Santander Launches Santander Advance, a Global Strategy to Become SMEs’ Partner for Growth

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Nace Santander Advance, una estrategia global para convertir al banco en socio de las pymes
Enrique García Candelas, senior executive vice president and head of Santander España and Javier Marín, Banco Santander's CEO.. Santander Launches Santander Advance, a Global Strategy to Become SMEs’ Partner for Growth

Banco Santander’s CEO, Javier Marín, today announced the launch of Santander Advance, a project that places SMEs at the centre of the group’s business strategy and aims to make Santander their partner of choice for growth in all its markets. Under this initiative, which starts today in Spain and will be operating in all the group’s main markets by 2015, the bank expects to expand SME lending by more than 10% in each of its markets this year. It will also improve its internal processes to cut down response times and enable it to provide a more specialised service to the sector. 


As well as the additional financing and specific product line for SMEs in each of its markets, Santander will offer a range of tools to help small companies develop and overcome obstacles to growth. For this, the bank is launching the Santander Advance Development programme with four basic pillars: recruitment and training, international expansion, employment and connectivity. The bank’s objective is to provide support to 200,000 companies under the Advance Development programme between 2014 and 2016.

With this project, which includes the group’s good practices in this segment of markets such as UK (Breakthrough), Santander aims to share the advantages of belonging to a global group with a strong international presence. As well as providing the services, products and tools that companies need to expand internationally, the bank will launch the Santander Passport in the next few months. This is an identifier that guarantees companies doing business abroad access to specialist local support and gives Santander customers the same advantages they’d have in their market at any of the group’s subsidiaries in other countries.

Santander’s chief executive Javier Marin said, “Santander Advance will become the new model for the whole group’s relationship with small and medium-sized companies. The bank is making progress in segmenting its business and deepening its focus on customers. It can now share with SMEs the advantages of being part of a well-capitalised and highly liquid international group, with a strong presence in key markets. SMEs are a strategic segment for Banco Santander and we want to be partners with them in their growth plans. We want more customers, who are also better linked and more satisfied”.

Within this comprehensive offer, Marín also announced the Advance Fund, a financing vehicle for medium- and long-term projects, mainly by investing in the SMEs through subordinated debt. It will start in Spain with EUR 250 million for projects of at least EUR 1 million. The model will then be extended to other markets.

Launch in Spain

Enrique García Candelas, senior executive vice president and head of Santander España, explained the plans for Spain, where the bank expects to provide EUR 30 billion of new lending, implying an increase of 24%. Its target is to grow its customers base by 22% on top of the 280,000 it already has (including small, medium and micro companies, but excluding retailers and the self-employed). The bank also wants to raise the number of linked customers by 29%. In addition to extra lending, lower interest rates for linked customers and competitively priced products designed specifically for SMEs, Santander España will make its approval processes more agile and provide specialist advisors exclusively for SMEs.

Regarding Santander Advance’s development programmes in 2014, over 20,000 SMEs will have access to training, internationalization and employment initiatives in Spain. Santander will offer 5,000 scholarships to university students for internships in SMEs.

“We have the most complete product range in the market,” García Candelas said. “We want to stand by SMEs as they grow, help them through all the financial and non-financial difficulties they encounter and accompany them in their internationalization.” To ensure the success of the strategy, Santander España has taken a number of specific steps in recent months to improve its model of customer service, its price and riskmanagement, its human resources structure, increasing the number of specialist sales staff for this segment, the technical platform and all the processes needed to guarantee faster response times.

Santander España will provide a digital platform, www.santanderadvance.com, where SMEs can find useful contents and tools to improve their training through online and classroom courses. The platform will provide information about credit lines and banking products, public sector financing available (through the European Investment Bank and Spain’s Official Credit Institute). It includes a link to www.santandertrade.com, a site designed for companies looking for opportunities in international markets.

ECB’s Options are Limited, Unless Ukraine Erupts

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Las opciones del BCE son limitadas, a menos que la situación en Ucrania estalle
Mario Draghi. Photo: World Economic Forum. ECB’s Options are Limited, Unless Ukraine Erupts

The ECB’s options are limited, barring a serious economic shock that could come from an escalation of the Ukraine crisis, Léon Cornelissen, Chief Economist at Robeco,  advises investors in his monthly outlook for March.

