Securities Lending Today

The Last Word - my final post

I am sad to say this will be my final post in this blog.  I am taking up a new position as Global Head of Securities Lending at HSBC Securities Services from tomorrow and this personal blog is no longer appropriate.  I started "Securities Lending Today - an Industry Under Siege" in the summer of 2008 at a time when it seemed like the world was fighting against securities lending and short selling.  Back then the only media coverage outside of the specialty press was negative and often bordered on hysteria.  

Today I think there is a much more balanced view, alongside an acceptance that some people will never be convinced of the importance of these activities to the capital markets.  Since the crisis began in the summer of 2007, we have seen a number of countries approve the activity for the first time, flying in the face of conventional wisdom.  This says to me that the future of the business is solid.

Writing the blog has been one of the most enjoyable experiences I have had, with the only frustration being the lack of time available for writing.  I will continue to run the blog for a while, but there won’t be any new posts.

I have loved my time as a consultant (Zimmerhansl Consulting), trainer (FinTuition) and product specialist (Trading Apps).  The consulting business will close with immediate effect.  I will continue to own FinTuition, and the demand for training seems to be significantly increasing over the past few months.  The management of FinTuition will fall to Pamela and Zafira who have really been doing this for some time now anyway.  I will also cease working with Trading Apps as well, which is unfortunate.  A great group of people and fantastic products – if you haven’t had a demo yet, you should check it out.

Thanks to everyone that has been a reader of this blog, a client, sponsor, partner, trainer, colleague or source of information.  Your interest, efforts and money was, and is much appreciated.  Hopefully you found value in my work.

I’m really looking forward to the opportunity that HSBC is giving me and there is tremendous potential growth for the business, building on the existing solid core activity and team.   I look forward to seeing many of you in my new role.

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A Quick Rant

Excuse my indulgence, but I need to get something off my chest that doesn't really have anything to do with securities lending, but adds to the negative public perception of banking activity including our niche business.

I was watching Sky News this morning before heading to Stockholm to teach the ISLA/FinTuition "Introduction to Securities Lending" course and heard a comment that has sent me over the edge on a particular subject.

Michelle Dewberry was talking about the Keweku Adoboli story, found guilty of two counts of fraud and not guilty on four other counts.  Her first comment was that this showed once again why retail and investment banking need to be separated, and others nodded their agreement.   The need for separation has been a common theme put forward by politicians and the media in recent years. 

I don't get it, so maybe it's me.  Adoboli's employer, UBS isn't a retail bank in the UK, where he worked, committed the fraud and was found guilty.  The UK government/taxpayers weren't required to give any support to UBS as a result of his actions.  The losses UBS experienced were absorbed within the bank and in Switzerland, where it is a retail bank, no public money was required to deal with the losses.  So how would separation between retail and investment banking have made a difference?

It is a fact that Northern Rock, RBS and Lloyds Bank all needed UK public funds to rescue them during the crisis.  Northern Rock was essentially a mortgage lender -  a traditional banking activity NOT investment banking.  Although RBS was involved in investment banking, what took it over the edge was over-reaching expansion in its acquisition of ABN AMRO.  That capped a long period of expansion, typically into banks that did traditional banking, not necessarily driven by investment banking.  Indeed, after the rescue in the UK, RBS's losses have been reduced by investment banking division profits.  In other words, UK taxpayers would be worse off if it wasn't for the investment bank.  Lloyds was forced by Gordon Brown to buy HBOS, with disastrous results.  Both Lloyds and HBOS were overwhelmingly "traditional" banks, rather than investment banks.

The latest banking scandals,, involving LIBOR rate rigging and PPI insurance premiums make it 1-1 for investment banking scandals compared to retail banking scandals.  

So as far as I am concerned the whole push against "casino banking" as our politicians often call it, is more smoke and mirrors to make it appear they are doing something.  Can't see how it actually adds any level of protection to the public purse-strings.  If anything, given the evidence, it seems that the public needs protection against the actions of retail banking activity.

PS.  Wading through the FSB report on shadow banking.   Comments?