
Best Retail Banks
Armenia Ardshinbank Austria Erste Bank Group Azerbaijan Pasha Bank Belarus Belarusbank Belgium Belfius Bulgaria Postbank Canada BMO ChileSantander Chile ColombiaBancolombia Costa Rica BAC Credomatic Denmark Danske Bank Dominican Republic Banreservas Finland Nordea France BNP Paribas Germany Commerzbank Greece Eurobank Hungary K&H Bank Iceland Arion India ICICI Bank Italy Intesa Sanpaolo Kuwait Gulf Bank Macau BOC Macau Mexico Banorte Netherlands ING Nigeria GTBank Norway SpareBank 1 Pakistan Easypaisa Peru BCP Poland Santander Bank Polska Portugal Santander Saudi Arabia Al Raji Bank South Africa NedBank Spain Banco Bilbao Vizcaya Argentaria Sri Lanka Sampath Bank Sweden Nordea UAE Mashreq UKLloyds Bank US Bank of America Uzbekistan Octobank
Best Commercial Banks
Austria Raiffeisen Bank International Belarus Belagroprombank Belgium BNP Paribas Fortis Canada BMO Cape Verde iib West Africa Colombia Davivienda Czech Republic CSOB Denmark Nordea Dominican Republic Banreservas France BNP Paribas Germany Deutsche Bank Hungary OTP Bank Kazakhstan ForteBank Macau BOC Macau Netherlands ING Nigeria Zenith Bank Norway Nordea Poland mBank Portugal Banco Finantia Saudi Arabia Al-Rahji Bank Singapore OCBC Sri Lanka Sampath Bank Sweden SEB TaiwanMega International Commercial Bank US BMO Vietnam Techombank
Most Sustainable Banks
Brazil Banco Do Brasil ChileBCI China Bank of China Colombia Bancolombia Djibouti iib East Africa Dominican Republic Banco Popular Dominicano Germany GLS Bank Kenya Co-operative Bank of Kenya Macau BOC Macau (Cash Management Services) Malaysia Maybank Nigeria Access Bank SingaporeOCBC Sri Lanka Commercial Bank of Ceylon Sweden Handlesbanken
At an economics conference in the early 1960s, one speaker began his presentation on development by citing India as an example. Before he could continue, an economist interrupted and asked: “What other country in the world is like India?” The room fell silent. To this day, this question remains unanswered.
Earlier this year, Prime Minister Narendra Modi announced that India aims to achieve developed-country status by 2047, the centenary of its independence from the British Empire. This ambitious goal, which could transform the Indian economy and reshape the global economic landscape, has generated widespread excitement.
But reaching this milestone is no small feat. Conservative estimates suggest that India’s per capita income growth would need to outpace China’s by 3.5 percentage points each year to meet Modi’s 2047 target. While India has experienced strong annual growth of six to eight percent in recent years, the economy is already showing signs of slowing. Moreover, even if a slowdown can be averted, sustaining this growth momentum over the next two decades will be challenging.
India is a country of extremes. It has a thriving software industry, and its biometric identification system, Aadhaar, has enabled the government to co-ordinate public services for the world’s largest population. And India is home to world-class universities, particularly the Institutes of Technology and Institutes of Management.
From rural to urban
But India’s shift from rural to urban employment has lagged behind most developing countries, exacerbating inequality. While the country has 167 billionaires, more than 129 million people still live below the poverty line. These disparities extend to the education system, where over half of the country’s fifth-grade students struggle to read at a second-grade level.
At the end of World War II, China and India were both impoverished countries with large populations. As recently as the 1980s, their living standards were nearly identical. China’s command-and-control system relied on state ownership of virtually all means of production, while India’s model combined private ownership with government control over key industries.
Four areas require urgent attention: labour, education, trade and regulation
Neither system produced positive outcomes. In the early 1980s, China began implementing sweeping economic reforms, ushering in an era of spectacular growth. India, prompted by a foreign-exchange crisis, followed a decade later. But although the country’s GDP growth accelerated, it never matched the rapid pace of China’s economic rise. In its latest World Economic Outlook, the International Monetary Fund estimated India’s per capita income at $2,730, compared to China’s $13,140.
Despite China’s current economic challenges, most analysts expect it to achieve developed-country status by the 2040s. For India to do the same, it must address several glaring economic weaknesses. But given that the pace of reforms has slowed over the past decade, it is unclear whether it can muster the political will to pursue the changes needed to meet the 2047 target.
Four areas require urgent attention: labour, education, trade and regulation. India’s restrictive labour laws, which make it extremely difficult to fire workers, present a particularly serious policy challenge.
Industrial growth has been relatively slow, leaving much of the labour force stuck in low-productivity rural jobs. Consequently, while 46 percent of India’s labour force works in agriculture, the share of manufacturing workers declined from 12 percent to 11 percent between 2023 and 2024. Moreover, India’s stringent regulations on overtime pay, apprenticeships, health care, and other benefits significantly increase employer costs.
Powerful labour unions further deter businesses from hiring unskilled workers, causing employers to invest in capital equipment rather than expanding their workforce.
Enhancing productivity
To meet the demands of today’s global economy, India must overhaul its education system. Although it has significantly increased school enrolment rates, the quality of education – especially at the primary and secondary levels – is not sufficient to build a productive labour force. One major driver of India’s earlier economic reforms was the loosening of tight controls on foreign trade and capital flows. But under Modi’s ‘made in India’ policies, the country has reverted toward protectionism, imposing tariffs and erecting other import barriers while subsidising the domestic production of essential goods. This protectionist turn casts a shadow over India’s growth prospects. Without a rapid expansion of labour-intensive industries and exports, it is doubtful that the country can maintain the growth rate needed to achieve developed-country status by 2047.
Another major concern is bureaucratic red tape and onerous licensing requirements, which increasingly hamper economic activity. Previous efforts to streamline regulations have led to significant improvements and spurred growth, but achieving Modi’s ambitious goals will require a new wave of bold structural reforms.
The state of the global economy in 2050 will partly depend on how quickly and effectively India implements these changes. Given the right policies, the country could reach high-income status by 2047. Otherwise, it risks remaining a middle-income country plagued by low productivity and sluggish growth.
When US private equity firm 777 Partners decided that the world of sports would become its new playground, it went all in. Early investments included promising assets like the UK basketball powerhouse London Lions and a minority stake in the country’s basketball league, but its real speciality was football. Like a collector of old football shirts, the Miami-based firm acquired a list of fine specimens from the palette of the beautiful game worldwide, owning stakes in Genoa, Vasco da Gama, Standard Liege, Melbourne Victory, Hertha Berlin, Sevilla and Red Star in France.
Last spring it came close to acquiring Everton too, but its failure to meet the Premier League’s strict ownership conditions and trouble at 777-owned Australian airline Bonza put off the club’s owner and the deal fell through. This October, 777 Partners collapsed, leaving its football assets high and dry. “777 probably went too wide, too quickly, without sufficient intelligence on the European sporting market – investments inside and outside football,” says Rob Wilson, founder of Investinsoccer.com, a strategic sport advisory service that helps match prospective football club owners with the best sporting assets.
