Treasury Chief Jacob J Lew said the world is looking to America to drive the global recovery. Is this the case? World Finance speaks to Ryan McMaken, Editor of Mises Daily and The Free Market, to discuss how important America’s economy is to the rest of the world
World Finance: Treasury Chief Jacob J Lew said the world is looking to America to drive the global recovery. Ryan, is this the case? How important is America’s economy to the rest of the world? Ryan McMaken:Even with all of America’s troubles, there are 300 million people in America and they do have money, still. There’s still a lot of capital that was created during the twentieth century in this country and we’re still taking advantage of it, and still able to use it.
So, as a place where you you can sell your goods globally, in terms of a place where there are many investors looking to invest, the United States is still very important, there’s no denying that.
World Finance: Well the US and China could very much be described as “frenemies”, so how much do they need each other? Ryan McMaken: Well, if we really want to increase the well-being of both people in China and the United States, free trade is always a good way to do that. So as long these two countries can get along and continue to trade, even if it’s not totally free trade, just some trade is certainly better than no trade.
Certainly the better those countries get along, the less they get caught up in foreign policy that’s belligerent, the better that’s going to be, not of course just for the people in those countries, but globally as well.
After months of battling it out against Canadian drug firm Valeant and activist investor William Ackman, pharmaceutical giant Actavis looks set to acquire botox-maker Allergan.
The firms are to hold discussions this week to review the cash and stock terms already agreed on – with shares valued between $215 and $220 – according to sources familiar with the case, Reuters reported. That could see the deal close at over $65bn, marking the biggest pharmaceuticals buyout of 2014.
Allergan has shown reluctance to accept
either offer
Allergan has shown reluctance to accept either offer, arguing that Valeant’s tendency to buy out competitors and then reduce spending could negatively impact on its product development. The debate provoked a wider discussion in the industry over how much money should be invested into pharmaceuticals R&D.
Allergan even tried to sue Valeant and Ackman – manager of hedge fund Pershing Square Capital Management – for insider trading. The pair, whose interest in Allergan dates back to April, offered $200 per share in their latest bid. That would value the company at $53bn – significantly lower than the Actavis offer, although they could still raise the bid.
“I think Actavis is going to win,” University of Michigan business professor Erik Gordon told Reuters. “Ackman is going to be content to take his profit on his Allergan shares and go onto the next battle.”
Ackman revealed in April that he held a 10 percent share in the Botox company – meaning he will gain from either takeover.
The deal marks the latest in a string of buyout attempts in the industry, with Pfizer’s AstraZenica bid and Abbvie’s efforts to acquire Shire both falling through in 2014.
Much has been made of the Middle East’s real estate market in recent years, as the region’s wealth and easy access to capital has created an accommodating growth climate – presenting a wealth of opportunities for those in the sector. Nonetheless, the characteristics fail to offset the fact that demand far outstrips supply, and it is here above all else that the Middle East’s status as a still-immature market is best seen.
In a region still characterised by a lack of transparency and inadequate government policy, the real estate sector represents a means by which the Middle East could perhaps realise a more diverse and sustainable economic strategy. Real estate developers, therefore, have been tasked with the responsibility of leading the region’s social and economic development, as the Middle East looks to move away from its dependence on oil and gas, and expand upon the diversity of its economic make-up.
Governments in the Middle East must start incentivising developers
“I personally view the role of a developer as the key player in facilitating this growth and in un derstanding the responsibility they have towards the built environment,” says Renimah Al-Mattar, Executive Vice President of United Real Estate Company (URC). “First and foremost, it is a real form of diversification away from oil.”
Addressing needed reforms
Al-Mattar is acutely aware of the opportunities and challenges facing the industry, as well as the unique qualities it takes to succeed in what remains a problematic marketplace. The relative immaturity of the market she says, does mean however, that there is a great deal of growth still to be realised; although there are many challenges, and require far-reaching structural reforms before the real estate sector reaches its potential.
“I think the role of developers has changed because they are no longer builders or contractors,” says Al Mattar. “We still have a tendency to call companies or investors ‘developers’ when they are not, and this does not happen only in the Middle East but actually all over the world.” Al Mattar continues to outline the importance of governments contributing to this same growth and treating real estate as more than an investment market, by acknowledging its contribution to social and economic growth. Governments in the Middle East, says Al-Mattar, must start incentivising developers by streamlining the process of approvals required and by creating further development guidelines, as opposed to simply reverting to subsidies.
Developing responsibly
Unlike construction companies, real estate developers must manage the entire value chain, starting with land acquisition onto overseeing valuations, developing and analysing financial feasibility studies, and, most importantly, creating development strategies. “A developer must not only choose the appropriate construction companies, consultants and architects,” says Al-Mattar, “developers are the entity that oversee the whole project and make sure the final product stays true to the development’s strategy, and that is something that we do at URC.” The challenge of realising untapped potential in the region’s real estate sector, however, is easier said than done. “Following the Arab spring, there are still uncertainties arising from political transitions and social unrest, and issues of unresolved public policy or private sector legal framework affect all industries, including the real estate sector.” What’s more, research shows that the majority of real estate activity in the Middle East is centred on land acquisition and residential units, given that there is an artificial shortage of land triggered by that being reserved, either indirectly or directly, for oil-based activities.
Taking into account the challenges that exist for real estate developers, only those with a focus on sustainability and a commitment to responsible development will succeed. With projects such as the Abdali Mall in Amman, Jordan and another sustainably minded project in Shuwaimiyah, Oman, has URC been working towards satisfying the demand for real estate and participating in the region’s wider social and economic development.
URC demonstrates how, with a commitment to responsible growth and a wealth of experience in the market, developers can skirt the complications that exist for those working in the real estate sector. “I want to continue working with my CEO, Mohammed Al-Saqqaf, who has been instrumental in driving many of our visions. Strong leadership and supportive shareholders are what will allow us to develop projects that we feel contribute to the built environment,” says Al-Mattar, on speaking of the company’s future. “My ambitions for URC are to continue to attract and retain talent that allows us to be the leading real estate developer in the region.”
Banco Puente, which is based mainly in Argentina, is one of the leading investment banks in Latin America. World Finance speaks to its Capital Markets Director, Marcos Wentze, about how the investment banking industry has remained strong, despite the country defaulting for the second time in a decade on its sovereign debt repayments.
World Finance: Marcos, you operate throughout Latin America, but are primarily based in Argentina. Earlier this year the country defaulted for the second time in a decade on its sovereign debt repayments; how has this felt in the Argentinian investment banking industry? Marcos Wentzel: I would say it’s totally different, what happened in the last default. It’s more a legal problem. At the end, what happened is that some kind of the debt that Argentina had put it in a situation of default.
What’s happened in the market, we see it mainly as a stop from outside investment, outside inflow, and what we still see is a lot of interest of all investors around the world in Argentina; a very good medium and long-term picture. But we must struggle through the next couple of months until this situation comes through.
World Finance: Now how has this posed opportunities or challenges for Banco Puente? Marcos Wentzel: Well yes, it’s always for us a challenge, because the economy here has given us constant challenges!
We are very optimistic. We are going to have a couple of months more volatility, but with a good future view
On the wealth management side, we see a lot of clients looking for more conservative investments. They don’t only go to Argentina, they go to corporate investments. So, looking for good yields and better credits in this situation.
What’s going on in the rest of the LatAm region is, the economies are getting slower; Argentina’s getting slower. But at the end we see a lot of potential for Argentina.
I think the expectation of everybody to investments here is very high. As you probably know, next year we’re going to have elections – there is no possibility for this government to continue. And we see at this point different alternatives, different candidates, and they’re all very open to international investment for different projects, infrastructure projects the country has.
We are very optimistic. We are going to have a couple of months more volatility, but with a good future view.
World Finance: So for the next 12 months, would you say there are investment opportunities in Argentina? And then as you said, in the longer-term when the new government arrives, which sectors would you target for growth? Marcos Wentzel:After 12 months, for sure energy. The energy sector is one of the sectors that has been in need of investment, and the growth of Argentina over the last 10 years has been on average six percent. And from being an exporter of gas 10 years ago, we are importing gas at this point. So Argentina has the reserves; what is needed is the funding and investment to have this gas in the local market, and put Argentina again in an exporting situation.
So energy, for me, is one of the places that for sure is going to be an ace today, in the view of international investors. Not for the short-term, because for sure you will have this volatility because of what’s going to happen mainly in the political environment.
[E]nergy, for me, is one of the places that for sure is going to be an ace today, in the view of international investors.
World Finance: So is there anything you’d like the new Argentinian government to do, to help attract new investors to the country? Marcos Wentzel:The issue that the last government had was that Argentina today’s debt over GDP is one of the lowest in the region. So I think that’s something very positive for the next government. It will give them the opportunity to go on the capital markets internationally.
What’s going to be really important for me and for all investors, is that the target of these funds really goes to investments that will support the continuous growth of Argentina for the next 10 years. And that’s the main challenge this government will have.
World Finance: Let’s talk about Banco Puente in the context of this volatility, then. How do you manage your investment risk? Marcos Wentzel: Well, as the main investment bank in Argentina, we diversify our risk through different locations. We cover the southern cone from Argentina, but we have offices in Uruguay and in Paraguay, where we do not only get the flow of investment coming to Argentina, or from Argentina going to these countries; we’re also involved in local businesses.
For the other side, we are in Peru, where we cover all the Andean corridor. And we are also in investments in Peru, Colombia and Chile, from our office in Peru.
