Simon Hughes, International Banker: Do you expect global banking regulation to continue tightening over the next few years, and if so, how significantly do you expect the bank’s profitability to be affected?
Mr. Mikael Sørensen, CEO, Handelsbanken UK: Well, I think that it will get tougher. There will be more regulations imposed on the financial sector. And I will say that the financial sector has asked for it themselves by the misbehaving they have done through the last financial crisis. So I’m not surprised that there are tougher regulations, and I expect that that will continue. And, of course, it will have an effect on the profitability for the financial sector. For Handelsbanken, we always measure ourselves relative to the sector and not in absolute terms. And the new regulations will, of course, count for all the participants on the market. So the lead we have in profitability will remain the same lead with or without new regulations. So for us it will remain the same relative to the peers.
Mr. Edwin R. Bautista, President and Chief Operating Officer, Union Bank of the Philippines: It will continue. We are already seeing new regulations down the road. In the Philippines, the regulators have been very active in implementing in the Philippines all those regulations and trends which are being adopted worldwide. And that means that there will be…and it will cost money. But on the positive side, all these things, like enhanced risk management, enhanced operations risk management, cybersecurity and all of that stuff if properly implemented and embraced will result in less credit losses down the road, better operations results, lower costs. The only problem is you invest first before you reap it. And that’s why I said, we’re in a great position because our incomes are strong at a time when we have to make these investments.
Dr. Charles Stephen Kimei, Chief Executive Officer, CRDB Bank: Well, unfortunately the regulators are still really, really following international standards. And in a way this is good because it makes it easier to compare banks, and investors want, they will be able to say, “Well, this is a better bank, this is a most strong bank than that one”. But as I said, sometimes there is a wrong approach to this. But all the same, we have to comply. Of course, it is going to affect the bank, the banking in large. With us, we know that we are a little bit cushioned by the fact that, as I said, we are ready. We have a lot of international investors who know us and who can, if we wanted today to raise capital by private placement, we can meet very quickly. Because it is a strong bank. The problem is that, as I said, there is a proliferation of smaller banks, institutions that have no access to international finance. They have no access to domestic finance, and they are not yet making money. If you tighten the regulation, and if you impose regulation, and you don’t give them a moratorium period, which is not as accepted to some of the local businesses. “Why should I comply, if the others are not complying? Give them an advantage. No point.” So they will have to merge. They will have to be acquired. So in a way that’s the case. Compliance is always a cost, a very cost intensive issue. And I think that some of the profitability of the bank will be affected. Because as I said, the strategy that we have is to ensure that it is not the declining, but maybe it could be more, but it will probably not grow faster than what we think.