The central bank did not add to stimulus at its regular 6 March meeting, even though it had earlier raised expectations, tempting a third of analysts to predict a rate cut. This disappointed many investors who believe that drastic action is still needed to invigorate the sluggish Eurozone economy. There were even forecasts for a cut in the deposit rate to below zero, introducing negative savings rate in Europe for the first time since the 1970s.

“And so the ECB is on hold for all practical purposes and will continue to remain on hold, barring a severe negative economic shock,” says Cornelissen. “Could the Ukraine crisis be such a shock? Probably not – unless we see a serious military escalation.”

Three reasons for sitting on the fence

Cornelissen says there are three reasons why the ECB did not act: the threat of deflation has abated; the Eurozone economy is gaining strength; and the ECB doesn’t have much room for manoeuvre anyway with hitting the ‘nuclear option’ of unconventional stimulus.

The good news is that deflationary fears are waning as prices rose last month. Although headline inflation is still hovering within the ECB’s stated ‘danger zone’ of between zero and 1.0% and is far removed from its target rate of ‘close to 2.0%’, the flash estimate for February was a comfortable 0.8%, slightly higher than the 0.7% inflation rate for January.

“Headline Inflation seems to have bottomed out at around 0.9%-0.7% since October, despite all the talk about increasing deflationary risks. So deflation is not a problem and there was and is therefore no urgent need to act,” Cornelissen says.

Unusually mild winter helps

Secondly, the Eurozone economy is gradually gaining strength, partly helped by the unusually mild winter – a sharp contrast to the US, which has been battered by snowstorms. Retail sales rose a seasonally adjusted 1.8% in January compared to December. German factory orders rose 1.2% and French unemployment dropped.

“These developments allowed the ECB to raise its forecast for Eurozone GDP growth by 0.1% to 1.2% for 2014 – still too conservative in our opinion – and keep its 2015 forecast unchanged at 1.5%,” he says. “The Eurozone economy is mending slowly but surely, so the need for additional monetary stimulus is absent.”

Thirdly, the ECB’s room for manoeuvre has become very limited in terms of conventional monetary stimulus, he says. “Unconventional stimulus like a negative deposit rate, a new Long-Term Refinancing Operation (LTRO) with a fixed rate, or even generalized quantitative easing is possible, but they would be highly unpopular with German policymakers. These have to be considered as measures of the last resort, only to be used in conditions of severe stress.”

“The Eurozone economy is mending slowly but surely”

Main risk is China, though Ukraine is the new wild card

Such severe stress could come from an escalation of the crisis in Ukraine, where Russia has sent troops to Crimea, much to the anger of the west. Cornelissen says sanctions that are being imposed by the US and EU could damage the Russian economy and inflame tensions further.

“Russia accounts for a third of EU gas supply, but at the end of this mild winter, Europe can live easily without Russian supply,” he says. “On the other hand, Russian exports to the EU are worth 15% of Russian GDP. Capital flight and the higher interest rates needed to support the ruble will damage the already weakening Russian economy. Russia can ill afford an escalating crisis.”

“So in the meantime, it’s wait-and-see for the ECB.”

He says the real threat remains a slowdown in China along with the credit bubble which caused the first corporate default last month.

“Uncertainties remain elevated, following the first onshore corporate default,” he says. “The worry about China is less a question about lacking ambition – Chinese leaders have reiterated the 7.5% growth target for 2014 – but more about the government’s ability to do the tricky balancing act of preventing a hard landing while deflating the credit bubble.”

Standard Life Investments Strengthens Strategic Position Through Acquisition of Ignis AM

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Standard Life Investments compra Ignis AM por 645 millones de dólares
Tower Bridge, London. . Standard Life Investments Strengthens Strategic Position Through Acquisition of Ignis AM

Standard Life today announces that its global investment management business, Standard Life Investments, has entered into an agreement with a subsidiary of Phoenix Group Holdings to acquire its asset management business, Ignis Asset Management. The transaction is conditional upon, inter alia, approval from the Financial Conduct Authority. SLI will pay £390 million for Ignis, including regulatory capital. The consideration will be settled in cash from Standard Life Group’s existing internal resources.