The great private equity attack
For all its mishaps, 777 Partners’ sporting adventure was far from an isolated case. Over the last decade, private equity capital has poured into the sports industry, lured by its global appeal as leagues with a soaring fan base like the Premier League offer immense growth possibilities for investors. Annual global investment in the sports industry has trebled to over $30bn within 15 years, according to CNBC data. In the US, the world’s biggest sports market, within just two decades average NBA team values have increased by a staggering 1,176 percent and NFL valuations by 523 percent, estimates JPMorgan Chase. Changes in the media landscape have turned sports into a golden goose for streaming platforms like Amazon Prime, massively increasing games rights. Digital technology has also transformed sports into a brave new world for marketers, with stadium sponsorships, digital scoreboards, jumbotrons and branded areas offering new opportunities.
If private equity investment in established sports has its critics, for less popular ones it’s a boon
Team owners have welcomed the sudden interest of institutional investors, which has shaken up what used to be a slow-moving and often loss-making industry. “Given the restrictions on how much private equity firms can own, it provides some liquidity and an exit to legacy owners who would otherwise hold an interest in a very illiquid market,” says Michael Rueda, head of US sports and entertainment at law firm Withers, adding: “It is not necessarily a vanity asset now – it is a real business with growth potential.”
As the world’s most popular sport, football has been a major target for investment. The pandemic deprived many clubs of revenue streams like ticket sales and TV rights, making their owners less sceptical of investors with little football expertise. More than one third of Europe’s top five league clubs had financial backing from private equity, venture capital or private debt firms in 2023, according to the financial data company PitchBook, a total of $5.4bn up from less than $71m in 2018. US private equity firms have rushed to benefit from economies of scale, as the acquisition of stakes in European clubs allows them to share resources across the Atlantic.
Ares, a firm that manages around $450bn, has invested in Chelsea and Inter Miami, while Sixth Street is a major investor in the San Antonio Spurs and Real Madrid.
“Revenues are high in several European leagues (see Fig 1) and for clubs consistently playing in UEFA competitions, but losses are common, which creates a potential for efficiency gains,” says Christina Philippou, who teaches accounting and sport finance at the University of Portsmouth, adding: “Many private equity investors come in with the idea of controlling costs and increasing commercialisation as a means to enabling the extraction of profit, particularly those that look to learning from US sport league models which are far more commercial.” Another reason why private equity investment has increased is better regulation, notably improvements in UEFA’s financial fair play rules, according to Rob Wilson: “A regulatory framework is beginning to take a firmer grip on financial sustainability. If private equity waits another five years, the assets will see higher entry value, and thus become less attractive.”
Despite the buzz all that investment has created, some scepticism remains in parts of the sports industry. Last August, the National Football League (NFL) became the last major US sports league to let private equity capital in, allowing investors to buy stakes of up to 10 percent in its teams, provided that they hold them for at least six years. It has selected six private equity powerhouses as preferred buyers on the premise that they can invest large sums from the get-go. As the world’s most lucrative league with a $110bn media rights deal under its belt, the NFL had enough leeway to keep its ownership rules stricter than those set by other leagues, which have permitted investors to acquire 30 percent stakes and in some cases even control teams.
“They want to benefit from institutional investors, but in a way that doesn’t change the makeup of the game and the way it’s governed,” says George Pyne, founder of the private equity fund Bruin Capital, which invests in the sports sector, adding: “With just 10 percent the investor has no rights. For the owners, not giving up those rights is important to the integrity of the game.” The league is also aware of public scepticism over private equity’s priorities, says Roy Lockhart, managing director at the global consultancy Stax, who specialises in private equity: “NFL owners still want to project the image of long-standing family ownership as the typical model, and where that has been the case, winning has always been a priority in addition to financial success. By including these restrictions as they open up franchises to private equity investment, they are able to maintain this illusion while preparing for a future where franchises are treated more as investment vehicles than passion projects.”
An own goal?
The massive inflow of capital has sparked fears that there is already a bubble in parts of the sports sector. In the case of football, it has led to “massively inflated” valuations based on “facile notions” about growth, warned Gerry Cardinale, owner of AC Milan, at a business summit last September. “The problem with my crowd is they are asset managers. They just want to buy stuff, and that is not great for intellectual property based businesses,” said the founder of the private equity firm RedBird Capital Partners.
Cardinale’s statement echoes a broader concern over the financial sustainability of European football. Many of its iconic clubs are mired in a spiral of growing debt; in 2023, Europe’s top five leagues owed a total of over €10bn. A 2023 report commissioned by the UK government found that many English clubs are “run in unsustainable ways” and rely on owner funding and underwriting of losses, which increases the possibility of insolvency.
A major risk is that inflation of club values may price future investors out, argues Philippou from the University of Portsmouth, co-author of the report: “This is good for owners short-term, but poses a potential problem in the long run if valuations are pushed too high to enable clubs to find buyers, particularly if the financial landscape where loss-making is the norm continues, which may lead to insolvency events.” As an example of what could go wrong, she points to the English rugby league, which saw three top-tier teams going bust last year. For the clubs, the main concern is that debt-fuelled deals involving private equity firms that are looking for quick returns could eventually leave them high and dry, as in the case of 777 Partners. Last October, Moody’s warned that an increasing number of private equity groups struggled under heavy debt, with Chelsea co-owner Clearlake being singled out as one of the firms with the highest leverage ratios.
It is not necessarily a vanity asset now – it is a real business with growth potential
Another worry is that private equity firms are not equipped with the patience needed to thrive in a relatively illiquid industry that is smaller than their traditional targets and requires long-term investment. “One challenge is that sports teams are not necessarily high cash flow conversion investments. They are investments that are challenging to put down, which is the opposite of what classic private equity is all about,” says Bruin’s Pyne.
A particular problem US firms face when investing overseas is differences in regulations and sporting cultures. European football clubs need steady investment to avoid relegation and enter competitions like the Champions League, while US franchises are less risky and offer an opportunity for underdogs to sign promising young athletes through the yearly draft system. What’s more, measures that in other industries are accepted without any problems, like cost-cutting and pursuing new commercial opportunities, can cause a fierce backlash in sports if fans perceive them as a threat to their team’s history and identity. Protests that involved German football fans throwing chocolate and tennis balls on the pitch forced the Bundesliga to abandon its plan to sell a stake of up to eight percent in its media rights business to a private equity firm.
All in the game
If private equity investment in established sports has its critics, for less popular ones it’s a boon. The explosion of women’s sports, for example, can be partly attributed to the recent inflow of private capital. Sixth Street entered the game last year by becoming the main investor in Bay FC, the latest entry in the increasingly popular US National Women’s Soccer League. “An increasingly common consideration for investors in European football is the ability to invest in two markets with a single purchase: the mature men’s market and the effectively start-up but high-growth women’s football market,” says Philippou. Sports like lacrosse and pickleball also have an opportunity to attract a bigger audience through investment that creates a virtuous circle of growth. “With income growth there is a role for private equity to play as league values grow and the need for capital increases,” says Rueda from Withers. “It’s the only way to grow a business.”
