Introducing: the alternative IB Awards

IFR 2064 20 December to 9 January 2015
7 min read
EMEA

SO HERE WE are, nearing the end of yet another event-filled year in investment banking and capital markets. Historians may look back at the themes and stats of 2014 and find little to get unduly excited about – yet the impact of continued zero interest rates and the interplay and tension between spluttering economic, business and banking cycles were, in their own idiosyncratic ways, fascinating if occasionally frustrating spectacles.

Beneath that broad canopy, efforts to right-size the banking sector, achieve the right regulatory balance, and neutralise banks’ ability to unleash Armageddon were similarly enthralling.

Over the course of the year, I’ve attempted to capture many of the grand themes and many of micro issues at play in the broad investment banking universe. I’ve upset a fair few people along the way by saying what I thought and calling a spade a spade. I make no apologies for that. If, in the process I’ve pricked some pomposity, pierced some pretentiousness or punctured some posturing, I reckon I’ve done my job. (And yes, all of those things were present in abundance …)

People tell me I’ve been a bit mean to regulators. And they’re probably right. I’m aware that regulating global banking today is something of a hiding to nothing and that the much-vaunted level regulatory playing field is as much of an aspiration today as it always will be. But I’ve been concerned for some time about the dangerous political cross-currents at play in the regulatory debate, some twisted ratiocination and in some cases the lack of a clear end-game. Unclear objectives and woolly thinking have led to some serious unintended consequences and I fear more will emerge as the story unfolds.

Even worse: they’re actually intended consequences. Rendering large parts of banking uneconomic through punitive capital and other charges, or banning certain products or practices outright may have been justified in some cases but tying banks’ hands behind their backs and denting their profitability will do little to incentivise them to take up their rightful place in financing the global economy. After all, if it’s about anything, it’s about creating growth and jobs and giving us all the wherewithal to seek prosperity, right?

We’re still betwixt and between with regard to banking regulation and the recalibration of the banking strategies set in motion to take account of the new world. But I do sense we’re nearing the end of the second act of a three-act play and that the new normal is slowly coming into view. In that context, I look forward to seeing how 2015 unfolds and how the myriad themes out there play out.

As the annual IFR awards, our annual swansong and the standards of excellence for the capital markets industry, are out, I figured I’d end the year with a few of my own awards, intended to capture the major talking points of 2014 with a smile, to send everyone into year-end with some good cheer. Back in January.

The 2014 Alternative Awards
AwardWinner
Category: Macro
The Central Bank ‘Whoops!’ awardECB, for stoking a huge speculative bubble in financial markets while failing to create monetary transmission or kill deflationary tendencies
The ‘will you just get on with it’ awardECB. for dithering over QE
The ‘why can’t you screw over someone else’s market instead’ awardECB, for CBPP3 (specially presented by the Covered Bond market)
Most under-whelming monetary act of the yearECB, for its Asset-Backed Securities Purchase Programme
Special award for the sheer amount of time wasted on something that didn’t happenFederal Reserve, for roiling markets all year and causing the research community to produce truly colossal amounts of analysis of the impact of higher 2014 US rates on every market in the world
Biggest disconnect of the yearGeopolitical conflict/war/stuttering growth vs global equity prices
Category: Regulatory
Most unattainable propositionLevel playing field for global bank regulation
Biggest confidence trick of the yearRegulators pretending they give a damn about the above
Wonkiest regulatory decisionFCA for fining and banning Mark Stevenson for buying bonds to make the price go up
Biggest wasted opportunityTesting the impact of senior bail-in over Banco Espirito Santo collapse
Biggest unintended consequences awardGold: Monetary authorities, for fueling market speculation
Silver: Same, for forcing banks to crimp lending due to high capital levels
Bronze: Killing bond market liquidity and taking price discovery with it
Honourable mention: Banks ramping up salaries to circumvent pay caps
Storing up trouble for the future awardRisk transfer to the shadow banking sector
Snouts in the trough awardGlobal regulators, for fine inflation
Sweetest irony of the yearRegulatory obsession to kick-start securitisation
Biggest kick in the nads for G-SIBSTLAC
Biggest capital fight of 2015-16TLAC vs MREL
Biggest snore fest of the yearResults of ECB stress tests
Category: Thematic
Most boring debateSeminal vs cyclical
The ‘you’ve made your point now shut up’ awardRegulators and politicians, for their obsession with comp
The ‘Get over it’ awardBankers: you’re still paid a multiple of most other people in the world
Biggest over-arching repeat theme for 2015Hunt for yield
Special prize for annoying righteousnessUK’s Banking Standards Review Council
Prize for blatant ridiculousnessRoyalty and the super-rich promoting inclusive capitalism
The ‘it’ll never happen’ awardBond market funding small companies
The ‘we’re not getting there any time soon’ awardEuropean capital markets structurally mirroring their US counterpart
The ‘It’ll never happen again’ awardGlobal investors, for buying anything with yield and to hell with the consequences
The ‘It’s dead … No it isn’t. Is it?’ AwardFICC
The ‘RIP it’s definitely dead’ awardBond market liquidity
The ‘it just got a bit complicated’ awardBond syndication
The ‘It really washes whiter’ awardAll banks, for their constantly re-invented “client-focused strategies”
The ‘I don’t think so’ awardCapital markets taking over global infrastructure funding from banks
They know each other too well to get alongECM bankers and independent advisors
Category : Product
Investment Bankers Contributing to Society AwardGreen Bonds
Most turbo-hyped product of the yearGold: Green Bonds
Silver: European Private Placements
Bronze: Institutional/non-bank lending
Biggest product misnomer of 2014High-yield’ bonds
Most egregious example of the sign of the timesUS$100bn-plus book on Numericable/Altice bond
Biggest investor 180 degree turn of the yearAdditional Tier 1 instruments
The ‘yet another false dawn’ awardM&A
Keith Mullin