The acquisition of Ignis Asset Management will complement Standard Life Investments’ strong organic growth and strengthen its strategic positioning. It will deepen its investment capabilities, broaden Standard Life Investments’ third party client base and reinforce its foundation for building a business in the rapidly developing liability aware market.

The combined business will offer a full range of investment solutions, including active management for institutional and wholesale clients, discretionary wealth management for high net worth private clients and outcome orientated products for maturing pension schemes and insurance companies.

As part of the transaction, Standard Life Investments will enter into a strategic alliance with Phoenix through which Standard Life Investments will provide asset management services to Phoenix’s Life Company subsidiaries, including the potential to manage future books of assets that Phoenix may acquire. The Phoenix Life Company Boards are supportive of Standard Life Investments as their investment manager of choice, reflecting Standard Life Investments’ strength and heritage in managing insurance assets.

Ignis Chief Executive Officer, Chris Samuel, commented that “Ignis is now ready to move on to the next phase of its development by way of a combination with Standard Life Investments. Standard Life Investments will inherit a strong range of products and investment capabilities and a group of talented individuals who will be an asset to the merged business. I am delighted that the business is being handed over in such excellent shape”, said in the presentation of results. Ignis reporteda record £1.9 billion of net new assets raised in 2013, which builds on net sales of £1.6 billion in 2012 and £1.2 billion in 2011, and 85% of AUM outperformed benchmarks and peer groups in 2013 compared to 79% in 2012 and 73% in 2011. Combination with Standard Life Investments will enhance key client offerings including Absolute Return Bonds, Liquidity and Real Estate propositions.

Commenting on the transaction, Keith Skeoch, Chief Executive of Standard Life Investments, said: “This acquisition is entirely complementary, deepening our investment capabilities, broadening our third party client base and strengthening our strategic position from which to develop a business in the rapidly developing liability aware market. Standard Life Investments continues to perform very strongly”.

Ignis is a top 15 asset manager in the UK with £59 billion of AuM as at 31 December 2013 excluding stock lending collateral. Ignis earned revenues of £150 million and generated EBITDA of £52 million in 2013.

The transaction is anticipated to complete on or before 30 June 2014 and is conditional upon, inter alia, approval from the Financial Conduct Authority.

Forbes Releases Real-Time Global Billionaires Ranking

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El patrimonio de los más ricos del planeta, ahora en tiempo real por cortesía de Forbes
Photo: World Economic Forum. Forbes Releases Real-Time Global Billionaires Ranking

Forbes has announced the release of a new digital tool and wealth tracking platform that provides real-time updates on the net worth and ranking for each individual featured on the Forbes World’s Billionaires List. For the first time, Forbes.com desktop and mobile readers will be able to access up-to-date information on more than 1,600 billionaires around the world. The value of individuals’ public holdings will be updated every 5 minutes when respective markets are open. Billionaires who only have holdings in private companies will have their net worth updated once a day.

“The world’s wealthiest continue to have an impact on huge swaths of the global economy,” said Luisa Kroll, Wealth Editor at Forbes. “By being able to track their movements on a daily basis, not once a year, readers will have a much better sense of where these billionaires’ influence is being felt and how their fortunes are ebbing and flowing along with the markets.”

For the launch of the new wealth tracking platform, Forbes will update the net worth of more than 1,600 individuals who qualified for the Forbes World’s Billionaires List this year. Forbes will continue to add to that group over the course of 2014 as new 10-figure fortunes are discovered.

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“At Forbes, we’re constantly thinking about how best to serve consumer appetite for real-time news and information in a digital and mobile world,” said Andrea Spiegel, SVP of Product Development and Video for Forbes. “The launch of this wealth tracking platform reinforces our commitment to breaking new ground and continually releasing imaginative products on Forbes.com.”

You can view below how the fortunes of the world’s top 20 billionaires have changed since Forbes released its 28th annual world’s billionaires list in March 2014.

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To view Forbes’ real-time billionaire rankings, please visit this link. For information on the Real-Time World Billionaires List methodology, please visit this link. The full World Billionaires list and profile pages will also be optimized for mobile. Previously, Forbes updated the net worth of U.S. billionaires twice a year and once a year for non-Americans.