And we cover all the central Caribbean from our offices in Panama. So our diversification goes not only in the kinds of business; it goes also in the countries we’re in, so that 100 percent of our income is not only from Argentina.
World Finance: So what’s the outlook for the Latin America region? Marcos Wentzel:I would say on the whole, the main challenge for emerging markets, the Latin American countries, they will mainly have an infrastructure growth challenge to continuously grow their GDP for the next couple of years.
Commodities will not always be as high, will give the economies a backwind situation so that economies will grow. So it’s really important for all economies that they really start investing so that their infrastructure projects can be developed. And the real challenge is to get this funding and projects going on. And that’s the point today that everybody’s focusing on.
World Finance: A very hopeful outlook. Marcos Wentzel from Banco Puente, thank you so much for your time. Marcos Wentzel:Thank you very much.
In June, Eurex, the clearing house of Deutsche Borse Group, announced it would be introducing new risk-management systems for its clients in Europe, including the possibility of cross-margining between interest rates swaps and fixed income futures. The announcement was greeted with measured enthusiasm in the industry; there was a lot of interest in the potential efficiencies to be made, but there was some trepidation – many wondered why Eurex should bother to clear these products at all when it was not required by regulatory authorities to do so.
The flagship Eurex Clearing Prisma can, as of September, use a plethora of new tools in order to drastically reduce its margining and risk management costs. Though there appears to be demand within the industry for these services, not a lot has happened – probably because the European Securities and Markets Authority (ESMA) released yet another draft proposal for the implementation of key regulatory framework as agreed by the European Parliament in 2012, leaving banks and clearing houses struggling to find their feet in an increasingly convoluted environment.
However, Eurex’s desire to remain ahead of the regulators speaks volumes about the current tense market in Europe. The fact that no other exchanges have yet launched similar products, speaks of the insecurities.
Rising costs Products such as the ones Eurex Clearing Prisma is launching are already common in the US, where the regulations requiring the central clearing of OTC swaps are already enforced through the Dodd-Frank Act. As similar regulation is set to make it across the Atlantic, the cost of execution of OTC swaps has already risen in Europe, creating a market for swap futures contracts such as Eurex’s new launch. There, the (still relatively small market) for cross-margining swaps is dominated by the CME Group, a futures company and one of the largest options and futures exchanges. However, CME is yet to launch cross-margining products in this side of the pond.
The US has been leagues ahead of Europe when it comes to regulating
OTC swaps
“The Euro-Swap Futures provide our participants with a cost-effective product which tracks the risk of the underlying with the margin efficiency of a standardised futures contract and makes it possible to offset risk with our liquid benchmark government bond futures. The entire European interest rate market will benefit from this offering,” said Mehtap Dinc, a member of the Eurex Executive Board, in a statement made at the time of the launch.
Though Eurex remains confident that the uptake will be significant once the implementation period is over – actual clearing will not start for several months yet – it is a tough sell for many big businesses that will not be required to execute this type of clearing until 2016 under ESMAs new guidelines.
Published in the beginning of October, ESMAs latest draft – still pending approval from the various trade repositories and the European Parliament – declares that so-called ‘Category Two’ counterparties, those of the financial distinction, will need to fulfil stringent clearing obligations for all OTC trades, but not until at least the first quarter of 2016. A definitive date for this regulation to be enforced is still pending.
There are plenty of potential benefits to adopting a cross-margining system for OTC interest rate derivatives trading before the regulatory mandate stipulates. In its documentation Eurex cites higher capital efficiencies as well as more accurate netting effects for listed and between listed and OTC positions. However, because the facilities with which to execute this type of margining is still extremely limited, the cost in terms of time and facilities as well as money, is still relatively high.
Clients are hedging their bets Cross-margining is not a new concept. Prime-brokerage houses have been offering this type of service for years. But it has not ever been applied to clearing assets before now. It works by factoring in correlations between cleared products – in this case interest rate swaps and fixed income futures – when calculating margin requirements, instead of determining collateral on each individual product. If the risk in each product is reasonably offsetting, which is the case when futures are used to hedge a portfolio of interest rate swaps, a lower net margin amount is possible. Efficiencies can be as high as 70 percent, though savings are highly dependent on the structure of listed and OTC portfolio, and how clients prefer to hedge their investments. So Eurex is hoping that despite high initial investment costs, the potential savings will be enough to push buy side firms to become early adopters.
Without the legal requirement for this type of clearing, the incentive for clients to start clearing these products has been drastically reduced. This type of clearing activity is likely to increasing in the coming months, as front-loading requirements stipulated by ESMA are more clearly defined. In the latest RTS, ESMA indicated that once its mandate was enforced, it would expect trades occurring in the months leading up to its implementation to already have been cleared through the new system – a process known as front-loading.
As with everything else in its latest release, ESMA has not released a date from when traders are expected to adhere to these demands. There will be some reaction in the market as people prepare to clear in order to avoid the confusion that front-loading causes. Clearing voluntarily ahead of the regulatory mandate is a way to avoid that, market participants suggest.
Cross-margining remains a fairly simple principle, however, in order to be put in practice, dealers and clients will potentially need to rethink the entire structure of their clearing apparatus. More often than not, clients will see their portfolios reorganised from top to bottom in order to achieve the type of efficiencies Eurex are promising. The implementation process for this type of clearing is going to be dependent on each individual client. Because mandatory clearing is still relatively in its infancy, banks and buy side clients are often still struggling with myriad operational issues and many may not yet be at the stage where they are ready to consider how to increase efficiencies.
Despite ESMAs decision to push back the deadline yet again, it seems as though Eurex and its partner banks will carry on offering the service as before. That may be mainly to do with the need to front-load clearances, but also partly because of the considerable cost savings the process can offer. In short, the future of the OTC market in Europe is still uncertain. ESMA and other relevant authorities are still clearly struggling to strike a balance between the widespread regulatory reform mandated by the European Parliament in 2012 and the laissez-faire approach the industry often favours. Going by their constant re-drafting of the proposed rules and dates for implementation, it appears as though regulators might be losing confidence in their own mandates.
This is turn leaves dealers and clients struggling to adapt their systems to impending regulatory changes in time. And, perhaps more dangerously, fosters a climate of uncertainty in the industry that can be lethal. In the meantime, the US has been leagues ahead of Europe when it comes to regulating OTC swaps, as the Dodd-Frank Act requiring these types of trades to be cleared and margined has been in force since May 2012.
According to Risk.net, early adopters in the US have suggested that their choice of clearing counterparty would largely be affected by the ability to cross-margin in-house would, alongside the significant potential savings, be factors when choosing OTC clearing providers. Mandatory clearing as a principle in itself is still relatively new to the international market, and companies are still struggling to find adequate systems through which to execute their trades, there is still some way to go before they start examining ways in which to make more significant efficiencies in this type of clearing. When it comes to clearing and cross-margining, the market and the regulators need to learn to crawl before it can run.
Europe’s financial industry is amid a compliance shortfall, particularly among alternative investment funds. Only months after the deadline for compliance with the Alternative Investment Fund Managers Directive (AIFMD), a large majority of firms have not yet received significant authorisation for their structure. The news is troubling as it depicts the problems regulators are facing with the enforcement of new financial rules and with Europe’s UCITS V regulation ahead, many fund managers are concerned of the costs and further risk this will present as they struggle to meet requirements in time for the next deadline.
For many firms AIFMD has become the sweeping indicator for how the implementation of cross-border regulation can affect an industry for months on end and incur costs in the billions. With several similar pieces of regulation underway, the lessons revealed by AIFMD compliance, or lack thereof, are a telling indicator of the success of current legislative efforts to regulate financials.
Hedge funds, private equity funds, commodity funds, real estate funds and infrastructure funds, among others, are all covered by the AIFMD. In this respect the regulation is far-reaching and impacts a large majority of the fund management industry in Europe. Fundamentally, the AIFMD was implemented in order to address a number of issues bought to light after the financial crisis, including remuneration practices in financial institutions to tackle incentives for excessive risk-taking.
Managers in a muddle
31%
still need to implement risk and control systems
36%
need to update fund documentation
38%
yet to appoint a depository
With EU regulators maintaining the importance of AIFMD, the lacking compliance post-deadline has come as a surprise. Especially as 82 percent of managers canvassed in a recent BNY Mellon survey confirmed that the required AIFM structure was in place to meet the July 22 deadline. Despite this, almost half still haven’t received authorisation from their local regulator and are therefore not compliant with the new rules.
A lot of this comes down to a lack of resources among local regulators who have been set with the task to enforce financial rules on behalf of the EU. This means interpreting the complicated regulations and ensuring that they are complied with by the local financial industry falls on regulators such as the UK’s Financial Conduct Authority and Prudential Regulation Authority. Both institutions have endured a significant brain drain in recent years as the demand for good financial compliance heads continues to soar.
Failing regulators In particular, a number of European countries have not implemented the AIFMD at all, and if they have, it’s far from complete implementation. According to the Alternative Investment Management Association, this lack of regulatory homogeny in Europe is hindering managers’ ability to do business and means that investors in certain countries may be prevented from accessing alternative investment funds. Furthermore, with many managers facing delays in being authorised by their national regulators firms are unable to conduct marketing campaigns and reach investors in certain countries.
Problematically, the differing adoption of AIFMD across Europe has created uncertainty over how some measures are being interpreted and applied in the different state. This has left certain key relationships between managers and service providers in a state of flux, AIMA told World Finance.