The focus on executive leadership setting the example for the rest of the organisation to follow is deeply ingrained in corporate life. The idea behind the concept of ‘tone from the top’ is laudable: if the rest of the board, management, and employees see the exemplary conduct set by the head of the company, the values and example they demonstrate will be understood and followed by everyone else in the organisation.
Similarly, the ‘positive’ actions the CEO takes to stamp out ‘bad’ business practices, as well as the efforts they take to promote key issues such as ethics, diversity, sustainability, and corporate governance, will inspire everyone else in the organisation to regard such matters in the same way and adopt the same behaviour.
But time and again the idea of CEOs and other members of the C-suite setting the tone for others to follow becomes risible, especially in light of a swathe of corporate governance scandals (which executives are ultimately responsible for) and enormous pay awards that bear no resemblance to other workers’ salaries (some 200 times a typical worker’s pay in the US), corporate performance, best practice, or even common sense. Nor does executives’ behaviour always chime with the conduct they are meant to champion: instead, it often exposes the attitudes they think are permissible (at least for themselves), but which are out of sync with progressive society.
“Every leader sets the tone, whether they intend to or not,” says Robert Ordever, European managing director of workplace culture and recognition specialist O.C. Tanner. “Their words, and more importantly their actions, set expectations as to what is acceptable. The danger area is the gap between corporate rhetoric and the actions of leadership.”
The ivory tower
There are plenty of recent examples to demonstrate the appalling moral compass and/or laughable lack of self-awareness exhibited by some corporate leaders. For instance, the newly announced boss of Starbucks, Brian Niccol, has come under fire after it was revealed he would commute almost 1,000 miles on a company jet from his home to the firm’s headquarters in Seattle – despite the company’s pronouncements that it is a sustainability leader.
The perception of leadership has changed over the past decade
Meanwhile, Chris Ellison, managing director of Australian mining firm Mineral Resources, said during a financial results presentation in August that he wants to “hold staff captive all day long” after he complained that employees who go out to buy a coffee (rather than get one at work) are costing the company too much money. In February 2021, the UK chairman of Big Four firm KPMG, Bill Michael, was forced to resign when his motivational speech to employees on a virtual meeting went off the rails (and went public) after he told staff to “stop moaning” about the impact of the Covid-19 pandemic and lampooned unconscious bias as “complete crap.”
That same year, Barclays Bank CEO Jes Staley resigned after an investigation by the UK’s financial regulators uncovered a cache of emails that suggested his relationship with disgraced financier and paedophile Jeffrey Epstein was closer than he had admitted. Two years later the Financial Conduct Authority (FCA) fined him £1.8m and banned him from serving in a senior management role in the financial services industry – a rarely used sanction. Staley had previously had his knuckles rapped by the FCA when he tried to out a whistleblower who raised concerns about his past employment history.
It is perhaps unsurprising that such incidents lead some experts to suggest the concept has its limits. “The tone from the top works in practice all the time, but whether the tone that is being set in practice is the one that we might choose is a different matter,” says Diane Newell, managing director at coaching consultancy OCM Discovery. She adds that managing how people interpret and understand the behaviour that they see from executives and other senior leaders is “never going to be an exact science.”
Raised expectations
Part of the problem is that the perception of leadership has changed over the past decade, as has the notion of corporate and executive accountability. “The C-suite and board of any organisation needs to recognise that expectations around conduct and culture have changed and expectations have increased,” says Piers Rake, partner at legal services firm Astraea. Previously, he says, the principle corporate stakeholders were limited to shareholders, customers and employees, but wider societal pressures “have resulted in heightened expectations from a wider cohort of interested parties.” This may include “rights holders” – those who may be impacted by the business’ operations – as well as activist groups. “Companies are more likely to face adverse or negative press for entirely legal business activities where they are considered to be inconsistent or at odds with wider societal trends,” Rake warns.
Liz Sebag-Montefiore, director of HR consultancy 10Eighty, says employees want – and expect – strong, ethical leadership from the top, with a focus on actions rather than words. “A company can talk about ethics but if they are gouging their suppliers, exploiting staff, treating employees as disposable and treating customers unfairly, then they won’t inspire a workforce committed to best practice,” she says. With that said, should the ‘tone from the top’ mantra be scrapped? And – if so – what should replace it? And who should workers and stakeholders look to for better leadership?
Melissa Hewitt, head of HR outsource at recruitment company Morson Group, suggests others have a role in helping executives fulfil their roles as ethical leaders. She believes there is a strong argument for elevating the HR director onto the board role because “company culture and values are part of their remit,” while regulators should also do more to set clear parameters for leaders in their sector. Ultimately, she concedes that commercial – rather than ethical – factors may be the most important short-term influencer because Gen Z recruits (typically those people born between 1996 and 2010) are more likely to leave if they feel the organisation is not living up to expectations of corporate best practice, leaving companies with a skills gap they may find hard to plug.
Room at the top?
Sarah Miller, CEO at Principia, an ethics advisory firm, says there is already a shift away from focusing on a core group of executives to set expectations around ethical leadership. “It is increasingly the exception – not the norm – to rely on a small group of executive leaders to shape, champion and model the tone and tenor of a culture,” she says, partly because it is such a risky approach. With both higher expectations and greater scrutiny, she says, the chance of failure for a small number of top leaders becomes more concentrated and exposed, so it is better to share the responsibility with more – not fewer – people in the organisation, which means relying on middle management.
Employees want – and expect – strong, ethical leadership from the top
“Many companies are focusing on values activation and ethical decision-making skills for the top 100 people, with a recognition that it is not just the executive team that needs to consistently reinforce and apply hallmark cultural attributes,” she says. “This is arguably still the ‘top,’ but in a much more expansive, diffused understanding than the term has tended to apply to,” she adds. Miller believes this trend is “encouraging” because seeing how middle and/or line managers deal with ethical dilemmas and how they understand and abide by rules on a daily basis is going to make a much bigger and deeper impact to a wider range of workers. “I would rather have a strong ‘tone at the middle’ any day, particularly in larger organisations,” she says. While there might be an acknowledgment in some quarters that the tone from the top is flaky and needs rethinking, it appears that the majority are prepared to stick with it – largely because there does not appear to be anything better to replace it.
The devil you know
Kevin Gaskell, former CEO of Porsche UK and chairman of ITS Technology Group, a fibre broadband firm, believes the ‘tone from the top’ should work in practice, but its effectiveness “depends heavily on consistency, transparency and authenticity.” He adds that if executives are not the best people to demonstrate ethical and correct leadership, “it becomes difficult to imagine who else could effectively set the tone. Leadership by its very nature is hierarchical, and the values and behaviours of those at the top of an organisation trickle into the entire workforce,” he says. “If executives fail to embody the ethical standards or correct behaviours expected of them, it creates a leadership vacuum where confusion, inconsistency, or poor practices can easily spread,” Gaskell added.