Improved Market Conditions Allow Institutional Investors to Contemplate Big Moves

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Now that institutional investors in the US are reaping the rewards of improving market conditions, they are increasingly turning to specialized managers to fulfill their investment mandates. Yet, given divergent sets of needs, relatively few of the leading broad asset managers are poised to capture future mandates from both defined benefit pension and non-profit institutions. These and other findings are included in the annual US Institutional Investor Brandscape®, a Cogent Reports™ study by Market Strategies International.

“Recent favorable market performance along with the corresponding boost in funding status and portfolio returns are causing investors to take a careful look at their current strategies as they evaluate their options for the future,” explains Linda York, vice president and lead author of the study. “Pensions appear to be heeding the advice of consultants and industry experts by taking steps to de-risk their portfolios, shifting assets out of US equities in favor of fixed income strategies. In contrast, non-profits are seeking additional sources of diversification and higher returns, and as such are turning their attention to international markets.”

Of the asset managers that pension and non-profit institutions would most likely consider, Cogent reveals the overall consideration potential of 44 leading firms and the likelihood that these managers would be tapped for the specific asset classes of most interest. The results show that only four firms rank in the top 10 among both pensions and non-profits: J.P. Morgan Asset Management, T. Rowe Price, Dodge & Cox and Goldman Sachs Asset Management.

“The needs and goals of pensions and non-profits are very different, which presents a formidable challenge for asset managers targeting the institutional market,” says York. “Beyond the core aspect of investment performance, pensions look for partners with notable organizational stability and an experienced investment team. Meanwhile non-profits place more weight on a firm’s commitment to social responsibility and integrity, and it’s very difficult for asset managers to excel in all these areas. The few who are able to do so hold the keys to future growth.”

Virtual Currency, as Bitcoin, Is Treated as Property for U.S. Federal Tax Purposes

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EE.UU. tratará fiscalmente al bitcoin como propiedad y no como moneda
Photo: Zach Copley. Virtual Currency, as Bitcoin, Is Treated as Property for U.S. Federal Tax Purposes

The Internal Revenue Service today issued a notice providing answers to frequently asked questions (FAQs) on virtual currency, such as bitcoin. These FAQs provide basic information on the U.S. federal tax implications of transactions in, or transactions that use, virtual currency.

In some environments, virtual currency operates like “real” currency — i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance — but it does not have legal tender status in any jurisdiction.

The notice provides that virtual currency is treated as property for U.S. federal tax purposes.  General tax principles that apply to property transactions apply to transactions using virtual currency.  Among other things, this means that:

  • Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.
  • Payments using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally apply.  Normally, payers must issue Form 1099.
  • The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
  • A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.

Further details, including a set of 16 questions and answers, available in this link.

Daniel Pinto Named Sole CEO of J.P. Morgan’s Corporate & Investment Bank

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JPMorgan Chase has announced that Daniel Pinto, co-Chief Executive Officer of the company’s Corporate & Investment Bank (CIB), will become sole CEO of the CIB, effective immediately.  Mike Cavanagh, co-CEO of the CIB, is leaving the company to become co-President and co-Chief Operating Officer of The Carlyle Group, a global alternative asset management company.

“I have worked with Mike Cavanagh for more than 20 years,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase. “He’s a highly talented executive and has been an integral part of our management team, as our CFO for six years and as co-CEO of the Corporate & Investment Bank.  He’s also a special person and we wish him well in his choice to take on a new challenge. While we would prefer he stay at the firm, we are glad he’s going to a valued client in Carlyle.  I know the whole Operating Committee joins me in thanking him for his years of service to our firm.” 

Mr. Dimon added:  “I am pleased that we have someone as extraordinarily capable as Daniel Pinto to take over as sole CEO of the Corporate & Investment Bank.  Daniel is an exceptional manager of risk who understands markets as well as anyone I’ve ever met.  He is a true leader – his values, character and judgment are second to none.  He’s proven he can lead in the toughest of times and will be a terrific CEO to build on the CIB’s track record of success.”