“Unfortunately, like with many pieces of regulatory reform we have seen negotiated and applied in recent past, AIFMD implementation has proven to be more complex than originally expected, not only for the industry but also for the regulatory community. We are heartened to see that European policymakers are starting to recognise that core reform measures need more time to be put in practice and that more generous transposition deadlines are being considered,” said AIMA CEO Jack Inglis.
In this respect, the BNY Mellon survey highlights that a significant proportion of managers will have work left to complete when it comes to key elements of the AIFMD regulations. For example, 31 percent still need to implement risk and control systems, 36 percent have yet to update fund documentation, and 38 percent have yet to appoint a depository. All these elements are crucial for AIFMD compliance and with regulators failing to give timely approval, as well as firms failing to live up to approval requirements, the overall consensus is that alternative fund managers across Europe are falling seriously behind on regulatory compliance.
What’s more, regulatory reporting templates are still being finalised, despite reporting requirements due to take effect in January 2015. This leaves managers with little time to build out their IT systems, while a lack of consistency between reporting requirements in different European countries would push compliance costs higher, especially for non-EU managers seeking to market under the respective private placement regimes. With further, related regulation looming, this is not the time to be lax, yet firms are battling to keep up with costs and finding the resources necessary.
Staggering costs When AIFMFD was finalised by EU regulators, estimates suggested that it would cost every firm between £300,000 and £1m to correspond with the rules and adopt the new regulations. What has become apparent since is that the costs are far outweighing the initial estimates, as well as the benefits of the regulation. In particular, hedge fund managers and other alternative fund firms say that regulatory reporting, followed by risk and compliance reporting have incurred the greatest one-off costs. They will also continue to do so for years to come, as these two areas are expected to account for the majority of on-going costs associated with AIFMD compliance.
“The economic impact assessments produced by the European Commission are notable for their lack of empirical evidence on the impacts of the AIFMD. Deloitte published a survey of UK based asset managers which found that nearly three quarters of respondents viewed the AIFMD as a threat to their business and more than two thirds suggested that the AIFMD will reduce the competitiveness of the industry in Europe and the AIFMD will lead to fewer non-EU managers operating in the EU. The overall asset management industry has an annual impact of €102.6bn and 510,000 jobs across Europe. If Europe lost its competitive advantage in fund management because of the AIFMD, around €21.5bn and 107,100 jobs would be at risk from the regulation,” the New Direction Foundation said in a recent Red Tape Watch report on EU regulation.
The increased costs to fulfil the regulatory requirements around AIFMD in some cases looks set to fall onto individual funds, impacting total expense ratios particularly. Every ninth fund manager even said they now expect costs to be passed on to the fund in full, with a third saying they will pass on some of the costs. Consequently, fund managers are now bracing themselves for higher-than-expected levels of cost and complexity when it comes to meeting requirements around the UCITS V regulation, which essentially aligns the UCITS regulatory framework with certain aspects of AIFMD and is expected to be transposed into local law in 2016.
Benefits and implications “The continuing challenge for managers will be to attract new inflows of money into their funds – but AIFMD’s impact is significant and causing some funds to question the longer-term feasibility of their business models. We are witnessing a step-change taking place within the industry, which will have far reaching consequences for funds and investors alike,” said Hani Kablawi, Head of Asset Servicing for Europe, Middle East & Africa at BNY Mellon.
Looking forward to the UCITS V Directive, fund managers are now growing increasingly concerned that the UCITS V implementation costs will exceed original expectations, and that compliance will be more complex than anticipated, on the back of AIFMD’s complicated and costly enactment. To this end, AIFMD will also have other implications. Investors will now have less choice between investment products, as a third of fund managers have said that they plan to merge or close funds as the costs of compliance for each individual product becomes too much to bear.
“With UCITS V pending and expected to be even more far-reaching in scope, now is the time for fund managers to start planning and to identify the lessons learned from AIFMD that can then be applied as they look to successfully navigate the changes that will bring around depositary functions, remuneration and administrative sanctions,” said Kablawi.
The BNY Mellon survey revealed that many fund managers are questioning whether AIFMD will even turn out to be beneficial to their organisation. A large part of the industry still maintains that the benefits are hard to gage and that regulators will be the primary group to benefit from the regulation – despite AIFMD being implemented in order to create a more transparent and less risky industry, for fund managers and investors alike. That said, AIFMD is one of the biggest pieces of EU regulation to have been implemented post-crisis and it’s less than impressive enactment, may be a stark indicator of what awaits the finance industry in coming years when the likes of MiFID II, Solvency II and UCITS V roll out.
Already an accommodating climate for international businesses seeking a European base of operations, policymakers in Cyprus are not content to rest on their laurels and have opted instead to improve and expand upon opportunities that lie ahead. Ranked 39th of 189 economies in the World Bank’s Doing Business 2014 report, and 16th out of the EU28, Cyprus enjoys a proven reputation as an international centre of excellence and boasts the necessary expertise to support key drivers of both the national and regional economy.
A member of the EU since 2004 and the eurozone since 2008, Cyprus has swiftly made a name for itself as a major trading hub and a choice destination for international businesses and investors looking for opportunities in Europe. Strategically situated at the crossroads of Europe, Asia and Africa, the small yet dynamic island nation has a rich and sophisticated business culture, with access to more than 500 million EU citizens.
The country also remains one of the region’s most attractive FDI destinations, and although the appetite for investment has been affected by the economic downturn in recent years, the government has taken measures to restore enthusiasm among investors and boost the country’s economic credentials. Seeing recent global and domestic challenges not as hurdles, but as opportunities to reassess and refocus on core and emerging strengths, Cyprus has come to be seen as a key constituent of the European recovery and an example of what can be achieved with a new model in place.
Increasing competitiveness
The measures that have been already announced include favourable tax incentives for existing or new companies doing business in Cyprus, fast-tracking of permits for large projects and tackling bureaucracy. These are expected to positively supplement efforts to increase Cyprus’ competitiveness and create a more effective and business-friendly environment. Cyprus is a highly competitive centre for international businesses, offering a platform for operations and a preferential access to markets like Europe, Russia, China, India and Asia.
The country’s established sectors, such as tourism, professional services and shipping, are playing a key role in driving economic growth. What is perhaps more important, however, is that the island goes further still in redesigning its economic strategy, by developing additional business sectors with high-added-value and rich investment potential – such as telecommunications, renewable energy, alternative tourism, health, innovation and technology.
The emergence of the hydrocarbons sector, therefore, is an important development for the country, in that it signals a more diverse future for the Cypriot economy and a surge in investment interest. By developing newfound natural gas deposits in the country’s exclusive economic zone, Cyprus hopes soon to cement its status as a major distribution hub in the eastern Mediterranean by capitalising on its sizeable reserves, strategic location and accommodating energy policy.
Cyprus is a highly competitive centre for international businesses, offering a platform for operations and a preferential access to markets like Europe, Russia, China, India and Asia
With a highly educated workforce and a burgeoning investment climate, Cyprus’ diversified; open-market economy offers a host of opportunities for individuals and organisations choosing to reside there. For one, the country’s EU and OECD-approved tax system offers one of the lowest corporate tax rates in Europe at 12.5 percent, and the country’s individual tax rate, at between five and 35 percent, is among the continent’s most competitive, again underlining Cyprus’ accommodating business climate.
Closely in keeping with the island’s tax advantages is a highly successful professional services sector, founded on the country’s well-educated and multi-lingual workforce. Owing to years of impressive performance in the field, Cyprus has cemented its status as a leading provider of accounting, auditing, management consultancy, taxation, financial advisory, administration and legal services in the continent. Notably, the Institute of Chartered Accountants in England and Wales, and the Chartered Institute of Management Accountants, have chosen Cyprus as the first country in the world to train UK Chartered and CIMA accountants outside the UK, as well as to organise the training of UK Certified Accountants on the island.
Untapped potential
The country’s untapped potential also extends to financial services, given that the island stands at the gateway between European and MENA financial markets. The sector consists of a number of insurance and financial intermediation companies specialised in various fields such as investment funds, international trusts and fiduciary, as well as companies offering advisory services and their expertise in special-license businesses. Cyprus is fast becoming one of Europe’s foremost investment centres, with an accommodating legislative and regulatory environment to suit all manner of investment firms.
Aware of the nation’s burgeoning investment climate and increasing attractiveness for businesses, policymakers have stepped in to boost the country’s prospects further still. By accelerating a number of reforms and creating a pro-business environment for individuals and organisations, the level of FDI looks certain to rise in the years ahead.
In an increasingly globalised economy, companies and individuals are tirelessly seeking a base that might allow them vital edge over their competition. And as Cyprus continues to foster what strengths exist already and explore new and untapped opportunities, few can ignore the emergence of the country as a huge investment hub and a fertile business environment.
To assess the current economic performance of Sri Lanka, one must first look to the past. Indeed, the peace dividend and political stability achieved by Sri Lanka since ending its internal conflict in May 2009, paved the way for accelerated GDP growth in excess of six percent per annum during the last four years, which rose to 7.3 percent in 2013. Faster growth in sectors including the wholesale and retail trade, hotels and restaurants, transport, banking, insurance, real estate, and service sectors provided the momentum for such economic growth.
The country’s inflation rate showed a declining trend in 2013 as a result of relaxed monetary policies during the year. This process started in mid-December 2012 by cutting policy rates by 0.25 percent, which continued in May and October 2013, with further rate cuts of 0.50 percent. Lending rates of commercial banks also declined, noticeably in 2013, but the year-on-year credit growth decreased to 8.8 percent in 2013 from 17.4 percent in December 2012.
