In
terms of number and breadth of presentations and topics, this
year's Convention had to be one of the best and most intensive
for some time. With high quality speakers present, delegates took
the opportunity to turn open format into interactive debate on
several occasions.
The
first such time concerned the opening topic of Pensions in which
Rupert Brindley (UBS) explained the tough regulatory
environment, the role of the Pensions Regulator in the strategic
actions of companies (particularly disposals), and the trend towards
Liability Driven Investment (particularly for Life Assurance companies).
A fascinating insight by Nigel Bodie (Watson Wyatt LLP)
followed, concerning actuarial developments in mortality, and
how lifestyle improvements in mortality and other effects, such
as smoking and social status, were factored in.
The
complete change of subject to CO2 Emissions Trading given by Paul
Dawson (Barclays Capital) was both informative and new
to 50% of treasurers present. The regulation-driven rules, permitted
(and reducing) targets by country / industry sector were explained,
and trading strategies for credits to offer, or excesses to find,
were discussed versus the initial €40/tonne penalty.
Member
presentations are always a feature of the Convention due to its
restriction to ‘Treasurers only'. The first of these was led by
Ian Ladd, Deputy Group Treasurer, ICI, on the
Operational Risk of how to control overseas entities in closed
economies from a centralised treasury model. The issue of managing
local staff within central policy through training and review
and elimination of ‘inappropriate activity' was actively discussed.
In
the second such presentation, Chris Bowmer, Treasurer,
Rexam, followed Stephen Green's detailed
review of Standard Chartered Bank's view of the
Chinese economy, bank reform issues, and currency revaluation.
Chris dwelt on the practicalities of doing business in China including
financial structure, restrictions on working capital, and the
‘entrusted loan' concept for intercompany financing between two
Chinese subsidiary companies.
Another
current topic in financial markets is Hedge Funds and their operation.
Nadja Pinnavaia of Goldman Sachs explained very
lucidly the types of investment used and their basic investment
strategies including relative value, event driven, equity long/short
and tactical trading.
One
of the reasons for the intensity of the Convention and the diversity
of subject matter was that it was pleased to welcome speakers
at both lunch and dinner. Philippa Foster Back,
in her role as Director of the Institute of Business Ethics
(and with her background as a past President of the ACT and a
past Chairman of SIT), reviewed the ethical issues facing a treasurer
today. These included gifts, entertainment, conflicts of interest,
bullying and bribery, all of which could lead to a position of
undue influence. The evening was rounded off with an overview
of the World and European economic outlook from Dennis
Turner (HSBC) – a presentation given in good humour and
his own inimitable style, but with serious messages.
Convention
Day 2 got off to a lively start with Andrew McMurdo
presenting Deutsche Bank's views of the current
Syndicated Loan market, which generated considerable debate. He
described how this type of funding was now the largest source
of capital in Europe, and that being an ‘investment grade risk'
was not now a prerequisite for entry. The move to ‘self arranged'
facilities by corporate treasuries was also debated. This led
neatly into the topic of Credit Derivatives given by Glen
Manning (JPMorgan), in which he contrasted the dynamic
market driven credit risk management approach to banks' more traditional
role, and demonstrated the calculation and management of credit
exposure built into swap rates.
Following
an open forum discussion on International Acounting Standards,
Richard Workman (Oriel Securities) gave an interesting
insight into the development of Investor Relations and its increasing
involvement of corporate treasurers. He traced the independent
investment analysis function from the 1960s, through the creation
of internal corporate Investor Relations departments, the regulation
/ certification and unbundling of analysts' activities, to the
increasing role of corporate treasurers in advising IR departments
on more highly technical issues such as credit risk and pensions
impact.
This
last presentation demonstrated particularly the enhanced technical
and diverse contribution that the modern corporate treasurer has
to make, and the need for networking and interaction that the
Convention fulfilled for its delegates.
23
June 05
Brian
G. Lowe
Director
General: SIT
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