Despite divergent topics discussed during the opening trio of sessions at the FCIB Global Conference in the greater West Palm Beach area, one theme seemed to beam out of the morning sessions: Change (and being able to adapt the large amount of it going on in business and credit at present).
Sanjiv Sanghvi, of Wells Fargo Bank, noted that a few changes in leadership in Europe (Italy, Greece) doesn’t necessarily equate to a bump in stability automatically.
“It’s tough to believe that putting technocrats in power will mean they will things will be run in a fundamentally different way,” he said, before noting the U.S. economy continues to look strong – much stronger than portrayed by the mainstream media – especially in comparison.
Sanghvi did note that the coming Basel III changes will require businesses, notably those in credit, to stand up and take note. All told, the Basel III changes and what seem to be some almost hidden requirements could force financial institutions to literally double their capital holdings. As such, he believes banks forced to change their ratios will simple handle the equation on one side or another: raise the costs to borrow or reduce assets in the game.
“That’s a huge different in capital requirements,” he said. “There’s going to be less credit available, not just in trade finance, but finance in general.”
Meanwhile, Marsh USA’s Angela Duca’s speech about global political risk suggested companies either need to be quick on their feel and flexible when granting terms into emerging, somewhat stable economies or they need some type of insurance backing.
“How do you forecast political risk [terrorism, regime changes, etc.]? You can’t,” Duca said. “It’s hard to predict the spark that will cause a major change in a country. And, in the real world, political risk exists all the time.”
Michael Sauter, of Guardean GmbH, used his presentation to promote the idea of willingness to be flexible as well, noting that holding firm to principles and strategies that worked four to five years ago simply may be the most “dangerous” strategy a credit department can employ.
“Adapting to change is the most important thing to our profession,” Sauter said.
Note: Check back throughout the week here and at our Twitter account (NACM_National) for live coverage from FCIB’s Annual Global Conference from greater West Palm Beach, FL.
Brian Shappell, NACM staff writer