Real banking and real rewards

The definition of an optimistic investment banker, according to a joke currently doing the rounds, is one who irons five shirts on Sunday night. Yet for trade finance professionals, the challenge is simply finding the time to do the ironing – perhaps colleagues in investment banking could help out?

When the credit crunch first broke in August last year, wise heads said that it wouldn’t last long – the way would be clear by January. In January, the same people suggested that it would all blow over in about six months and that the emerging markets would, in any case, be largely unaffected.

Now, we know better. The events of early Autumn have clearly demonstrated that much of the world is heading for recession. The deleveraging that follows a long economic boom has not even begun – outside of Iceland – and the over-indebted will be ruthlessly exposed and punished as a result.

The heroes of the hour will therefore be those professionals that can deliver the liquidity to the vital organs of the global economy without taking the crazy risks that caused the crisis in the first place: forfaiters and structured trade and commodity finance (STCF) specialists.

Today, forfaiters are moving back into the markets that they had once been squeezed out of, while trade professionals have turned into the fourth emergency service – available 24/7, flying anywhere at a moment’s notice; the ‘Red Adairs’ of global finance.

They should therefore be remunerated (or should that be compensated?) accordingly. Yet the indications are that banks are planning on being especially parsimonious at bonus time this year.

If the phantom profits of the investment bankers were enough to secure them good bonuses in the good years (or what we thought were the good years – maybe they should be called the illusory years?) it makes sense to reward now the professionals who are making the real profits in real banking.

Of course, banks need to save every penny right now. But forfaiting and STCF are areas that will grow and grow in the next few years, yet are already severely stretched due to a lack of experience and appropriately skilled staff.

Furthermore, with top specialists – such as Hypovereinsbank’s Norbert Fritsch – set to retire soon, banks need to attract talented, high-calibre staff into trade and short-changing the sector’s best professionals will do nothing to achieve this.

Graeme Burton
Managing editor

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