Edward Chandler

OEs in Financial Services meet for drinks

Edward Chandler (Forest 1967-71), Chairman of Corporate Finance at Deutsche Bank, spoke at the Baltic Exchange on 15th November to gathering of approximately 40 OEs.

In his remarks he described the interdependence of governments and banks in stimulating economic growth and the central function banks perform by intermediating capital flows and recycling risk, which has underpinned much of the wealth creation experienced in recent decades.

On the flip side, he acknowledged that banks had to take much of the responsibility for nearly bringing the global economy to its knees. "Banks simply got too big and adopted risk profiles which overstretched their resources. Some stayed ahead of the curve and avoided having to take Government support. Most, however, did not."  He explained that Deutsche Bank has since significantly reduced its balance sheet, exited proprietary trading, and realigned its compensation policies.

The Vickers Report, while not revolutionary, will undoubtedly shape the structure of banking in the UK in the coming years. Further afield, only the well capitalised universal banks will have the capacity to remain globally relevant.

He also commented, "In a world of tougher regulations and higher capital requirements, everyone will have to work much harder to achieve sustainable returns."

There was a real risk that higher capital standards would impact the availability of credit and liquidity to the real economy. It will also be interesting to see whether the US banks in particular maintain a level playing field and comply with Basle 2.5 and 3.0 capital standards.

Mr Chandler noted the importance of financial markets as a catalyst for recent political change in Europe. He concluded by saying, "Germany will need to see the implementation of national austerity programmes as well as clear signals of fiscal alignment in the long term before voting in favour of secondary bond purchases by the ECB." Rapid implementation was now critical to avoid a significant recession.

The Education Trust thanks guests who contributed approximately £400 to the General Bursary Fund at this event and to Peter Dodd (Rosebery 1943-47) and Richard Dodd (Crawfurd 1975-79), who hosted.

Another gathering is planned for the early next year, when entrepreneur Clive Watson (Rosebery 1974-79) will speak about the acquisition by Greene King of the company he co-founded, Capital Pub Company. Details will be announced shortly.