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Banking, business executives upbeat about recovery

Banking, business executives upbeat about recovery

Top bankers and business executives gathered in London were upbeat Monday about a developing recovery in the global economy, but cautioned against any slowdown in reforming regulatory and financial systems to prevent a repeat of the crisis.
Deutsche Bank head of global markets Anshu Jain said at a conference that he expects the banking system to end the year in a far better position, while General Electric Co. chief executive Jeffrey Immelt said the period of crisis management is "behind us."
John Kingman, the CEO of UK Financial Investments Ltd., the group created by the British government to run the bank stakes picked up in a massive industry bailout last year, said he was confident of beginning the process of "gradual exit" from those positions.
"I would say we have almost a fully functioning capital market," Immelt said at the event, which was held at the London Business School. "In some way, shape or form, 2010 and beyond will see economic growth. How positive it is remains to be seen."
Jain said substantial progress was being made on unwinding banks' heavily leveraged positions, which were part of the cause of the crisis.
"We will finish the year with a much lower level of risk and leverage," he said.
Asked about the prospects for the next 12 months, Kingman said he was confident that "confidence will build in the U.K.," allowing the government to start unwinding its stakes in private companies, like its 70 percent holding in the Royal Bank of Scotland PLC.
While the tone of the annual "Global Leadership Summit," was broadly positive, there were warnings that the start of an economic recovery could bring complacency about tackling long-term changes.
Royal Bank of Scotland CEO Stephen Hester said both the public and business worlds needed to acknowledge that the excesses enjoyed by many were no longer viable.
"It's a question of trying to rev the engine of change as hard as it can go without blowing a gasket," he said.
There was also an acceptance that changes to the financial system would be substantial, given the demands made by taxpayers, who now have a larger say thanks to the government bailouts around the world.
"I think that is why the system coming out of this will have to look very different from the one we had going in," Kingman said.
Immelt, who last week called for a doubling of manufacturing jobs in the United States to at least 20 percent of total employment, said that he expects a permanent change in the way business will be done.
"Financial services probably isn't going to be the same in my lifetime," he said. "You're going to see more regulation. The government has moved in next door and they're not leaving."
The presence of Kingman and Hester at the same event also sparked further criticism of RBS' decision to grant the new CEO a pay deal worth as much as 9.6 million pounds ($15.7 million). Kingman said he was "very comfortable" with the package, stressing it requires Hester to hit performance targets that will give shareholders a very healthy return.
Immelt said that Fairfield, Conn.-based GE, one of the world's largest industrial companies, making products like jet engines, household appliances and light bulbs, plans to introduce more products in the next two years than ever before.
It will also spend more on research and development this year than last year, he added.
Business advisory firm Deloitte said that with the immediate crisis over, the businesses who will succeed over the next decade will be those that have the courage to think beyond the current challenging markets.
"Winners emerging from a recession are typically those who have not only built financial strength, but have also developed resilient, robust and flexible business models, to deliver stickier and more compelling value propositions," said Richard Punt, Deloitte strategy partner.


Updated : 2021-08-01 21:22 GMT+08:00