Mr. Cavanagh said:  “I have worked at JPMorgan Chase for almost my entire professional life, and it was not without a lot of soul searching that I decided it was time for me to take my career in a different direction.  I wouldn’t have left for any company other than The Carlyle Group, a firm and a management team I have known for a long time.  While I am saddened to be leaving this remarkable firm, I am looking forward to a new chapter.  I wish all of my friends and colleagues at JPMorgan Chase the very best.”  

Mr. Pinto said, “I am very honored to become CEO of the Corporate & Investment Bank.  It’s truly a privilege to lead the talented team in CIB at a time when the business is performing exceptionally well.  We will all miss Mike – he’s been a terrific partner and friend and key contributor to our success.  We will continue to work hard for that success, and, as we always have, to serve our clients with distinction.”

Julius Baer Acquires Majority Stake in Brazilian Wealth Manager GPS

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Julius Baer Acquires Majority Stake in Brazilian Wealth Manager GPS
. Julius Baer aumenta su participación en la brasileña GPS Investimentos

Julius Baer Group, a Swiss private banking group, has announced that it has acquired an additional 50 per cent of São-Paulo-based GPS Investimentos Financeiros e Participações S.A. (GPS). This increases Julius Baer’s participation in GPS to 80 per cent from the 30 per cent acquired in May 2011. This increase follows a highly successful cooperation to date and underscores Julius Baer’s strategic goal of building a leading wealth management business in Brazil, one of the most attractive domestic wealth management markets worldwide and the largest wealth management market in Latin America.

GPS, which includes GPS Planejamento Financeiro Ltda. and CFO Administração de Recursos Ltda., is the largest independent wealth manager in Brazil with approximately BRL 15 billion (CHF 6 billion) of assets under management. GPS has consistently delivered profitable growth over the last ten years and has almost doubled assets under management over the last three years. Julius Baer and GPS both specialise in discretionary portfolio management and advisory services for high net worth individuals, based on a client-centric and open product architecture business model. GPS, which employs a total staff of over 120, was established as a partnership in 1999 by its three founding partners José Eduardo Martins, Marco Belda and Roberto Rudge, which has since then been highly successful in managing and expanding its client base and operations. GPS’s operative business is regulated by CVM, the Securities and Exchange Commission of Brazil.

The current partners of GPS will continue to lead the business as it is integrated into Julius Baer’s overall corporate structure and culture. Julius Baer senior executives will assume a majority in the Board of Directors of the company and will also appoint two members to the Executive Committee of GPS. GPS will continue to operate under its well established and respected brand.

GPS is profitable, and the transaction is expected to deliver a low single-digit accretion to Julius Baer Group’s adjusted earnings per share in 2014 and will have a limited impact of approximately 60 basis points on Julius Baer Group’s current BIS capital ratios.

Boris F.J. Collardi, CEO of Julius Baer, commented: “We are very pleased with our partnership with GPS, the leading independent Brazilian wealth manager. Our majority participation enables us to gain long-term access to one of the most attractive and promising domestic wealth management markets worldwide, and represents another key step in the execution of Julius Baer’s focused growth strategy.”

Gustavo Raitzin, Head Latin America and Israel of Julius Baer and designated Chairman of the Board of Directors of GPS, added: “This move underlines our strong commitment to continue to grow and develop our business in Latin America and ideally positions us to advise clients for domestic and international investments. We are confident that the even closer future co-operation will benefit clients, employees and further add strong growth momentum for GPS.”

José Eduardo Martins, founding partner of GPS, added: “We are very pleased to extend our client offering through the even closer co-operation with the leading Swiss private banking group with its global research and market know-how. This will create the opportunity for us to provide advisory services based on the combined expertise of both companies. We will continue with our strong growth strategy keeping focusing on our independent advice business model; Julius Baer guarantees perpetuity and sustainability for our ambitious future growth plans.”

Real Estate Equities Are in A Sweet Spot

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La renta variable ligada al real estate se encuentra en un momento dulce
Wikimedia CommonsPhoto: Darwin Bell. Real Estate Equities Are in A Sweet Spot

After a disappointing 2013, returns on real estate beat equity returns by a wide margin year-to-date. Improving fundamentals and attractive valuations, coupled with a relatively stable bond yield environment translate into a sweet spot for real estate. These are the conclusions of a recently published report by ING IM, which holds an overweight position in global real estate equities.

