Dilemmas came thick and fast at last month’s ACT Annual Conference (ACTAC). One of the key messages was that regulation is set to become even more intrusive, demanding, costly and potentially damaging. The reregulation of the world’s financial system is throwing up some genuine concerns, with the regions diverging rather than converging in regulatory approach. While the financial meltdown proved beyond doubt that the system in place was not fit for purpose, regulation such as Basel III – described as a “train crash” in one ACTAC debate – is set to turn the West’s banks into hoarders rather than suppliers of capital. Allow that to happen and our anaemic recovery is likely to stay just that – anaemic. The role of banks is another dilemma. For some in investment banking, it is very much business (and that includes their own remuneration) as usual. It is an interesting moment when Lord Davies, a man who has been both a government minster and a senior banker, says that few lessons have been learnt from the financial crisis and wonders what may be the long-term price we pay as a society for such a failure to be schooled properly. The dilemma looks unresolvable. From the UK’s perspective the government wants/needs London to remain the top global financial centre but does not want bankers to be a burden, actual or potential, on the taxpayer. The message the conference heard was that, apart from any political or moral objection, the country simply cannot afford another bank bail-out. The ACT anticipates that credit availability will soon be a major headache for all but the biggest and the best of corporates as capital becomes another scarce resource. Those running global corporates characterised the banks’ current approach to credit as wanting only to lend to those who don’t need it. Not so, say the banks – we lend to good credit risks. But for some corporates it seems that one way to secure their long-term future is to actively fund those in their vital supply chain who can’t receive credit from the banking system proper. Supply chain finance has its role but it is not designed for non-financial corporates to become shadow banks; it is not their core competency and could be storing up trouble. But perhaps we should be careful about indulging too much in a gloomfest. The UK still has many fantastic economic strengths and opportunities and the conference heard that we should gracefully resign from one world-beating trait we possess – talking down our economy. After all, with professional bodies like the ACT equipping individuals all over the globe with the skills and resources that corporates require to find the right corporate financial strategy, it is perfectly possible to overcome the severest odds. The very place where the conference was held – a renewed, revived and now prosperous area of Liverpool dragged by vision and hard work from the dereliction and decay of a forlorn and forgotten dock – is proof of that. As ex-Tesco boss Sir Terry Leahy said, set yourselves audacious goals – they can work. PETER WILLIAMS EDITOR
