2010 | Investment Management Industry Review
Total Page：16
File Type：pdf, Size：1020Kb
2010 | Investment Management Industry Review accounts. The British and French negotiated similar deals. In September, Switzerland also completed the last double- taxation treaty required to remove its name from the OECD’s list of nations failing to comply with tax-sharing the Right Places information. In Italy, the government raided the local Lookin’ for Dough in All on a tax treaty grew testy. Meanwhile, a tax amnesty led When governments in the U.S. and Europe take Italiansoffices of to Swiss declare banks $115 and billion talks in between assets held the twooutside nations the a moment to consider their future pension country, though estimates for the total amount run six and health care obligations to baby boomers, times as high. Lichtenstein, with 35,000 people and per it doubtless quickens the pulse. In the U.S., capita GDP over $100,000, cut a deal with the U.K. to close the Peterson Foundation, a fiscal watchdog, the accounts of British citizens who do not comply with figures the nation has $56 trillion in unfunded their government’s demand for full disclosure. The small obligations up the road, primarily involving principality has also engaged in similar discussions with Medicare. Among European Union nations, Germany. generous national state pension and health So it was that in 2009 the worst economic crisis since the care benefits face similar funding challenges. Depression continued to play out. It engulfed Europe’s lucrative offshore banking industry, remade banks and In the U.S., states and localities are falling behind on their own promises to boomer public employees, having watched hundreds of billions of dollars in assets disappear in 2008-2009. Wilshire Consulting estimates Tepid Recovery that the average public pension funding ratio of assets to liabilities dropped 18 points in 2008, to 81%. None GDP Growth 2008 2009* 2010* of these stratospheric numbers even factor in the stress Advanced Economies 1.3% Uncle Sam and John Bull borrowed last year alone to avoid U.S. 0.6% (3.4%) 1.5 on public finances from the $1.4 trillion and $290 billion Euro Area 0.3 10% and 12% of their respective GDPs. Greece, Ireland 0.4 (2.7) an economic free fall, figures that amounted to about U.K. 0.7 (4.2) 0.9 spending, with Standard & Poor’s cutting Greece’s bond Japan 1.7 and Spain were hovering around the same level of deficit 0.7 (4.4) Developing Asia (0.7) (5.4) 7.3 rating to a rocky “BBB-plus.” $1.6 trillion in the red while euro zone members as a China 7.69.0 6.28.5 9.0 In the fiscal year ahead, Washington expects to be another India 6.4 of GDP, four points above the cap set in Brussels when whole will likely ring up budget deficits equivalent to 7% Global 7.33.0 (1.1)5.4 3.1 Organization for Economic Co-Operation and Development (OECD),the economic total borrowingunion was formed.is projected Among at $32 nations trillion in thefor World Trade 2009-2010, and the International Monetary Fund (IMF) Volume (goods & svcs.) +3.0% (11.9%) +2.5% * Projected figures the world’s leading industrialized nations will Source: IMF continue running large deficits through at least 2014, Under such circumstances, what’s a politician to do? Start including nearly 7% of GDP in the U.S. and U.K. shrewdly independent nation of Switzerland comes in. insurers, helped undo the postwar dominance of Japan’s looking for money — and fast. That’s where the placid but Liberal Democratic Party in national elections, and forced governments to borrow money on an unprecedented scale shieldWith a money wink and from a nod the fromtaxman nations or the around law. No the longer. world, Uncle it Sam,has long John operated Bull and as host a haven of others for wealthy have come people calling seeking from to for its ability to generate tax revenues and jobs, instead world capitals. enduredin peacetime. the wrath The financial of once-friendly sector, only politicians. recently revered The British and French governments will apply a 50% The result: the Swiss blinked, and another offshore private timebanking agreed center, to provide Lichtenstein, the names followed. of large Under numbers pressure of voluntarilytax on banks’ adopted bonus apayouts. restrictive In Germany, code recommended where the by from the U.S., last year the Swiss government for first UBS thegovernment Group of demurred20 nations. on The a special U.S. placed tax, top pay bankers restrictions Americans (some 4,400) suspected of hiding money in Berkshire Capital Securities LLC | 1 on companies it bailed of its foreign exchange out and the House policy. The Economist in December passed wondered aloud in a new and more Lost Decade November whether regulatory scheme. restrictive financial Major Stock Indices