After the sharp depreciation of the Sri Lankan rupee in the early months of 2012, when the exchange rate was allowed to float, the currency fought back to become broadly stable against the US dollar in 2013. Foreign investors exiting from emerging markets in mid-2013 had only a modest and temporary effect on the exchange rate. In 2013, the rupee depreciated against the dollar by only 1.9 percent.
Overall, 2013 proved a very positive year for the Sri Lankan economy. Exports and imports both posted positive growth in the second half of the year, following declines a year earlier. Export earnings increased by 6.3 percent to $10.4bn, reflecting a gradual recovery of demand in partner countries, with garment exports increasing by 13 percent and agricultural exports, mostly tea, increasing by 10.7 percent.
The banking sector will require a renewed vision in the run-up to 2016, to sustain the positive economic outlook
Imports, on the other hand, declined by 6.2 percent during 2013 to $18bn. This was a result of less demand for oil, policy measures adopted in 2012 to rationalise imports and subdued commodity prices in international markets. The bulk of the drop was due to the reduced imports of transport equipment by 32.7 percent and fuel by 14.7 percent. The trade deficit fell to 11.4 percent of the GDP, a marked decline of 4.4 percent from 2012.
The tourism boom continued in 2013 with the number of visitors growing by 27 percent to reach 1.2 million and earnings expanding by 35 percent to $1.4bn.In addition, tourist arrivals from China and Russia increased significantly, while western Europe continued to be a large source of visitors.
Workers’ remittances expanded by 13 percent to $6.8bn. The main factors that boosted remittance inflows were the increased labour migration in professional and skilled categories, the expansion of formal channels for remitting money and the introduction of swift web-based money transfer systems.
A renewed vision Road Map 2014 – which introduced the Central Bank of Sri Lanka’s (CBSL) monetary and financial sector policies for 2014 and beyond – highlighted that the banking sector will require a renewed vision in the run-up to 2016, to sustain the positive economic outlook and ensure greater financial system stability.
As part of this vision, the CBSL expects that at least five Sri Lankan banks will have assets in excess of LKR1trn ($7.68bn) by 2016, with a strong regional presence. It also envisages that there will be fewer banks as a result of mergers and acquisitions and anticipates that there will be a large development bank to provide a significant impetus to the nation’s development activities. The CBSL assures that its policies “will be forward looking, designed to balance potential worldwide policies and adjust to sudden volatilities”.
In keeping with the CBSL’s vision, banks with assets of less than LKR100bn ($768m) are expected to grow beyond this limit, either through organic growth, consolidation or mergers with other banks or non-banking financial companies over a reasonable time frame. The island’s two main development banks, the NDB and DFCC, have been in preliminary discussions to merge their operations, in the light of creating a robust entity that could provide a broader impetus to development banking activities.
Recently, the banking industry has been showing remarkable growth. As a result several banks were successful in 2013 in raising dollar funds from international capital markets at very attractive interest rates, reflecting growing investor confidence in the industry. With these funds, the banking sector was able to diversify the sources of funding and to channel more credit to the needy sectors of the economy.
Sampath Bank has been focusing on both traditional branch banking and technology driven banking for customers. Though 2013 posed many challenges, the bank was successful in overcoming them strategically. The bank’s consistent focus on customer-convenient banking has been the key competitive advantage.
Credit growth
The industry’s loan growth moderated in 2013, after recording high growth rates since 2009. A drop in gold loans due to falling gold prices further aggravated the situation. Nevertheless, Sampath Bank managed to successfully penetrate the market and record high credit growth (see Fig. 1). The bank was successful because it was able to re-channel funds released from gold loans to other products such as overdrafts, credit cards and leasing, while also introducing structured financial solutions tailor-made to address customer needs at competitive pricing.
Source: Sampath Bank
A popular product among the low-income groups, gold loans accounted for 24 percent of Sampath Bank’s lending portfolio-mix. When hit by the falling gold prices, the bank was able to adopt new strategies such as reducing the loan to value ratio from 80 percent to 65 percent, discontinuing the practice of granting extensions to customers on part payment of capital/interest and expediting the auctioning process on defaulted articles. An impairment provision of LKR3.2bn ($24m), which was the highest among peer banks, was made to cover the entire gold loans portfolio and exposure to the product was reduced from 24 percent to 19 percent by the end of 2013.
The bank also had the highest net interest income growth among its peers in 2013 (see Fig. 1). This success was due to the several factors, including high credit growth and safeguarding net interest margins, despite downward market pressure. In addition, low non-performing assets in all lending products other than in gold loans, timely re-pricing of products, conversion of the bulk of off-shore banking foreign currency reserves to local LKR to reap the benefit of higher interest rates also helped to achieve the NII growth referred to above.
New branch model
Sampath opened 101 new branches between 2009 and 2013, in order to expand the customer reach. This was done by adopting a low cost branch model, in that the branches operated only as deposit collecting and credit marketing centres, with an initial staff of six to seven. All credit decisions were centralised in the hands of well-trained officers at regional offices. This model ensured superior credit quality as well as low cost operations at branches, expediting the break-even process of new branches. Consequently, the number of loss making branches reduced from 37 to nine during 2013.
Overall, 2013 proved a very positive year for the Sri Lankan economy. Exports and imports both posted positive growth in the second half of the year
The bank launched the Sampath mobile app in 2013, enabling the customers to do transactions through their smart phones and tablets using unique and versatile features free of charge. This software, which can be downloaded from the Apple and Google Play stores, has been downloaded more than 10,000 times to date.
The bank has also enhanced its internet banking products – by linking card system and treasury systems to Sampath Vishwa and further implemented a process improvement. Consequently, it was possible to increase the internet business volume and value by 40 percent and 50 percent respectively.
Sampath introduced the first ever cardless ATM in the country in 2013, which, as the name suggests, allows customer to use the ATM without a card. Customers are authenticated through the national identity card number and unique pin. The bank also installed its foreign currency ATMs at several key tourist locations in Sri Lanka. This ATM allows the users, including non-customers, to convert foreign currency to LKR. Further, the interbank ATM network was expanded to reach 1,420 ATMs, the largest network in the country.
The bank raised $100 from a syndicated loan through HSBC. Initially, HSBC was engaged to raise $45m, but due to growing confidence of the foreign investors in the performance of Sampath Bank, the syndicated loan was increased to $100m. Furthermore, the bank was able to raise another $20m to finance its renewable energy projects from Proparco, the private sector arm of the French Development Agency (AFD).
The bank also raised LKR5bn ($38.4m) medium-term debt capital funds in the local market by way of issuing, unsecured, subordinated, redeemable, five-year debentures, also strengthening its Tier II capital.
As a systemically important bank in the country, Sampath looks forward to continuing its tradition of setting industry standards through technological innovations and customer service.
Access to finance ranks high on the list of concerns for emerging markets, and it often limits the ability of individuals and businesses – SMEs in particular – to capitalise on available opportunities. In Lebanon, for example, access to the formal financial system is problematic, though with the help of the banking sector, the country is looking to increase penetration and, by doing so, realise a more sustainable growth potential.
Headquartered in Beirut, BankMed has 61 branches spanning all corners of the country. The bank offers a wide range of distinctive services and innovative products that meet the evolving business and individual needs of its diverse client base. The bank continues to rack up impressive achievements, and in 2014 this success is best seen in the growth of its net income, total assets, and in its deposits and loans portfolios. During the first half of 2014, BankMed’s net income grew by 8.1 percent compared to the same period last year, reaching $69.9m. The bank’s total assets also stood at $14.3bn, representing a 3.6 percent year-on-year rise, while deposits grew by 11.6 percent to reach $10.7bn by end-June 2014, and the loan portfolio similarly expanded by 9.8 percent to reach $4.6bn.
Diversity in operations
After the civil war in the 1990s, BankMed played a dynamic role in the resurgence of the Lebanese economy and in funding the reconstruction of the country. It actively participated in financing commercial, industrial, and contracting sectors, hence promoting their growth and earning a prime position as a market leader in corporate banking. Nonetheless, understanding the importance of keeping pace with a fast changing financial landscape, BankMed opted to actively expand its banking services to also include retail, private, commercial, investment, and brokerage services. Thanks to its distinctive customer-oriented culture – which delivers speed in processing and responding to client requests – the bank has been able to successfully cater to individuals, large corporate clients, and to SMEs.
SMEs constitute the bulk of Lebanon’s enterprises and a cornerstone of its economy. However, they have been unable to grow at full potential due to limited financing access
In corporate banking, BankMed has continued to hold one of the largest commercial lending portfolios in the Lebanese market, covering top tier corporate clients across all industry lines. While its traditional focus on the corporate sector has endowed the bank with a robust business model and a history of corporate transaction structuring, the bank has embarked on various initiatives aimed to enhance other essential business lines. In 2013, and in spite of the local instability and regional turmoil, its commercial lending portfolio witnessed a 6.5 percent growth.
The bank has managed to attract new clients and expand its customer base, especially with the establishment of a dedicated International Banking Business Unit, created to better serve its customers outside Lebanon. In recent years, BankMed has enhanced its trade finance arm, given increasing demand. With its strong network of banking partners all with reputable names and services, it has been able to successfully expand its trade finance activities and explore new avenues of opportunities.
Its retail banking business has also experienced significant growth in recent years, with the continuous introduction of unique retail products and services. The bank has enhanced its delivery channels by adding new branches, entering new markets, and acquiring a full range of state-of-the-art remote delivery channels. Furthermore, new products and services have been introduced, tailor-made to customers’ individual needs, including new loyalty cards, housing loans services, as well as mobile banking solutions.