Even some of those who believe a re-examination of the ‘tone from the top’ is necessary, do so “not for the reasons you might think,” according to Mike Greene, an entrepreneur and executive business coach. Leadership, he says, is not about popularity – it is about making tough, often unpopular decisions for the organisation’s benefit. The trend of deferring ethical leadership to inexperienced majorities or feel-good committees is “dangerously misguided,” he adds.
“Executives are not just accountable – they are essential,” says Greene. “They have the experience and authority to navigate complex ethical landscapes. Diluting this responsibility is short-sighted and potentially harmful. The notion that middle management or employee-led initiatives can effectively set ethical standards is naive. It often creates echo chambers of inexperience, reinforcing biases rather than challenging them.” Greene believes ‘tone from the top’ works when implemented “with backbone, not as a PR exercise” and demands “leaders unafraid of unpopularity, who understand that real-world ethics are not always clean-cut or politically correct.”
For ethical leadership that withstands real-world pressures, Greene says companies need “experienced executives who are not afraid to take charge. Remember: sheep may be soft and cuddly, but they need a guard dog and shepherd to protect them from wolves. If you want to be popular, sell ice cream.”
Over the last decade, exponential growth rates have turned Southeast Asia into an unmitigated success story of 21st century capitalism. However, behind the facade lurks a murky underworld, argues the University of Chicago sociologist Kimberly Kay Hoang in her book Spiderweb Capitalism. Through fieldwork in Vietnam and Myanmar and interviews with hundreds of insiders, she exposes an intricate nexus of bankers, accountants, lawyers, bureaucrats and investors who facilitate capital flows through shell companies and financial centres like Singapore to hide the origin of dirty money, enabling local elites to accumulate obscene amounts of wealth. What’s more, after the 2008 financial crisis, the West lost its supremacy in frontier markets, with a rising China that is unconstrained by Western regulations gaining the upper hand. Is corruption a price worth paying for Asia’s ascendancy? In an exclusive interview to World Finance’s Alex Katsomitros, Hoang shares her thoughts on the origins of this murky ecosystem and how to unravel it.
What is spiderweb capitalism?
We usually think of global capital movement as capital moving from nation A to B. Spiderweb capitalism is a system that features a complex web of subsidiaries, offshore shell companies and money flows interconnected across multiple countries that obfuscate the origin of capital. Offshore financial centres have enabled economic and political elites – often the same people in developing economies – to secure exclusive, quasi-legal opportunities for wealth accumulation. These are multi-layered deals sometimes not available on the public market.
I differentiate between ‘big spiders,’ ultra-high-net-worth individuals (UHNWIs) whose capital flows through these webs, and ‘smaller spiders’: high-net-worth individuals (HNWIs) who are highly compensated agents building these webs on behalf of UHNWIs, but bearing the criminal and reputational risks. Every piece of the web is connected by different financial professionals: bankers, lawyers, accountants, PR agents. They are purposely obfuscated from one another in their relationship with the web. Each specialist builds one part, but they don’t know how other parts are constructed.
What are the power dynamics between UHNWIs and HNWIs?
I use the words ‘co-ordination’ and ‘sabotage.’ There are instances where they build these webs together. But between emerging and developed economies, there is also sabotage. You have joint ventures between local investors and entrepreneurs from overseas where the former will find ways to kick the foreign investor out by mobilising capital restriction laws or engaging the state to issue back taxes. So there can be co-ordination at the beginning and sabotage towards the end as a way to consolidate the resources. Sometimes there is also a protective approach to the local economy in regard to natural resources, such as oil, gas, minerals.
Do HNWIs aspire to become UHNWIs?
Many UHNWIs I have studied were once HNWIs who grew wealthier. HNWIs want to ultimately become UHNWIs, but it is more nuanced than simply a story of greed. Inequality has become wider since 2008. We thought that the financial crisis would democratise the system with the Occupy Wall Street movement. What I have uncovered during my research is that there are variations in the one percent, and we should differentiate between the 0.1 percent and the rest.
What is hard for the public to understand is that HNWIs feel economically precarious. We can make assumptions that it is just greed, but it is deeper. Their socio-emotional feeling is typically middle class. They talk about securing their children’s future, higher education costs, helping them buy homes. So it is less about wanting to get on the Forbes list and more about the fear of falling behind. That motivates them more than anything else.
One aspect of spiderweb capitalism is what you call ‘relational capitalism,’ which includes ‘homosocial bonding rituals’ like wild nights out. Is that specific to Southeast Asia or a broader phenomenon?
I first captured these rituals in my book Dealing in Desire, where I argued that the Vietnamese sex industry plays an important role in cementing relationships of trust between political officials and private entrepreneurs. In Spiderweb Capitalism, I talk about relationships of mutual hostage and destruction. Through these experiences they build homosocial bonding rituals, but it is also a way of getting dirt on one another. If something goes wrong on a deal, they can release to the media photos of their partners at orgy parties.
When you don’t have faith in the rule of law and each bureaucrat can interpret laws differently, relationships are crucial to moving around the regulatory apparatus. They are especially important when something goes wrong. If there are charges of corruption or back taxes, how do you manage that? You go to the bureaucrats. Even in relationships between entrepreneurs, how do you trust your partner? That is why relational capitalism is important in these economies.
Initially I thought it was a very Asian way of doing business. I have given talks in the US and Europe and bankers told me that their rituals are not that different. Before 2008, strip clubs and prostitution were a big part of the culture.
The Epstein case is very Western. If a business person ingratiated himself with high-level politicians, including Bill Clinton, Prince Andrew and Donald Trump, who knows what dirt he had on them? So perhaps it is more generalisable and not culturally specific to Asia, but we don’t have empirical evidence.
You mention in the book that the US is the largest offshore jurisdiction. So did this system originate in the West?
My research subjects would repeatedly remind me that this system was invented in the West. It goes back to colonialism, the British Empire and small sovereigns linked to it. Delaware has always been there, and we pretend it is not. Interestingly, after the Panama Papers leak, Mossack Fonseca moved their headquarters to Delaware. In the words of my research subjects, the biggest gangsters are in Delaware!
One thing that is different in Asia is that when you have an authoritarian state, offshoring is one mechanism that makes investors feel they can protect their investments from arbitrary state capture. They worry that the state can capture assets at any moment. We are seeing that in China right now, as Xi Jinping is weaponising charges of corruption to consolidate power.
Offshore structures have a bad rap, but if you take a conservative economist approach where you don’t want to stop all investment, it is a mechanism to protect assets as much as a way to evade taxes.
Is corruption a price worth paying for rapid development?
Many government officials feel that if there was a crackdown on corruption, it would affect their bottom line, and capital would stop coming in. They look at how rapid development has been, even in authoritarian states like China. Some were hoping that Myanmar would leapfrog Vietnam by introducing a democratic state with the election of Aung San Suu Kyi. It turned out that the military still had a strong hold on the economy and crony capitalists wouldn’t suddenly disappear. China and Vietnam have experienced rapid growth, but inequality is extremely wide. We imagine this trickle-down economy, but many people have been dispossessed. They have better infrastructure, but they have not gained from it.
