House

HOUSE, Issue 22

Kung Hei Fat Choy!

It has been a very busy start to 2017 and we think this activity will continue to accelerate following Chinese new year. Hiring has been broad based, across banking, asset management and the corporate sector.

The biggest news so far is the launch of Arion House UK! William Rowland is leading the business, offering executive search and market intelligence services to our global client base from London. Please reach out to him (E: wrowland@arionhouse.com, D: +44(0)20 7096 0811, M: +44(0)78348 58002) or visit him at 32 Threadneedle Street if you are in London.

Asset management needs structure

The most common feedback we have received this month concerns the asset management industry. In conversations with regulators, partners of law firms and heads of compliance, it seems the regulatory pendulum is swinging from banks to asset managers. Asset managers are likely to be closely scrutinised and the structures of their compliance functions questioned.

Traditionally, compliance teams have formed a sub-set of legal departments within asset managers, will this change? Will compliance be elevated to stand on a par with legal functions; with their own, separate reporting lines, or structured more like the banks; with product aligned compliance officers, separate surveillance teams and even control rooms?

Reverse globalisation

Whilst European and American banking institutions are rationalising their exposure to ‘non-core’ businesses and geographic regions, like Barclays and RBS across Asia Pacific, our Chinese clients are increasing their exposure to western markets. Saturation of the internal consumer market in China has led Chinese businesses to expand their global footprints in a bid to maintain growth.

This push into western markets has been accompanied by a growth in Chinese banking representation. This makes sense, as Chinese corporates continue to use their own relationship bankers who they trust and understand their business. As such, we have seen a growth in demand for western regulatory experts to support this growth and ensure they remain on the right side of the regulator. The recent fine by the DFS of the Agricultural Bank of China late last year has certainly focused minds.

Front office is taking over compliance

For the majority of our global clients it’s clear that scrutiny from the regulators continues a-pace with many project teams still focussed on the implications of MIFID II and 

business leaders in the UK still working to understand the true ramifications of the Senior Managers Regime (SMR).

However, there are signs that some see the possibility of a sea-change and are reacting accordingly. Do recent hires from ‘the business’ to senior compliance positions, such as Francois Regnier replacing Anthony Whitehouse at BNP Paribas, signal a shift across the Atlantic to lighter regulation of investment banks? Trump’s initial economic appointments appear to suggest otherwise, but some appear to be hedging their bets. Only time will tell.

Anti-bribery & corruption

A recent report from Transparency International, which looked at trends in perceptions of global corruption, concluded that two-thirds of the 168 countries included scored below 50 on a scale from 0 (considered highly corrupt) to 100 (considered very clean). In addition the IMF recently stated that 5% of Global GDP ($1.5 trillion) is directly linked to bribery while US enforcement agencies saw another record year of fines, with $2.4 billion collected in 2016.

In recent months we have seen separate statements from the SEC, FCA and AMF all promoting the benefits of early disclosure in relation to breaches of anti-bribery and corruption laws. The AMF have even gone so far as to completely overhaul their ABC regulation with the inception of Sapin II.

We have seen Rolls Royce hit with heavy fines for historical misdemeanours and now reports suggest that former Och-Ziff partners may also have a case to answer. These incidents mean that many businesses are evaluating their ABC provisions and while the larger institutions have work to do, it should also be noted that SMEs are not exempt and may well have more ground to make up. It’s clear that this sector will see increased activity during 2017.

 

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