On the investment front, BankMed’s Treasury has offered its clients access to local, regional, and international markets through its extensive and solid relationships with brokers and market makers around the world. Treasury has been successfully diversifying its liquidity profile, minimising counterparty and sovereign risk while enhancing profitability. Available 24 hours a day, brokerage services have been handled by the bank’s wholly owned brokerage subsidiary, MedSecurities. MedSecurities managed to end the very challenging 2013 by recording a significant increase in net income of 42 percent, with the introduction of new investment products and services, and expanding its client base.
Recently, BankMed has geared its efforts towards SME businesses, an increasingly important segment of the economy. SMEs constitute the bulk of Lebanon’s enterprises and a cornerstone of its economy. However, they have been unable to grow at full potential due to limited financing access. In fact, the SME sector in particular remains largely under-banked in Lebanon, and BankMed is therefore actively working on capturing a large part of that market.
The sizeable SME division at the bank offers products and services through relationship managers and locations spread all over Lebanon. Given its growing concern with sustainable community development, BankMed established Emkan Finance SAL in June 2011; a financial institution licensed by the Central Bank of Lebanon. For the past two years, Emkan Finance has provided over $90m worth of microloans for the economically active low-income earners in Lebanon, and has successfully extended microfinance services to about 45,000 borrowers.
Additionally, as a leading financial institution dedicated to the advancement of the community, BankMed has ingrained corporate social responsibility in the way the bank has chosen to do its business. BankMed’s “Happy Planet” programme, the frontrunner of the bank’s CSR commitments, has completed its fifth successful year in 2013. The programme, which includes funding of specific environmental programmes, has undertaken various projects in collaboration with government departments and ministries, NGOs and educational organisations, to preserve Lebanon’s natural environment. By leading the way in its green initiatives to preserve Lebanon’s environment, the bank is making a commitment to creating a better Lebanon for tomorrow’s generations.
International presence
BankMed has pursued a prudent expansion policy, establishing a presence in selected markets with sustainable growth potential. Its private bank in Switzerland is engaged in asset management and advisory wealth management services, known as BankMed (Suisse). This is backed by a professional management and investment team with solid experience in the private banking arena, and currently provides a full spectrum of investment products.
In 2006, BankMed teamed up with Arab Bank to acquire a commercial bank in Turkey, and rebranded it as Turkland Bank, better known as T-Bank. The bank is one of Turkey’s fastest growing niche banks, specialising in providing premium banking services to the commercial business sector as well as to SMEs through its 32 branches spanning Turkey’s most prominent business hubs. The strong ties it has established with its shareholder banks in the MENA region have allowed T-Bank to create a significant network synergy, which is enhanced by Turkey’s increasing trade relations with its neighbours (see Fig. 1).
T-Bank has implemented an ambitious growth strategy over the last few years, allowing it to proceed its operations with greater efficiency. During the first half of 2014, T-Bank achieved stellar results, with double-digit growth since December 2013. Total deposits increased by 10 percent and total loans grew by more than 12 percent. Moving forward, T-Bank will continue to grow its portfolio and expand its presence by targeting all components of the supply chain.
Source: European Commission
BankMed has also expanded its overseas activities to investment banking. Incorporated as a closed joint stock company in the Kingdom of Saudi Arabia in December 2007, and regulated by the Saudi Capital Market Authority (CMA), SaudiMed Investment Company has been an important addition to BankMed’s regional presence. It has acted as a financial intermediary offering investment and advisory services in the Kingdom of Saudi Arabia, and SaudiMed continues to focus on building its core competency business line of corporate finance advisory, taking into consideration new market realities and conditions for both clients and investors.
The bank also enjoys a presence in Cyprus via a branch in Limassol. BankMed Cyprus is both geographically close to Lebanon and is within the EU, providing BankMed with a strategic location from which to serve international and local customers. Additionally, based on its extensive experience and in line with its plans for further regional expansion, BankMed extended its international presence to Iraq in 2012. The bank inaugurated two branches in Baghdad and Erbil, and intends to start operations on its third branch in Basra in the fourth quarter of 2014.
More recently, BankMed has applied for two licenses from the DIFC (Dubai International Financial Centre) to operate a brokerage and a corporate business. This step will allow the bank to serve customers, who are involved across the MENA region – in particular in the Gulf – since Dubai has grown to become the financial and trade hub of the Middle East.
On the whole, and in spite of the recent global and regional instabilities, BankMed has been able to grow its business, expanding and strengthening its regional and international presence. The growth seen in recent years, coupled with its solid financial results, has served as an indication of the bank’s robust performance. Moving forward, its strategy is focussed on increasing its client base and taking advantage of new innovations and technologies that will enable it to better serve its customers.
I have been a tax advisor now for 33 years. Our profession led a low-key, well-respected existence. In the last 18 months, this has changed and we have been repeatedly in the national press. The first revelations concerned the comedian, Jimmy Carr, and subsequently, such well-known names as members of Take That, Anne Robinson and Michael Caine have had their tax affairs publicised as allegedly being involved with tax avoidance schemes.
While artificial tax avoidance schemes are no longer viable for the majority, traditional tax planning has returned to the forefront. Sensible planning based on sound commercial principles is still possible to follow, while avoiding some of the serious tax pitfalls. As a result of the press attention, now tax planning is seen by many as anything from distasteful to immoral – or even worse. HM Revenue & Customs (HMRC) has taken action to recoup lost tax and strengthen its armoury against companies who implement tax avoidance schemes. Some see that as a sensible reaction, while others view it as an unwarranted invasion of the rights of individuals.
Drawing the line As far back as 1936, Lord Tomlin, in a case involving the Duke of Westminster, stated: “Every man is entitled if he can to order his affairs so that the tax…is less than it otherwise would be.” Many continue to regard this as a fundamental right. Tax avoidance – as opposed to evasion, which is a non-disclosure of income – is perfectly legal. However, the schemes which have been prevalent for the last few years have focussed on whether they should be permitted, particularly those which contain artificial elements.
Tax avoidance – as opposed to evasion, which is a non-disclosure of income – is perfectly legal
In the 1990s, a popular area of avoidance was National Insurance Contributions (NICs). Schemes were devised to pay salaries in gold bullion, platinum sponge and other commodities to take advantage of a then loophole that non-cash salary was subject to income tax but not NICs. These schemes were finally blocked by the late 1990s. However, that led to an unintended consequence. Perhaps the strangest unintended consequence I know about arose from two new experimental rules in the 1994 Caribbean Cup football tournament.
Grenada had a superior goal difference before a group match against Barbados, who needed to win by two goals to progress to the finals. However, the new rules resulted in both teams trying to score own goals in the final minutes of the match! In the tax world, the unintended consequence of solving the NIC issue was that Employee Benefit Trusts (EBT) were developed which would save not only NICs but also the income tax. A company would make payments to the trust, which would then lend the funds to the individuals. Loans are not an income so the recipients found themselves with cash, but not having suffered any form of tax. Subsequent changes to the law in 2005, 2007 and 2010 were effectively overcome by changes in the way in which EBTs were implemented, such as Employer Financed Retirement Benefits Schemes (EFRBS) taking the place of EBTs.
In another area, an unintended consequence arose when statutory tax relief for investments in British films was withdrawn in 2007. By then, some high earners had grown accustomed to deferring their income tax bills by making such investments. To satisfy their needs, new structures were developed for investments in films, computer technology, entertainment productions and media, artists and property development. The normal model has been for a client to invest cash of, say, £100,000 in an activity. The promoters would then facilitate borrowing for the client to gear this up to, say, £500,000 but the funds borrowed would never leave the control of the promoters, and would often go round in a circle to a company associated with the lender. That circularity has turned out to be a weakness when the strategies have been judged.
A short time after making the investment, accounts would be drawn up claiming a substantial loss because of the uncertain outcome of the investment or by claiming specific tax reliefs. The loss of, say, £450,000, would be available to offset “sideways” against the client’s other income. If he or she were a 40 percent taxpayer, the tax benefit would be £180,000, all for an outlay of £100,000 plus fees. Other forms of tax avoidance involve a client entering into two or more linked transactions. One is aimed at making a profit which is not taxable and another in creating a loss which can be offset sideways against another income. Taking the transactions together, there is no real loss, other than fees.
Tax avoidance has now been a vibrant ‘industry’ (as some call it) for many years, which has put a strain on the Exchequer. The Times reported that one tax scheme called Liberty attracted £1.2bn of sheltered income until it was stopped in 2008. Another scheme promoter, Icebreaker, allegedly attracted over £300m. OneE Tax was so successful that it appeared in the fast track lists in The Sunday Timesin 2011 and 2012 as one of the 100 fastest-growing private companies in the UK. Taxpayers have grown used to the idea that they needn’t pay all the tax otherwise due. Their accountants and/or solicitors have received substantial referral commissions. The scheme providers and their barristers and other advisers have made large amounts of fee income.
Changes to the system In the meantime, HMRC has dragged its feet over taking these schemes to the tribunal. It has been aware of them for several years because of the need for promoters to disclose them under the Disclosure of Tax Avoidance Schemes (DoTAS) rules. After disclosure however, all that HMRC has done in most cases is to issue standard letters asking for information and then leave it.
It can take HMRC three years or more before it starts a dialogue to consider the technical merits of a scheme. It normally takes six years or more to take a test case to the tribunal. During that period, the taxpayer will hold on to the funds he has saved by not paying the tax. Tax is only payable if and when HMRC win an appeal at the tribunal and, even then, there can be further deferral by appeals in the courts.
