ECB board members need personal finance training

The ECB has released the declarations of interest if its executive and supervisory board members.

You’ll see that the forms are pretty vague when it comes to point IV – Financial interests. Board members should name “Any financial interests holdings in companies/firms listed on a stock exchange”.

Some members have included equity funds and bonds under this item, although one could argue if that’s really required.

However, the declarations of interest do contain some remarkable info:

  • German board members Sabine Lautenschlager-Peiter and Joachim Wuermeling own co-operative shares in banks. The value of these holdings is trivial.
  • Ed Sibley owns some shares in Bank of Ireland. Mr. Sibley adds: “These are the remnants from a share ownership scheme from when I worked for Bank of Ireland (until 2008). They are worth less than €500, and I am in the process of getting rid of them.”
  • Peter Praet owns shares of the National Bank of Belgium, one of the few publicly traded central banks.
  • The spouse/partner of Vytautas Valvonis works at the Lithuanian branch of Dankse Bank.
  • Several board members (Benoît Cœuré, Tom Dechaene, Yves Mersch,
    Gaston Reinesch, Vitas Vasiliauskas, Claude Wampach) teach at universities (see item II – private activities). The earnings from these professorships are trivial.
  • Mr. Wampach owns Turkish lira denominated bonds issued by the European Investment Bank. Let’s hope he hedged the currency risk 😉
  • The financial interests of board members Margarita Delgado (Spain), Catherine Galea (Malta) and Andreas Ittner (Austria) contain only securities from their home countries.
  • Constantinos Herodotou (Cyprus), Madis Müller (Estonia) and Pierre Wunsch (Belgium) have the most diversified investment portfolios – Mr. Müller even owns a gold ETF. They should teach their colleagues about the importance of diversification!

Why KBC Group has a larger market cap than Deutsche Bank

See my tweets from a couple of weeks ago. I’ll have more to say on the blog (including the potential merger/acquisition of Commerzbank) if I find the time…

Bouwgrondbezitters werden slapend rijk

Uit het jaarverslag van de Nationale Bank van België:

Tussen 1973 en 2014 zijn woningen in België 11 keer duurder geworden. Dat is vooral een gevolg van de gronden, die in dezelfde periode maar liefst 19 keer duurder werden. Zoals je in de figuur kan zien, waren de prijsstijgingen in Vlaanderen nog extremer dan in Wallonië.

Ter vergelijking: de consumptieprijzen zijn tussen 1973 en 2014 ‘slechts’ verviervoudigd. De bouwkosten gingen maal vijf.

“One step above the janitors”: a huge red flag for compliance culture

As a follow-up on yesterday’s post, read this story about how Deutsche Bank Trust Co. Americas handled payments from Dankse Bank‘s Estonian unit.

A number of quotes will give you an idea of the priorities at the bank:

[W]hen workers sought broader scrutiny of certain clients, they got a familiar response from some higher-ups, the officer said: Shut up, focus on the transaction in front of you, file your paperwork and move on.

Although U.S. executives routinely promised regulators they’d get tough, former staffers say such efforts were often disregarded in favor of cozy relationships with overseas customers.

Throughout Deutsche Bank, compliance staff members were considered to be “one step above the janitors,” an unnamed former executive told lawyers who filed a 2016 lawsuit against the bank.

In Jacksonville, that task [i.e. know your customer] fell to an office that was understaffed and overly permissive, insiders recall.

Money laundering doesn’t pay (for banks)

Swedish tv station SVT has investigated suspected money laundering by Russian and Ukranian customers of Swedbank. Oligarchs used accounts at Swedbank’s Estonian branch to move money offshore. The documentary is available online in English: part 1 and part 2.

At the end of part 2, Daria Kaleniuk, executive director of the Anti-Corruption Action Center in Kiev is asked “why do you think they [i.e., the bank] let this happen?”. Ms. Kaleniuk replies “because it’s profitable!”.

However, I’m not convinced that is true. Payments are a low-margin activity that expose banks to a lot of downside risk. Violating anti-money laundering (AML) rules have cost banks hundreds of millions of dollars in recent years.

In my opinion, criminals succeed in money laundering because compliance with AML regulation was (is?) not a priority for top executives.1 A lack of funding and management attention for compliance leads to a mentality of “just check the boxes, so it looks like we did what we had to do”.

Stronger enforcement, including higher fines and other sanctions, might change that situation.

Birgitte from Lehman Sisters

[A] higher share of women on the boards of banks […] is associated with greater stability. As I have said many times, if it had been Lehman Sisters rather than Lehman Brothers, the world might well look a lot different today. – Christine Lagarde, Managing Director of the International Monetary Fund

In today’s finance & crime news:

“Swedbank AB has fired its chief executive officer, Birgitte Bonnesen, amid allegations the bank was used to launder billions of dollars in Russian money on her watch.” – Bloomberg

For your information, five of the eleven members of Swedbank’s Board of Directors are women.

Foreign owned banks in Europe

How international is the European banking landscape?

Jamie Dimon, CEO of American bank JPMorgan Chase, says that European banks need mergers across borders in order to become more competitive. I created the map below to illustrate that Dimon has a point (that’s why he’s richer than you).

Flags show the nationality of the owner of the largest foreign owned bank. Subsidiaries and their parents are listed in the text.

Some remarks and observations: Continue reading “Foreign owned banks in Europe”

How the ECB can align its monetary policy with the climate targets of the EU

There is a discussion going on about how climate change should influence central banking. The Veblen Institute and Positive Money Europe have published a study which shows that although the European Central Bank (ECB) has acknowledged its responsability, bonds issued by carbon intensive companies make up a large fraction of the corporate bonds held by the ECB.

You can find the report (in French) here.

Update 7 April 2019: for the English version, click here.

De banken werven aan

Vorig jaar zijn er 3000 banen gesneuveld in de Belgische financiële sector. AXA en BNP Paribas Fortis hebben aangekondigd dat ze hun personeelsbestand nog verder zullen inkrimpen.

Daarbij wordt vaak over het hoofd gezien dat de banken tegelijk ook nieuwe mensen aanwerven.

Recent gaf ik een gastcollege voor studenten financie- en verzekeringswezen. Door de negatieve berichtgeving zijn er erg weinig jongeren die deze richting kiezen. Zoals je in Hoe bankiers geld scheppen kan lezen, heeft de sector echter dringend bankiers nodig die met de nieuwste technologie kunnen omgaan en die hun klanten persoonlijk advies kunnen geven.

Het ziet er naar uit dat de kranten over enkele jaren zullen schrijven “Banken wanhopig op zoek naar personeel”.