Close 2009 v. 2008 Close 2009 v. 1999 the triple-A rating of 12/31/09 (%) 12/30/99 (%) Obama did his part by Moody’sTreasury Investors bonds “could President Barack Dow Jones Ind. Avg. Servicebe in jeopardy” spelled outwhile S&P 500 scenarios in December duringreferring an to interview “fat-cat 10,428 18.8% 11,497 (9%) under which the U.S. bankers on Wall Street” Nasdaq 1,115 23.5 1,469 (24) and the U.K. could news show. The both lose that pristine FTSE 100 (U.K.) 2,269 43.9 4,069 (44) with the “60 Minutes” rating. in a charitable mood DAX (Germany) 5,412 22.1 6,930 (22) American people aren’t either, with more than Nikkei 225 5,957 23.8 6,958 (14) half the respondents in economicAs the year picture drew to a China (Shanghai “A”) 10,546 19.0 18,934 (44) a December Bloomberg remainedclose, the Americandismal if National Poll saying the 3,437 79.8 N/A N/A apparently stable, with Dow Jones U.S. Industry Index (% gain/loss 2009 v. 2008) an additional 85,000 are only interested in Financials 12.8% job losses in December enrichingmajor financial themselves firms Asset Managers 29.2 dampening hopes the bailouts were a bad Banks might be turning a and 64% opining that idea. corner.that the By labor year’s market end, Life Insurance (4.6) unemployment still arrows, some titans of Investment Services 16.756.2 hovered above 10%, Amid the slings and Source: Bloomberg with estimates of underemployment PRfinance consultants were clearly and adding six more lobbyists.taking cues Goldman from their points to that number. Sachs, whose CEO Michigan, with an last September that rate of 15% and publicLloyd Blankfein dismay over said anofficial auto unemployment industry growing again in the third quarter of on government life Although the U.S. economy began support, appeared bank compensation 2009 after four negative quarters, the mired in a localized was “understandable version of the Great prevailingand appropriate,” political Depression. Several windsacknowledged by announcing the than anticipated. states weren’t far in December that its annualized GDP gain of 2.8% was weaker behind, including top executives would once-unassailable forego cash bonuses California, with a in 2009. In a speech 12.5% unemployment that same month at West Point, Jeffrey Immelt, CEO of rate and a deeply troubled state government. General Electric — whose large financial arm fell victim thirdThe overheated quarter of 2009,real estate nearly market one-quarter that helped of homeowners spawn the to the credit collapse — proclaimed an end to a “difficult mindedness, a good trait, was replaced by meanness and withfinancial mortgages meltdown had remained negative equity, problematic according as well. to real By the generation of business leadership” in which “tough- greed, both terrible traits.” heavilyestate intelligence leveraged commercial firm First American real estate CoreLogic. sector, where the The crisis in year two also quickened the steady shift in Observers were also keeping their eyes peeled on the global financial power toward an increasingly confident level since 1993, according to Real Estate Econometrics. Asia, and in particular an ascendant if frothy China. default rate reached 3.4% in the third quarter, the highest Indeed, as America’s current account deficit merged with as the world’s reserve currency became a hot topic. China, third quarter of 2009 after four negative quarters, the Washington’sa mushrooming main budget creditor, deficit, felt the compelled future of to the announce greenback in Although the U.S. economy began growing again in the The world economy wasn’t doing much better, but as in | | annualized GDP gain of 2.8% was weaker than anticipated. 2December that the dollar remained the “main component” 2010 Investment Management Industry Review the U.S. appeared to be stabilizing. Europe’s largest At the same time, member states, Double-Digit Dip private capital to pay third-quarterAmong the 30 GDP OECD banks are raising suchback aid,government or simply to (lessfigures than in aggregate1%) since strengthenaid, to avoid balance taking showed the first gain Value of Announced Deals ($ billions) 2008 2009 2009 v. 2008 Mergers & Acquisitions, All Industries sheets. These include (%) BNP Paribas, DnB globalthe first GDP quarter declined of Worldwide $2,073 (28.2%) NOR (Norway’s 1.1%2008. lastThe year, IMF withfigures Societe U.S $720 (22.0) world trade off 12%. $2,887 Generale and The U.S., the world’s Europe $1,169$924 $580 UniCreditlargest bank),. RBS and shopping center, Asia-Pacific $424 (2.5) another government- (50.4) Lloyds drop in imports in the Number of Announced Deals 2008$435 2009 Banking Group, are 10registered months athrough 27% Worldwide 38,325 (6.6%) alsosalvaged planning firm, to tap October, according to investors for capital.