For many economists, however, Vietnam is a success story. So what is the right balance between pro-growth and anti-corruption policies?
That is a short-term success story. What will it look like 20 years from now? Much of the growth is linked to money lent from other countries. For example, sovereign wealth funds channel massive private investments through these offshore vehicles. With spiderweb capitalism, it is challenging to differentiate between funds from sovereign and private investors. China, the world’s largest lender, uses offshore vehicles to mask its origin as state capital.
China has a long-term vision that the West does not have because of our election cycles
They form shell companies that make private investments in these countries and offer loans that will have to be paid back in 20–50 years. Many people I studied told me that China is a more benevolent lender than the West, pointing to bad lending practices of the World Bank and IMF in Latin America as an example of what not to follow. So I would ask economists to take a long view. Can we build models that project 20–50 years from now, particularly with China’s Belt and Road Initiative? China has a long-term vision that the West does not have because of our election cycles.
Is the West missing out on investment opportunities in frontier markets by being too moralistic compared to China?
When the West dominated the global economy, having global laws around corruption made sense. We now live in a different world with the rise of China. You have competition for investment from all around the world. I empathise with Western investors who are constrained by things like the Foreign Corrupt Practices Act. JPMorgan Chase paid hundreds of millions in fines for the Sons and Daughters programme in Hong Kong. Meanwhile, their competitors from China, Russia, even Eastern European countries, don’t have to adhere to those laws. Does that mean that we should enable corruption? The answer is no, it is just that we do not live in a world where there is cross-border collaboration. Because of geopolitical conflicts, China, US, Europe and Russia will not share information on which oligarchs are offshoring their funds.
So how can we unravel this web?
Berkeley economists Gabriel Zucman and Emmanuel Saez have suggested a global asset registry. That is very optimistic. One challenge is that we are asking regulators to regulate themselves. The only way is separation between the political and economic spheres: regulators and private investors. We see less of that with the revolving door system where people spend years working in the US regulatory apparatus and then work for Wall Street. In Asia, the political and economic spheres are one and the same. So separation is the solution. That means that local and foreign investors couldn’t capitalise on their political ties, and that would hurt their bottom line, so I don’t know how it could happen. Vietnam is a young economy. There is a new generation rising, people who have been educated abroad and have a broader worldview. Not a ‘let-me-get-rich’ attitude, but a more nationalistic, community-orientated perspective that is about the long-term view. Perhaps that is the future.
A series of high-profile controversies at leading global companies has forced a re-evaluation of corporate governance. Tensions between corporate boards and investors persist, as seen during 2023’s AGM season, with notable disagreements at companies like Disney, Ocado and Smith & Nephew.
Internal corporate leadership struggles, such as OpenAI’s brief dismissal and reinstatement of CEO Sam Altman, have further underscored the need for better governance. According to a Harvard report, these events reflect a growing consensus that many of these issues stem from poor corporate governance. McKinsey research supports this, showing that around 70 percent of recent activist investor demands have focused on governance reform.
Addressing these governance issues, especially complex topics like executive pay, isn’t straightforward. However, adopting best practices can help rebuild trust between boards and investors. Here are several key areas where corporate governance can be improved.
Focus on regulation
One crucial step for companies is ensuring they fully understand and comply with industry regulations. Failures in this regard have led to significant scandals, such as the collapse of the cryptocurrency exchange FTX, where poor due diligence and asset handling were partly to blame. FTX’s CEO, Sam Bankman-Fried, later admitted ignorance of many regulations, highlighting the need for boards to ensure compliance at all levels.
Board accountability is vital in preventing scandals and ensuring proper governance
Boards cannot rely solely on legal departments to handle regulations. They need a comprehensive strategy that covers regulatory monitoring, compliance programmes, regulatory engagement, and risk management. With new regulations like the Corporate Sustainability Reporting Directive (CSRD) on the horizon, boards must prepare by understanding the requirements, developing data reporting systems, and adopting frameworks like the Global Reporting Initiative. Proper preparation will help companies avoid the pitfalls of ‘greenwashing’ or ‘greenhushing’ as they navigate sustainability efforts.
Board accountability is vital in preventing scandals and ensuring proper governance. Recent years have revealed numerous examples of companies faltering due to a lack of clear roles and transparency. One notable example is the UK Post Office scandal, where the board repeatedly failed to address management issues. Similarly, the Federal Deposit Insurance Corporation (FDIC) faced allegations of employee mistreatment that went unaddressed by its board. To improve accountability, boards should include experts in key areas like supply chains and environmental, social, governance (ESG). They must clearly define roles and responsibilities for board members, ensuring they can effectively oversee management, regulatory compliance, and transparency.
Upgrade communication
Improving communication with shareholders is another key area for reform. The use of outdated communication methods, such as paper-based ballots, has caused friction between investors and corporate leadership. For instance, Marks & Spencer’s chairman, Archie Norman, has pointed out how these methods hinder effective dialogue.
A lack of communication has led to misunderstandings, with investors accusing companies of secrecy. ExxonMobil shareholders, for example, criticised management in 2023 for not disclosing the financial impact of its net zero proposals. Digital investor relations should become standard practice, allowing for more transparent and efficient communication. This would enable boards to share documents and proposals with shareholders, while also facilitating early feedback ahead of AGMs. This approach would reduce conflicts, especially as many proxy disputes are resolved before AGMs.
As cyberattacks become a regular threat, corporate boards must prioritise data security. Cybercriminal groups like Scattered Spider and ShinyHunters have increasingly targeted private companies, making it essential for boards to focus on data integrity, confidentiality, and system resilience. Companies need to protect sensitive information and ensure that their cybersecurity measures are robust enough to maintain stakeholder trust.
Executive compensation continues to be a contentious issue. While there is a strong business case for competitive executive pay, boards must be transparent and communicate the benefits of attracting top talent to investors. Benchmarking executive pay against competitors can help ensure compensation is appropriate, and clear communication can reassure shareholders that these decisions benefit the company long-term.
While ESG policies have faced backlash, they still play an important role in corporate governance, particularly as regulations increasingly require sustainability initiatives. Boards should set company-wide ESG targets, bring in experts, and ensure compliance. At the same time, it’s essential to clearly communicate the fiduciary impact of ESG measures to avoid shareholder dissatisfaction, as seen in several revolts from 2023–24.
Finally, increasing board diversity has often been handled on an ad hoc basis, but formalising this process is essential. Boards should set diversity targets and appoint members to promote inclusivity throughout the company. Creating subcommittees dedicated to this goal can ensure that diverse voices contribute meaningfully to corporate decision-making. While issues like executive compensation and ESG will continue to spark debate, the broader challenges surrounding corporate governance are solvable. By adopting straightforward reforms, companies can significantly enhance their governance practices and meet the demands of today’s business environment.