Real estate underperformed in 2013

Real estate equities – or real estate investment trusts (REITs) – underperformed the broader equity market substantially in 2013. As the graph clearly shows, the strong rise in bond yields (sparked by Ben Bernanke’s taper talk) and as a consequence in mortgage rates in the US was the main factor behind the underperformance and overruled the stabilization and/or improvement in the underlying fundamentals.

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Year-to-date, real estate equities are the best performing asset class. Both in the US and Europe, real estate is outperforming equities. Japan is the odd man out with real estate underperforming an already weak equity market.

Economic backdrop is improving

The strong year-to-date performance of real estate is not a big surprise to us, as the environment has improved in recent months. An improving global macroeconomic backdrop, illustrated by increasing real estate prices and transactions is combined with relatively stable global bond yields.

You may access ING IM’s full report through this link.

How ‘Absolute’ is Your Absolute Return Fund?

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¿Cómo de "absoluto" es su fondo de rentabilidad absoluta?
Wikimedia CommonsLéopold Arminjon manages the Henderson Horizon Pan European Alpha. How ‘Absolute’ is Your Absolute Return Fund?

Absolute return funds aim to deliver a positive return through all market cycles – but that is often where their similarities end.

Such is the variety of strategies utilised by the funds within the Investment Management Association (IMA) ‘Targeted Absolute Return’ sector that the IMA itself counsels against attempting performance comparisons across the whole sector. Undoubtedly, however, their popularity with cautious investors as a ‘core holding’ has soared in response to the volatility experienced over the last several years, with £2.2 billion in net retail sales ploughed into the sector in 2013 according to the IMA. Even for January 2014, they were reported to be the month’s top-selling sector, with net retail sales of £343 million.

Diversification and risk control are usually sought by these investors but the methods used by individual funds to achieve these objectives are many and varied. They may include a variety of ‘alternative’ assets and utilise investment techniques such as short selling, derivatives and arbitrage. Others have a relatively ‘vanilla’ approach to absolute return investing, using a straightforward long/short equity methodology devoid of complex derivative or quant strategies.

As Léopold Arminjon of Henderson’s Pan European Alpha strategy explains: “We aim to deliver a disproportionate amount of market performance given the risks we take and we are extremely sensitive to drawdowns. The strategy – to which the Pan European Alpha has been aligned since December 2012 – has delivered positive returns in 2011, 2012 and 2013”.

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Source: Henderson Global Investors

There may still be trouble ahead

Many equity markets soared to record highs in 2013 and this blunted the appeal of absolute return investment in a ‘risk on’ environment. However, volatility returned early this year and the VIX index (or ‘investor fear gauge’) leapt on weakness in emerging markets, while central bank tapering and the slowing Chinese economy presage further trouble ahead. Where risk-averse investors might traditionally seek sanctuary in bonds, the effect of quantitative easing has driven down government bonds to the extent where shorter-dated bond yields offer little or no compensation for inflation. At the same time, interest in the absolute return approach is being stoked by fears that equities have had a strong rally and are due a correction.     

However, the job of absolute return fund managers was made harder in recent years by macro-economic conditions, often driven by central bank interventions, resulting in a high degree of correlation between markets and asset classes. Aside from the rout of 2008, 2011 was the worst year for long/short strategies since 1994 as equity performance was volatile but driven by herd instinct rather than by stock fundamentals.

Show me the stock dispersion

The problem many managers found during that period was the lack of dispersion between single stock names due to the limited differentiation between price actions of individual equities from mid-2011 until mid-2012. Macro-economic concerns, mostly emanating from Europe, caused investor sentiment to veer between risk on and risk off, cyclicals and defensives. During this phase little attention was paid to company fundamentals, which are essential for a long/short manager’s success – fund managers cannot realistically be expected to generate alpha if their longs and shorts are all moving together and will be warmly welcoming the return to a more benign environment for long/short strategies.

With their potential to preserve capital while delivering upside with less volatility than a long-only approach, the appeal of absolute return funds will continue for a broad swathe of investors given the risks in equity markets which remain as we enter the second quarter of 2014.