So what has changed? First, in 2013 a general anti-abuse rule was brought onto the statute books. This aims to counter tax schemes, which are seen to be against the intention of the law even if they have circumvented it in some way. It is early days yet, but I am not aware of any occasion where that rule has been invoked. This year, HMRC have been given a new weapon to issue notices to taxpayers who have been involved with a wide variety of schemes, demanding payment of the tax saved – irrespective of the technical merits of the schemes.
However, there is no mechanism for any independent appeal against the notices. When any of our clients receives one, we will commence a dialogue with HMRC to bring the outstanding issues to a head. If this is not done and HMRC has its hands on the tax, they will have no incentive to bring the case to the tribunal. We can also consider all the circumstances leading to a client implementing a scheme, including whether it might have been mis-sold.
On a separate tack, HMRC has been successful with some test cases before the tribunal. It has notched up four straight wins against schemes devised by one firm, NT Advisers. It has also won two tribunal cases against Icebreaker. Liberty will be before the tribunal in 2015. However, it is not all doom and gloom for taxpayers. HMRC have lost cases involving tax schemes against Glasgow Rangers, UBS and Deutsche Bank.
Taking all the negatives into account, anyone implementing tax avoidance schemes now will need to take risks and not be averse to the lengthy legal process. It needs to be remembered that HMRC will probably seek payment of the tax avoided up front. The taxpayer will then not have saved anything and will be due to pay fees in the hope that the scheme will be judged to be successful, in which case a tax repayment will then be due, but that is unlikely to be for many years.
It also needs to be considered that, more often than not, the judiciary is now sympathetic to HMRC and will look to find reasons to defeat schemes that are artificial. Very broadly, if a tax-geared plan involves artificial and/or un-commercial steps, then they will look at it very carefully and, at best, the outcome will be uncertain and probably expensive to obtain. For these reasons, such schemes are unlikely to have any mass appeal moving forward.
The Capital Requirements Directive IV, which has placed a cap on variable pay in the EU’s banking sector, is weakening many banks’ efforts to manage performance and risk through pay. Recent studies have shown that in an effort to remain competitive in attracting and retaining talented staff, large numbers of banks are increasing base salaries or using cash allowances as part of the pay mix. These allowances, however, cannot be performance-linked under the EBA’s definition of fixed compensation and this is skewing the market when it comes to retaining the best employees.
Since 2008, banks have made much progress structuring pay so that it allowed for appropriate consideration of risk-adjusted outcomes along with conduct and compliance behaviours over a multi-year timeframe. Essentially, banks have moved towards rewarding those who perform well under the current regulatory environment – thereby mitigating risk and fostering compliance.
A recent report by the financial consultancy Mercer, even said that organisations are continuously trying to strengthen the link between performance management and compensation, introducing individual risk-related factors in performance management and strengthening bonus-malus and clawback conditions.
This has resulted in more and more banks reducing or not paying deferred unvested awards when lower performance, non-compliance or misconduct occurs among employees. In 2012 alone, 62 percent of banks applied malus, with it being more prevalent among European banks compared to the US.
Interestingly, the majority of banks are reducing pay to individuals due to non-compliance or misconduct, while a far smaller portion of banks apply such malus as a reaction to poor performance. This has gone to show that banks are becoming more aware of the consequences and ensuing fines that non-compliance could lead to, rather than the costs of bad performance.
No longer rewarding performance
However, problematically the progress the banks have made in improving their pay practices over the last several years since the crisis is now being reversed to some extent with the impact of the CRD IV rules. In order to remain competitive, banks are shifting a significant portion of compensation into fixed, guaranteed pay, which reduces their ability to pay for performance and also to defer as much compensation subject to malus over a multi-year performance period. In some cases banks are even opting not to pay any upfront annual cash bonus at all, in light of the increases in fixed pay, and are shifting all variable compensation into multi-year deferral or long-term incentive arrangements.
The pay-cap puts increasing stress on banks to hike salaries on an overall basis in order to retain their staff and meet current industry remuneration standards
High-performing employees expect a salary comparable to their peers, but CRD IV restricts EU-headquartered banks in what they can pay in performance-related compensation. This has prompted more and more employees to act on offers from less-regulated and better-paying firms, as performance becomes less of a driver for remuneration among European banks.
In turn banks have been forced to look at other methods of making up the shortfall to prevent staff walking into the arms of less regulated competitors, such as hedge funds. An example of this has been cash allowances, which are a form of fixed compensation that do not generally require a corresponding increase in benefits costs as base salary increases do. However, both are forms of guaranteed cash with no variable link to performance, which is far from satisfactory from an employee standpoint.
Losing out
The drain of good employees aside, the pay-cap also puts increasing stress on banks to hike salaries on an overall basis in order to retain their staff and meet current industry remuneration standards. Now, a majority of banks are planning to increase cash allowances to compensate for the bonus cap for impacted risk-taking staff, as well as enhancing their broader employee value proposition beyond pay elements. In shifting variable compensation to fixed compensation, EU banks will be slashing variable pay such as bonuses, despite banks based outside of the EU still continuing with variable pay options. This could skew the market not only away from banks and to less-regulated financial services, but also to banks stemming from other geographic regions.
The remaining question is how will this shift from variable to fixed compensation impact the market dynamics for talent outside the EU between non-EU based banks and those based in the EU. Since banks based in the EU must apply the same cap rules to their risk-taking staff no matter where they are located in the world, fixed compensation could rise more broadly across other markets as well, leading to less pay for performance. As we’ve seen compliance heads flow out of regulators and into the private sector with the lure of better pay, it seems obvious that high-performing bank employees will do the same.
In general, financial services employees enjoy a mixture of fixed and variable compensation, with the latter largely related to performance. This has cultivated a competitive corporate culture within and between many financial firms. In public, this culture is often criticised for pushing employees to work obscene hours and for fostering cut-throat tactics between colleagues. However, this culture is also to some extent the backbone of our liberal economy and helps drive profits and ensure strong performance.
With the CRD IV rules, EU banks are prevented from rewarding such performance, have become less competitive and as a result, are losing some of their best employees in the process. Problematically, it has become apparent that the strongest employees typically have the experience needed in order to take managed risks. With banks losing out on this talent pool, compliance and risk management has become that much harder. And for Europe, this is a concerning development, as the fragile economy by no means is in a state where the best financial heads are expendable.
Viriyah Insurance PLC is already a market behemoth in its native Thailand and, with the launch of the AEC, is poised to take the next step into the wider world of the pan-Asian insurance market. World Finance speaks to Natdhanai Mankosol about how the insurer is staying abreast of trends in the industry.
World Finance: Thailand of course was recently triple B plus stable rated by Fitch, that’s a huge accomplishment for the sector as well as the region. Can you tell me, what does that do in terms of promoting your own goals in the insurance sector? Natdhanai Mankosol: For the insurance industry I think it feels, being rated, that we don’t have many many insurance companies to be rated there, because some companies in Thailand have been rated triple A, A, generally Thailand’s rating wouldn’t be worse than triple B positive. It’s getting that we have a society of insurers, and the OIC, the Office of Insurance Commission, are trying to get things better and we are expecting the revenue to grow more and more. It wouldn’t be effective in a negative way, so we are expecting that we will be getting better in the next few years?
[T]he Office of Insurance Commission, are trying to get things better and we are expecting the revenue to grow more and more
World Finance: Very interesting, now to continue that momentum, what do you think the government can do in terms of promoting the Thai insurance industry to international investors? Natdhanai Mankosol: The Thai insurance industry has been developing a lot. The Office of Insurance Commission has been trying to help the industry and all the businesses in the industry to get better. But the whole government doesn’t mean the OIC alone. The OIC has to work out with any other government sectors and other departments. So we’ve got a lot of limitations about the documents or the legislation, regulations. We are not harmonised nicely, so those departments have to work together to help to strengthen the business to grow better.
World Finance: Now of course between 2010 and 2014, Fitch rated the six ASEAN countries about 5.6 percent, whereas Thailand was rated between three and three and a half, comparatively we’re talking about a difference of a margin anywhere from two to 2.5 percent. Does that worry you at all? Natdhanai Mankosol: No, not really. We wouldn’t be worried about things that much because we have the AEC, that’s the ASEAN Economic Community. With the community, it’s just like the EU, everyone plays a role. One thing that our GDP didn’t grow that much because of the instability of the political issues and situations, and now we’ve got our new government, and everyone seems to be happy with the new government, we’re trying to get things better. So, everything is going to be more positive and Thailand has geographically located right in the middle of South East Asia, we’re likely to be the hub of the South East Asia. The government might need to reconsider more investment in the infrastructure of the country, and the technology and communication, communication is one of the most important things.
[W]e have the AEC, that’s the ASEAN Economic Community. With the community, it’s just like the EU, everyone plays a role
World Finance: Very exciting times it sounds like, so tell me, what is the next step ahead for The Viriyah Insurance? Natdhanai Mankosol:Viriyah Insurance is going to be investing more in terms of the technology and people. People nowadays have changed a lot of consumer behaviour, everything goes on the mobile. You’ll probably go and buy insurance or just look through your offer with your mobile phone, and when making a claim, you just contact the company using this technology, and even if you’ve had an accident and you just report it where you are, we could get your location, we could send our man right to where you are. Another thing that we try to train and have more skills and other things, in order to run the business in the back office or in the front officer, to get more customer satisfaction and lower the complaints, and others.
World Finance: It sounds like you play an important role in the local insurance industry. Natdhanai thank you so much for joining me today.