It was in 2014 that many were introduced to the term ‘conscious uncoupling,’ a term originally coined by sociologist Diane Vaughan, when Gwyneth Paltrow announced her separation from Coldplay frontman Chris Martin. For those emotionally invested in the love lives of celebrities, I imagine such events induce a lot of hand-wringing (and a collective shrugging of shoulders from everyone else).
In recent years, however, economic commentators the world over have made hand-wringing an internationally recognised sport. More surprising still, it is over the quarrelsome decoupling and occasional bitter divorce settlement of economies (see Brexit).
Inarguably, the two ‘A-list celebrity’ economies most talked about in recent years have been the US and China. Over the last 20 years, China has become a production powerhouse, attracting upstream players – those focused on components and raw materials – and handling their needs.
A 2021 Harvard Business Review article indicated that in 2010 China “overtook the US to become the largest value-added manufacturer in the world, accounting for 28 percent of all global production by 2018.” The article goes on to say that in order to achieve this dominant position, China had not only leveraged its size and low-skilled labour workforce, but also invested heavily in education and infrastructure to achieve its aims.
It was during 2018 that Trump began his trade war with China, with the US placing “25 percent duties on around $34bn of imports from China, including cars, hard disks and aircraft parts,” according to an article in the South China Morning Post.
China did not come close to meeting the purchasing targets of the phase one trade agreement in the first year
It set off a long retaliatory back and forth involving tariffs, duties and taxes. With over a million foreign companies operating in China, the implications of moving production anywhere else is seriously complicated – not to mention costly. Many of these companies, having invested significant time developing a fruitful relationship with China, were now weighing up the tearful possibility of packing up and moving out.
US over-reliance on Chinese labour (see Fig 1) is at least partly to blame for the scaling back of imports. From a US perspective, decoupling was about preserving or repatriating American jobs, to paraphrase the Harvard Business Review, but as the world’s largest trading partners, this has to be delicately navigated. What strikes me as remarkable is how clumsy and indelicate both sides so often appear to be.
Speaking about his opposite number in China at Davos in January 2020, mere months before the pandemic hit (another curveball for US-Sino relations), Trump said: “our relationship with China has now probably never, ever been better,” adding “He is for China, I am for the US, but other than that, we love each other.”
This seemingly rosy assessment of the relationship followed the signing of a phase one trade deal, not quite putting an end to the past two years of tariff brinkmanship, but easing some of the tension. In a Rose Garden speech four months later, the rekindled spirit of healthy relations seemed to have evaporated, with Trump stating “China’s pattern of misconduct is well known. For decades, they have ripped off the US like no one has ever done before.”
Undoubtedly the arrival of the pandemic played its part, but despite Trump’s boasts that the deal “could be closer to $300bn when it finishes,” China did not come close to meeting the purchasing targets of the phase one trade agreement in the first year. According to the Peterson Institute, they were “never on track to meet any of the additional commitments” and “ended up buying none of that extra $200bn of US exports it had promised to purchase.”
We need to talk
Reflecting on her marriage in a 2022 article for Vogue, Paltrow writes that the beginning of the end was something more unconscious than conscious, like “the inadvertent release of a helium balloon into the sky.” Not more than a couple of months after the publication of that article, a literal helium balloon was released by China, flying across Alaska and western Canada before appearing in the sky over Montana, home to some of the US’s nuclear missile silos. China maintained it was a meteorological balloon that had been blown off course, while US defense officials claimed it to be a “high-altitude surveillance device.”
If there were not already enough signs that relations between the two countries were strained, this was the clincher. Many had expected a Biden administration to take a tamer stance on the trade war with China, but on the back of his election win in 2020 were numerous pledges: investing in infrastructure, clean energy and manufacturing, and the promise to “create millions of good paying American jobs,” as well as overseeing America’s recovery from Covid-19. In his first speech to Congress, Biden said “there is simply no reason the blades for wind turbines can’t be built in Pittsburgh instead of Beijing.”
Following the alleged spy balloon incident he appeared to step up the rhetoric against China, saying “China is real – has real economic difficulties. And the reason why Xi Jinping got very upset in terms of when I shot that balloon down with two boxcars full of spy equipment in it is he did not know it was there. No, I am serious. That is a great embarrassment for dictators, when they do not even know what happened.”
In light of this statement, it is worth bearing in mind that in 2022 “goods worth $576bn were imported by the US from China and $179bn by China from the US” according to UNCTAD (UN Trade and Development). It can only have been an expression of frustration over China’s antics.
Friends with benefits?
For China, there has been a decoupling strategy in place since 2005, when it introduced its medium- and long-term plan for science and technology development (MLP) with goals to increase domestic content by 30 percent in several sectors by 2020. It then revisited these targets a decade later with the introduction of Made in China 2025 (MIC 2025), aiming for 70 percent by 2025. At the same time, China has turned its trade to developing economies, including Latin America and the ASEAN member states.
Similarly for the US, it has shifted its trade away from China to countries like Mexico, Vietnam and other ASEAN member states. McKinsey recently reported that “in 2023, Mexico became America’s largest goods trade partner” and “between 2017 and 2023, US imports of laptops from Vietnam more than doubled, rising by about $800m.” It might interest you to know that Vietnam sourced its parts for those laptops with another trading partner: China.
From a US perspective, decoupling was about preserving or repatriating American jobs
While this diversification is perhaps the trade equivalent of ‘I think we should see other people,’ for some time now, both the US and China’s strategy has been rooted in the notion of lying back and thinking of economic nationalism. With both of these large economies aiming at trade sovereignty, what has happened seems a logical outcome.
Both countries have taken action to disentangle their economic systems to a degree, but it is still a stretch to start ringing de-globalisation alarm bells.
McKinsey concludes that a deglobalised fragmentation of global trade would be significant, and could see drops of up to 90 percent in trade of critical goods and services between Eastern and Western group economies. If the future of trade is diversification, however, the “global trade map is largely preserved.”
In an article for JP Morgan, Zidong Gao and Joe Seydl posit that the world’s economies are not rapidly deglobalising. Instead they say “supply chains are mostly diversifying – what might be called a slow-moving maturation away from excessive concentration in China.”
And I think this assessment does go some way to ease the anxieties of those monitoring the love lives of global economies.
While I have already seen the light and now take all of my advice concerning matters of the heart from Paltrow, I can’t help but feel that the US and China could take heed of it too. Conscious uncoupling, or an amicable break-up, is the way to go.
Housing markets in a number of countries have in recent years shown a puzzling kind of behaviour, where an apparent shortage of homes is accompanied by an unusually low transaction rate. People need houses, but they aren’t buying them. A good example is Canada. In 2023 it saw a population increase of 3.2 percent, the highest in decades. Politicians are trying to ramp up the supply of new homes to match this influx. But at the same time, metropolitan areas such as Toronto also experienced one of the slowest housing markets on record. There are more unsold condominiums in Toronto than at any time in history.
According to classical economics, the law of supply and demand states that the price for any commodity including a roof over your head will adjust so that the market clears. However, instead of clearing, housing markets are going dark. So what is going on? To understand this conundrum, a useful analogy can be found in an even more vexing phenomenon, which troubled physicists at the turn of the previous century: the photoelectric effect.
Making a spark
The photoelectric effect refers to the tendency of some materials to emit electrons when light is shone on them. In the late 19th century, physicists demonstrated it by experiments in which they placed two metal plates close together in an evacuated jar, connected the plates to the opposite poles of a battery, and shone a light on the negatively charged plate. If conditions were right, then the light would dislodge electrons, which raced across to the other, positively charged plate, in the form of a sudden spark. According to classical physics, the energy of the emitted electrons should depend only on the intensity (brightness) of the light source. Shine a bright light, get a bigger spark. But in practice, it turned out that what really mattered was the colour: blue light created a bigger spark than red light. And depending on the material, for some colours no amount of light would work.
What counts is not the total number of buyers (the brightness) but how much each buyer can actually spend (the colour)
In a 1905 paper – one of a stream of results including his famous formula E=mc2, which would define the new physics – Albert Einstein showed that the photoelectric effect could be explained by the idea, recently proposed by Max Planck, that energy is transmitted only in discrete chunks known as quanta, from the Latin for ‘how much.’ According to this theory, electrons were emitted when individual quanta of light struck individual atoms – which meant what counted was not the total energy, but the energy of each quantum of light. And this was measured by colour.
Think of the metal plate as a marketplace of atoms, each selling electrons at a particular price. The quanta of light represent the spending power of individual shoppers. Shining red light onto the plate is like sending a lot of low-budget shoppers into a high-end store. No matter how many there are, the expensive electrons stay firmly locked inside their cases. High-frequency blue light, on the other hand, is like a cruise ship full of high-spenders ripping the electrons off the shelves.
Down payment blues
Einstein of course did not use a shopping metaphor – he gave his paper the cautious title ‘On an heuristic viewpoint concerning the nature of light’ – but it was clear that, unlike most of his contemporaries, he saw these light quanta (now known as photons) not as mathematical abstractions, but as real things. As he wrote, “Energy, during the propagation of a ray of light, is not continuously distributed over steadily increasing spaces, but it consists of a finite number of energy quanta localised at points in space, moving without dividing and capable of being absorbed or generated only as entities.”
This sounds mysterious when applied to light, but again is similar to the way that we make financial transactions. When you pay at a store, there isn’t a little needle which shows the money draining from your account – instead it goes as a single discrete lump. When you buy a house, you need a quantum of cash for a down payment – and you can’t usually band together with other people, at least if you expect them to not live there with you.
In fact the comparison with photons is more than an analogy, because as shown by quantum economics it turns out that you can model transactions using the same kind of mathematics as is used to model particles of light. So for a model of the housing market, again what counts is not the total number of buyers (the brightness) but how much each buyer can actually spend (the colour).
Central banks will no doubt try to jump-start the markets by further lowering interest rates, in the hope of generating a spark. In the meantime, if you want to buy a house in a country like Canada, then what counts is the colour of your money.
Despite concerns about a tougher outlook, many of the Eurozone’s biggest banks beat second quarter earnings expectations. Reuters says they have benefited from high interest rates and “bumper investment bank business,” even though their shares were held back. Shares may be lower than anticipated because of business performance – financial results, “where the market suspects the organisation is taking more risk than might be appropriate,” says Chris Burt, Director of the Risk Coalition Research Company. He adds: “Think Titanic powering full speed across the Atlantic making excellent progress…”
Mathieu Rosemain, Tom Sims and Valentina Za write in their article, ‘Eurozone banks see investment banking boost but outlook stalls shares,’ that while European banking shares rose 20 percent between January and July 2024 – reaching near nine-year highs – “the STOXX Europe 600 Banks index was down 0.5 percent after a raft of bank earnings fed into analyst and investor concerns about the sustainability of the sector’s profit growth.”
Deutsche Bank saw a quarterly loss, sending its stock down seven percent – not helped by a lawsuit provision linked to its troubled Postbank Unit. It also axed plans for a buyback and a rise in bad loan loss charges. BNP Paribas expects to exceed its €11.2bn net profit target, but there are concerns at its retail unit because of an 11 percent fall in net interest income (NII).
Moody’s Ratings also believes that Santander’s and UniCredit’s NII have mostly peaked. Risk charges are therefore likely to increase – despite rising profits, which have bolstered investor sentiment. Lenders have nevertheless traded below their tangible book value, raising concerns about whether their profitability is sustainable.
Despite this, BNPP and Deutsche’s investment banking divisions offset any weaknesses, helping to diversify revenue streams in recent quarters. Rosemain, Sims and Za add: “At BNPP, revenue from equities trading and prime brokerage services jumped 58 percent.”
Mixed outlook
Olivier Panis, Associate Managing Director of Financial Institutions Group, Moody’s Ratings, points out that Eurozone bank profits’ outlook was quite stable. The zone’s banks had managed to boost their net interest margins (NIMs) in 2023. He says that “in countries where variable-rate lending predominates, we expected profitability to stabilise.”
Italian and Nordic banks, as well as HSBC, outperformed their peers in the first half of 2024
Moody’s expects banks’ profitability in the Eurozone in 2025 to decline, “but remain strong.” Panis explains that policy rates have started to move down this year, and so Moody’s thinks that most of the margins have peaked. Yet there will be a slowdown in the shift from current accounts to more expensive term accounts.
Panis adds: “Steady economic growth and inflation close to central bank targets will offer the opportunity for stronger lending volumes, after two years of modest lending activity, while also supporting asset quality and risk charges.” He nevertheless sees operating costs continuing to rise, though. This is put down to technology and higher compensation costs. Despite this, Moody’s thinks there might be some diverging profitability trends between banking systems with a higher proportion of assets at variable rates – helped by increased interest rates in countries such as Spain, Portugal and Italy.
Fitch Ratings believes that Europe’s largest banks are likely to achieve 2024 profitability in line with the strong levels of 2023. In its ‘Large European Banks Quarterly Credit Tracker’ for September 2024, Fitch found that most of the 20 large banks performed well in the first six months. They achieved “better than expected earnings,” which led it to push its full year forecasts upwards for some banks. For example, in a press release it says Italian and Nordic banks, as well as HSBC, outperformed their peers in the first half of 2024. They were expected to continue to perform strongly from July to December. However, French banks are lagging behind their peers, and are only expected to achieve moderate profitability improvements.
Hugh Morris, Senior Research Partner at Z/Yen, concurs that the outlook is generally positive. He says the growth rate in the Eurozone is probably in the realm of three to four percent, and that should feed through to bank profits across the banking sector because half of Eurozone bank lending is mortgages, which have been generally experiencing low levels of demand over the last couple of years. The ECB, he explains: “thinks the banks will be able to improve with a forecast of global GDP growth of 3.4 percent for the next two years. The ECB believes that the Eurozone will not be too far off that. One of the drivers is that mortgages are expected to see long-term growth, whereas previously they weren’t growing at all in the Eurozone.”