November 2014 marks 25 years since the fall of the Berlin Wall. But was the world-changing event the ultimate triumph of capitalism and liberal democracy that commentators would have us believe? World Finance speaks to economist Liam Halligan to discuss.
World Finance: Well Liam, setting the politics to one side, what were the economic milestones immediately leading up to the fall of the wall? Liam Halligan: A collapse in the oil price in the mid-80s; the Soviet edifice, the evil empire, came under huge economic pressure; the big inconsistencies and incoherence of central planning was laid bare. And like many empires before it, the Soviet Union collapsed.
People say the fall of the Berlin Wall was difficult to forecast; it wasn’t really. By mid-1989 of course, the wall had been breached in Hungary; you had Gorbachov making serious attempts to ingratiate himself with the West, and so on. You had financial aid going to the Soviet Union from the western world by then.
And then of course the wall came down, to be followed very soon afterwards by German reunification, with all the expense that that imposed on folk in West Germany as Germany was once again reunited.
World Finance: Well how subtle would you say the economic and business divide between west Germany and the east is today? What figures are we looking at? Liam Halligan:We’ve seen enormous investment by former West Germany in east Germany. The early days of reunification were very difficult for both sides. Not just because West German consumers had to endure heavy taxes to pay for reunification, but also because folk in the east of course, their Eastern Marks became worthless.
So throughout the early and mid-90s, Germany, believe it or not, was the sick man of Europe! It was a very, very big adjustment. That’s one reason why German voters now are so impatient when they look at the struggling countries on the fringe of the eurozone, the so-called ‘Club-Med countries’. They think, ‘If we can adjust to what we had to endure, then you can adjust as well.’
People say the fall of the Berlin Wall was difficult to forecast; it wasn’t really
The German economy in general has used reunification. East Germany has acted like a bridgehead to the former Soviet Union. And that’s one reason why Germany has so successfully exploited the collapse of communism. You now have enormous German inward investment and trade links – not just with Poland, but also with Russia itself. And that’s a big reason why it strikes me that Germany’s been able to continue its very strong export performance, and why in the end, as a result of reunification and the shift east complementing its big trade links with the rest of Europe, the German economy is now among the most future-proofed – if you like – of any of the big economies of the world.
World Finance: Well economically speaking, over the last 25 years, how much did west Germany have to foot the bill for the east? Liam Halligan:Something like eight to 10 percent of west German GDP. But of course, the whole trajectory of growth since then, since that difficult adjustment of the early- and mid-90s has been much greater.
World Finance: So comparatively speaking, how have other former Soviet states faired? Liam Halligan:Kazakh GDP back in 1999 was about one fifth of US levels. It’s now two fifths of US levels.
Polish GDP back in 1999 was about a quarter of US levels per head. It’s now almost a third.
The numbers are similar for Russia. So you have seen very, very considerable catch-up of these post-communist economies.
While the talk on everybody’s lips then was, ‘Oh, this is the end of history, this is going to be the triumph of western democracy and liberal economics,’ it hasn’t actually turned out like that. Because many of these post-communist countries have taken their own path. Some involving democracy to various degrees; some not. Some involving very stripped-down, liberalised, almost Hayekian economies; some involving much more state intervention.
And many of them have enjoyed relative economic success. You know, there is a sense of doom and gloom and missed opportunities pervading the mainstream western view of many of these countries post-communism. But that really isn’t right, because hundreds of millions of people now have far, far, far more economic freedom now than they ever had.
World Finance: Well you might say that the Thatcher-Reagan economic coalition was a direct and primary construct in dismantling the wall. How far would you agree with this over the argument that it was the primary fault of Soviet leaders misunderstanding basic economic policy? Liam Halligan: Those two leaders, whatever you may think of them, remain revered across a range of opinion in the post-communist world to this day.
But I think what really caused the Soviet economies to collapse is that central planning just doesn’t work. It goes completely against human nature, it has to rely on oppression, thought control, the dead hand of a gargantuan state. And if like me you’ve lived in these parts of the world quite a lot, and had many conversations with people who worked, and tried to eke out a livelihood under those circumstances. It’s totally clear that in the end it would just collapse, because it doesn’t produce anything really of meaningful economic value.
I think what really caused the Soviet economies to collapse is that central planning just doesn’t work
Many of the countries we characterise as state-dominated actually have far, far healthier fiscal balance sheets than we do here in the west; far, far lower government debts, much more reserves; and also lower tax rates. And it’s clear to me that you don’t see much evidence of it in the western media, but there is an enormous amount of business going on in eastern Europe, in Russia, across the post-communist world. And we should spend a lot more time engaging with these countries.
World Finance: Now Helmut Kohl was the German Chancellor at the time of the fall of the Berlin Wall, and in subsequent years built up modern-day Germany. So, how successful do you think he was, and his successors have been? Liam Halligan: Germany is one of the few large economies in the world that has considerable strength going forward. Of course it has superb export performance, a very high degree of education and vocational training, which is the envy of the rest of the western world.
World Finance: So despite it being 25 years on, and the economy is said to be weakening, you don’t think Germany has had its day? Liam Halligan:In another 25 years after the fall of the Berlin Wall, it’s almost certain that Germany will be trading a lot more with the countries that aren’t currently in the EU, than the countries that are currently in the EU.
Germany’s whole commercial centre of gravity is shifting east, towards China, towards Russia, and that’s one of the, sort of, big unspoken truths of European politics at the moment.
Of course Germany has to act like a good European, has to act as if the thing it cares about most is the EU – that’s certainly what the politicians say, and maybe even some of them believe it. But as far as Germany’s industrialists are concerned, they’re increasingly looking east. And as the memory of the fall of the Berlin Wall slips ever further into the past, that trend will continue.
For more than a decade, Islamic finance has enjoyed a rapid rise in its use across the world. Sharia compliant methods of financing have traditionally been popular throughout Muslim-dominated regions, however more recently they are also being adopted in traditionally western-style financial institutions.
Many of the banks that are now starting to offer these types of finance have well-established technological processes that work in traditional forms of banking. Converting towards a sharia-compliant system is both arduous and complicated. There are a number of companies, however, that are leading the way in developing software for financial institutions that seamlessly provides an easy and customisable Islamic banking operation.
One such firm, International Turnkey Systems (ITS), has been operating in this sector for more than 30 years and has developed a reputation as a market leader for providing efficient, customisable and secure software to Islamic banking operators.
World Finance spoke to the company’s Group Product Director, Ismail Ali, about how it has become such a big player in the industry and why Islamic banking is set to grow even more in the years to come.
What is driving the spectacular growth of the global Islamic banking industry?
There are many reasons for this growth. One of them is the demography in the region, where more than 90 percent of the population is Muslim. Also, Islamic banking has been showing higher growth rates over the last 10 to 15 years. It has also proven attractive because it has reduced the inflation rate and many economies in this region have a problem with controlling inflation. Another thing that Islamic banking has helped do is to attract foreign direct investment.
Each country has its own way of developing its economy. In Kuwait, Islamic banking has been established for more than 30 years
As Islamic banking grows in popularity, how is the industry responding in terms of technological innovation?
From a technology point of view, there are many providers that claim to have an Islamic banking facility. However, in my view, there are only a few companies that actually do provide Islamic banking-focused technology. By that I mean software that isn’t just conventional banking technology that has a little tweak to accommodate some of the Islamic banking processes.
Having said that, the market is still in high demand and there are many areas in Islamic banking that are untapped. Most of the banks are using standard systems. Keeping in mind that Islamic banking operations are more complicated than their conventional counterparts, migrating systems generally requires a lot of changes and customisation to the organisations’ existing technology.
What are some of the biggest challenges facing the Islamic banking industry today?
For the industry in general, one of the main challenges is the standardisation of regulations. Until recently, regulations for Islamic banking have been scattered and most of the banks have their own sharia component that reflects their interpretation of Islamic economics. One of the main challenges is reaching a better standardisation – globally – of regulations. It will help to boost the growth rate of the industry.
There are many efforts that have been made. There are many organisations that have been developing Islamic banking standards from a sharia point of view, such as ISFB in Malaysia. However, all they have developed is recommendations and guidelines, rather than something mandatory for the banks to follow. From an operational point of view there is nothing set in stone that requires banks to follow such guidelines.
The other challenge is human resources and the ‘know-how’ of the industry. Most of the expert bankers are used to dealing with the conventional model. The Islamic banking industry needs a mind-shift in its philosophy. Around 80 percent of the resources utilised by banks are for the conventional side, rather than the Islamic banking side.
Taking into consideration the people and regulations, a crucial element for the industry to generate better growth rates is the technology. In our experience most banks are dealing with international providers as they consider it a safer way to migrate their technology. However, it requires a lot of manual effort or semi-automated processing, which all adds up for the operations of the bank. Technology is certainly one of the main challenges for Islamic banking.
Source: IJIMS
Why has Kuwait been such a pioneer in the industry?
We consider Kuwait our home yard. All of the Islamic banks in Kuwait are ITS customers. Most of the banks there are utilising technology in a better way, compared to other countries. The market in Kuwait has reached a level of maturity compared to elsewhere, because we launched our solutions many years ago.
There are some other countries, such as the UAE, that are also developing quickly. One of the ways it differentiates itself is by utilising the technology properly. However in Kuwait the market is smaller and the number of banks are limited. I believe that the way the two countries have utilised technology in their Islamic banks means that they are way ahead of many other countries.
Each country has its own way of developing its economy. In Kuwait, Islamic banking has been established for more than 30 years, so it understandably has a very strong position when it comes to the industry and a great deal of experience.