Net interest income
To Morris, one of the most interesting things is presented by the banks’ net interest incomes (NIIs). They are at the core of banking medium-term profits. Factors that drive short-term growth include cost management, which he says has been a real driver of BNP Paribas. He explains that NII is the bedrock measure because other factors can come and go. Morris adds: “BNP had record profits, for example, partly driven by cost management. Over a 40–50-year cycle, when banks must manage costs, they do so, and when they don’t have to, they don’t. The market is sceptical about whether BNP can sustain aggressive cost management, and it therefore looks at NII. That’s at the heart of the dilemma. Why is the market sceptical about BNP? NII is a big piece of the answer.”
Continuing, Morris said: “There could also be a full-scale war in the Middle East. If that part of the globe sneezes, the whole world will catch a cold. There has been an increase, caused by more than Ukraine, to Brent Crude Oil prices. These types of price shocks will hit investment decisions and bank lending. Nobody knows what is going to happen, but these are the major factors.” Morris also sees the Eurozone being on a slow growth path, and predicts that a lack of latent productivity in the West will put a cap on banks’ growth.
Banks held back
As to why some banks have been held back, it is possible that they were undervalued and that they are not getting the full reflection of profitability. Morris believes this could be due to concerns over NII and the sustainability of headline profits. “Much depends on how each bank is made up, and there is cyclical falling in love and out of love with investment banking as a way of kick starting growth,” he remarks before adding: “Deutsche Bank paid a huge penalty for getting that wrong. They set out to be a global investment bank to compete with the Americans 20 years ago, but five to 10 years ago the wheels fell off it. It is the 22nd largest bank in the world, and by assets it is smaller than Santander. It is only just bigger than the Toronto Dominion Bank by assets. Stock markets are trying to price in the value of future performance, and the markets see NII as a key indicator of medium-term performance, and if they see its performance diverging from short-term profits, they will focus more on that.”
Panis explains that interest rate challenges have held some banks back. “The benefits of higher rates to banks’ net interest margins have also started to fade, and this could potentially impact the sustainability of their profit growth,” he says. He suggests that borrowing costs will remain higher than before 2022 – despite central banks’ rate cuts. This will weigh in on borrowers’ ability to repay loans and to refinance themselves.
Making matters worse is the higher cost of living, and the fact that asset values have not materially adjusted since 2022 in Europe. He therefore thinks this could impact asset quality and moderate lending volumes, and adds: “Also, the cost of funding has materially increased, as a result of the monetary tightening, with the end of targeted longer-term refinancing operations (TLTROs), and a material shift in the deposit mix towards more expensive term deposits.” While this shift may have stabilised, the central banks have begun to cut rates again, and the deposit mix remains different to what it was before 2022.
Adding to these challenges are capital market income and costs. He explains that capital markets income supports revenue, salary inflation and one-off items are raising costs, which could negatively impact the sustainability of profit growth. He concurs with Morris, too, that there are multiple sources of uncertainties related to “geoeconomic fragmentation, which could increase volatility, impact banks’ operating environments, their asset risk and profitability.” Prime examples of this are the war in Ukraine and the widening conflict in the Middle East.
The NII impact
Morris nevertheless thinks that the concerns about the sustainability of profit growth are chiefly to do with NII. “It is the bread and butter business and it is not looking so rosy,” he says before commenting that the market has seen the focus on cost control and the fascination with volatile sectors, such as investment banking, come and go.
Europe’s largest banks are likely to achieve 2024 profitability in line with the strong levels of 2023
Despite this, NII is here to stay, even though the market is trying to price its likely performance into the current stock value. To Morris, it is Economics 101 because the share price should be the current value of projected medium-term profit streams. This means “the markets’ perception of forward value will outweigh one set of half-year results,” he explains.
Although he doesn’t know Unicredit well, he considers the company’s CEO Andrea Orcel’s decision to return nearly all profits to shareholders in buybacks and dividends as being an interesting tactic. As to whether it led to a three percent fall in shares, and whether the decision to buy a Belgian digital bank led to a drop in quarterly revenues, he suggests it is an open question – particularly about the latter.
While buying a digital bank will cost cash in the short-term, it could be a good thing long-term for Unicredit. Meanwhile, in the medium-term it is not going to be noticeably clear for at least a little while. “It is this uncertainty that would lead to a fall in its shares, and while the markets like to see innovation, they are wary of money pits and white elephants,” Morris remarks.
Panis reveals that investment banking is creating a boost in business because of higher market volatility, and client transactions are boosting capital markets income. He says this is supporting revenue growth in 2024. This is particularly so for banks that “could be negatively impacted by low commercial banking lending activity, which is the case for instance for French banks.”
Despite that, there is a capital markets business expansion, which he explains “drove a six percent rise in adjusted revenue to $65bn for European global investment banks in Q2 2024, with a significant boost from equity and investment banking income.” Then you have underwriting and advisory fees, which are from underwriting and advising on equity, debt issuances, and M&A deals. He says they are all contributing to overall revenue. Yet Morris also claims that there are fewer deals around, but “when a deal is there to be done, the fees and margins are probably better than they have been.”
There is a need to leverage against the cost-base, and he finds that if you need three people to deliver a $50m deal, you may need them all to do a $500m deal. This means that the cost-base remains relatively fixed, and he advises that this is good while you can “find deals to be done, but when the tide goes out you can be left with an uncovered cost-base.” Profitability tends to be very volume-dependent because of increasing economies of scale.
Capital market diversification
Investment banking has nevertheless profited from a diversification of capital markets activities in Europe – partly due to events such as the Covid-19 pandemic, which led to some banks experiencing material losses. Panis says some banks also decided to reduce their risk appetite limits to certain exotically structured equity derivatives.
Geopolitical crises, such as the Russia-Ukraine war that caused price instability, also led banks to develop more balanced global market divisions with a more diversified product mix. Yet while he says European banks do not all have an equal access to the depth of the US capital market, “this diversification is rather credit positive, when implemented successfully, because it exposes less the overall business model of those banks to market turbulences and makes capital market revenues relatively less volatile.”
Morris nevertheless feels that some banks are papering over the cracks, and that banks should return to their core purpose – acting as a store of value. To him banking ought to be a medium-margin, dull business. However, he thinks that “human ingenuity has added multiple layers of risk and complexity to that, to the point that banks’ report and accounts” make balance sheets extremely difficult to interpret accurately. This causes a misinterpretation of share value and causes a wobble.
Yet to banking futurist and author Brett King, there is a need for philosophical change and a need to rethink how performance is measured to align investments with “broader social initiatives and shifts in value creation.” Despite their gains, he says investment banking is simply not fit for purpose for the world we are moving towards today. To continue to prosper, he believes investment banks, and banks more generally, need to have fundamentally different thinking. In his view, this requires more diverse income streams that are aligned with emerging value systems.