Dubai is trying to become the capital of Islamic finance worldwide. It is bringing a lot of new ideas to the table and implementing regulations in order to become one of the main global Islamic banking hubs. Bahrain is moving on the same path as well and there is a significant demand over there. In fact, due to its strategic location, Bahrain has become one of the main players in the Islamic banking industry. All these countries see the potential of the industry.
How does ITS ensure its platforms are all sharia compliant?
ITS has pioneered Islamic banking for more than 30 years. Over the years we have been developing and refining the technology for Islamic banking institutions to ensure the best possible systems. Offering Islamic finance that is completely sharia compliant, regardless of the changes in interpretation across the banks, has led us to design the technology in a way that allows the banks to define their own sharia process. This also makes sure that the process also complies with the main sharia principles.
We provide the banks with a platform for Islamic banking that makes sure that the main rules of sharia are within the system, but gives the banks the facility to change their operations according to the market needs.
When it comes to the emerging markets, our main target is largely Africa, where Islamic banking is really growing
How has ITS developed as a business over these past few years?
We divide the market into two parts. There are the mature markets in the Arabian Gulf area where the banks have developed Islamic banking services and an advanced level of technology. For this market, we offer many unique products and services that help to enhance their operations. One example is related to Islamic banking process calculation and distribution, which is quite a complicated process. It has a big impact on the bank, so this is one of the unique systems that ITS has developed as a result of its long experience in the industry. We have been providing these modules to many of the banks within the MENA region to help enhance their operations.
Additionally we also have the fully automated Islamic banking process. The main challenge here is that banks used to have departmental automation. There would be a risk department system, an investment department system, and so on. However, the actual operation in the bank requires a transaction to go through multiple departments. In general the operation is not fully automated and there are many different checks between departments. What we offer is a full and complete automated process that covers the bank across all the important departments. We have been implementing this across the MENA area and so far cover around 25 banks.
For the emerging markets, such as Africa, we offer them a total banking solution which allows them to be up and running within three or four months. One of the models that we offer to these Islamic banks is to provide them with a holistic solution that is preconfigured, which helps to get them up and running quickly. It helps both parties. For the bank, it helps them to compete in the market, while for us it shows that it is not difficult to get an Islamic bank operating.
What is in the pipeline for ITS?
For us, the core market is the Middle East. We have been here for a long time and have a good reputation. We want to continue this work, targeting all the banks that are looking to enhance their Islamic financial operations, as well as to get the automation model taken up. On the other side, we have started to offer Islamic banking services based on mobile technology and we believe this part is really going to have a great impact on the Middle East market. It will expose the banks’ services to a wider range of clients and enhance their customers’ user experience. This will definitely have an impact on their customer retention plans.
When it comes to the emerging markets, our main target is largely Africa, where Islamic banking is really growing. We are also looking at eastern Europe, where there is a lot of demand. These will mainly follow the model of the Middle East.
The direct written premium income of the Taiwan non-life insurance industry recorded a fourth consecutive year of positive growth in 2013. The total premium income expanded from TWD120.48bn ($3.9bn) to TWD124.9bn ($4.1bn), with a positive growth rate of 3.67 percent.
The growth momentum was mainly contributed by motor insurance, which benefitted from the growth of new vehicle sales and the increase in the premium rate of the voluntary third party liability insurance. Most of the non-motor business, such as fire insurance, marine cargo insurance, and engineering insurance, revealed negative premium growth instead. In regard of the market portfolio in 2013 by classes of non-life insurance business, motor insurance still accounted a major share of 51.6 percent of total premium income (see Fig. 1)
Facing intense competition, Cathay Century devotes itself to providing the perfect service and most diverse value to its customers. It continues to design products to meet customer demands and develop a variety of mobile devices to boost all-around service quality and efficiency.
With this in mind, Cathay Century published mobile app My Mobicare to help drivers involved in traffic accidents. We also build a loss prevention service network to assist policyholders in risk planning and accident prevention, thereby increasing the added value of policies. We set up a Community Care Team in 2012, to help improve the safety of school safety facilities. In addition to all of this, we released the Accident-Free Campus programme, to enhance the safety of schools, teachers and students.
Keeping an environment full of children and staff members safe and accident-free is not an easy task
Going mobile In Taiwan, most car accidents require drivers to notify the police department. After the police have registered the claim, taken photographs and processed all-related paper works, the insured person(s) should then contact their insurance companies. However, drivers may misdirect the police or neglect to confirm or secure the scenes and miss opportunities to collect evidence to claim.
To better serve our policyholders in this situation, Cathay Century developed the My Mobicare app, the first mobile application in Taiwan’s Property and Casualty (P&C) insurance industry that combines positioning, photo shooting and instant contact to help policyholders involved in traffic accidents. Our mobile app was designed in order to help drivers to deal with car accidents, enhance customer satisfaction and promote corporate image.
My Mobicare offers users an easy-to-follow interface and step-by-step guidance. It also integrates back-end customer service support processes. As long as you are a Cathay Century Insurance Auto customer, you can be uploaded directly to the customer service centre at working hours. Our customer service staff will call back within three minutes to help customers cope at the scene of any accident. If necessary, our claims personnel will be sent to the scenes immediately to handle claims.
Significant benefits provided by the app include:
Its popularity: the app is one of the most popular on the non-life insurance market. From October 2013, the app was downloaded 61,433 times (the sum of iOS and Android platforms), the highest volume among the non-life insurance market;
Clients can obtain instant information at accident scenes or otherwise;
The app can establish direct channels to clients. The company used to communicate with clients by channels of agents. With this app, they set up another communication platform to get direct response from the target clients, interact with potential clients and benefit current clients with their active responses;
To promote Cathay Century’s corporate image through word of mouth. This has already been successful having seen the company nominated and winning quite a few awards.
Through this app service launch and promotion, we have devoted ourselves to providing customers with more convenient, more immediate, and ultimately, a better service experience. Through feedback from our customers and claims specialists, we expect directions to improve the quality of our services and also enhance customer satisfaction.
Accident-free campus Over the years, Cathay Century has provided various means of public liability insurance for elementary schools, junior schools and high schools. According to our accumulated experiences and analysis of numerous cases, we found that accidents play a major role in campus safety issues, accounting for 18.3 percent. The highest accident rate was recorded in elementary schools, with children between the age of seven to 12, the most accident-prone among all school systems. In our investigation, the main reasons for accidents were attributed to unsafe equipment and unsafe behaviour, and both of the above could be prevented or reduced by loss prevention measures.
Playground safety is the major concern for most parents. Most accidents and casualties often happened on the playground, and indeed, approximately 38 percent of serious accidents occur in the playground. When children are treated in the emergency rooms, the accidents are usually due to unsafe facilities and unsafe behaviours, such as falling on the playground, or other hazards such as sharp edges of equipment or malfunction of facilities. According to the authorities’ fatality report, the major reasons of accidents are falling, entanglement of clothing or ropes tied to or caught on equipment, head entrapment, and impact by moving swings and equipment. Adequate facilities maintenance and regular inspections are also necessary to the playground management.
Keeping an environment full of children and staff members safe and accident-free is not an easy task. A small defect on the playground might cause serious injury and could lead to legal complications for schools. In order to provide more comprehensive protection to the campus, its students and faculty members, Cathay Century innovatively delivers a series of accident prevention services by inspecting the playground safety, advocating ‘Play Safely’ activities, and conducting ‘Safe Schoolyard’ forums. We expect that the accident prevention services will reduce and minimise the amount of injuries and losses from accidents.
Safety first Cathay Century takes the lead in techniques for loss prevention and loss control in insurance industry. We believe that, with our long-term experiences in loss control, many of these injuries could certainly be prevented beforehand. Therefore we adopt nationally recognised safety standards ASTM F1487-11 (Standard Consumer Safety Performance Specification for Playground Equipment for Public Use) for playground equipment. With the aid of other safety guidelines, we help campuses examine their equipment in order to build safer playgrounds.
Source: Cathay Century Insurance
We became the first insurance company to offer free services of inspection corresponding to ASTM F1487-11, which include technical safety guidelines for designing, constructing, operating, and maintaining the playgrounds. We have developed the playground safety checklist to highlight some of the most important safety issues for the campus. After thorough inspection, we submit a report indicating the potential faults or defects of playground equipment and associated recommendations of improvement solutions.
From February 2013 to November 2013, we thoroughly inspected the playground equipment of 32 elementary schools. The main problems were insufficient protection surfaces (31 percent); other related surrounding equipment defects (22 percent), and head entrapment (21 percent). There is an average of 13 defects, which should be improved in every campus. We therefore take action to help the campus improve the defected equipment by replacing or strengthening the protection section to meet the standard of ASTM F1487-11.
Safety awareness is one of the other factors, which might affect playground safety. Many of the injuries are caused by the unsafe behaviour of students. Consequently, we conducted a serious of Play Safely activities to teach students how to avoid unsafe behaviours from preventing accidents in every way. Unlike the traditional approach, we designed vivid activities by means of dancing, singing, and playing games. To make an impression, we created cartoon characters to promote safety awareness. Students can learn correct concepts about how to use the playground equipment properly through these activities.
Other than that, we also invite faculty members from schools to attend seminar of campus safety. By offering various concepts and ideas about how to maintain a safe environment on campus, the aim of preventing hazards and providing a safe campus can be easily achieved. According to the questionnaires after the seminar, 95 percent of the attendees consider these seminar courses helpful for enhancing professional ability. Over 95 percent of the attendees indicated that they would recommend colleagues or friends to participate in similar seminars in the future.
