In partnership with the Swiss Finance Institute (SFI), the Capco Institute hosted their second annual Banking & Finance Forum in Zurich on 5 February 2019. The event brought together over 200 industry experts, regulators and academics to discuss important issues affecting the Swiss banking scene.
Disruption and its impact on IPOs
The number of initial public offerings (IPOs) has declined steeply since they peaked in 1995. In the first panel presentation, SFI Professor of Finance Laurent Frésard from the Università della Svizzera italiana addressed the reasons behind this development, citing disruption as the key trend.
Professor Frésard’s team analyzed technology patents for over 30 years and found that startups with disruptive technology are less likely to embark on an IPO as they have different growth strategies and priorities.
André Brunner, a Partner at Capco Zurich, drew a contrast with initial coin offerings (ICOs): “ICOs fail to challenge classic IPOs due to an immature regulatory framework. Security token offerings (STOs) might have a better starting point and we should expect an increase in activity in the near future.”
A new layer of corporate governance
The second panel focussed on passively managed funds in a global context and their capacity to oversee corporations.
Big players such as Vanguard, State Street, BlackRock, Norwegian Sovereign Wealth Fund, Fidelity and Capital Group own around a fifth of world market capitalization, and most of their ownership is passively managed. This puts them in a strong position to influence the corporates in which they have substantial investments. Some passive institutional investors insist that it is their duty to exercise governance and it is in their interest as long-term stakeholders.
SFI Associate Professor of Finance Rüdiger Fahlenbrach of EPFL led the audience through how passive investment funds can participate in the corporate governance of companies. The panelists, including industry leaders from BNP Paribas, Julius Baer, SNB and Credit Suisse, agreed that while corporate governance was a challenge, it played a vital role in adding credibility and transparency in the market.
Are Swiss regulators keeping up?
The financial crisis and its aftermath are still pressing issues for the financial community. The third panel of the day, led by SFI Professor of Banking Steven Ongena from the University of Zurich, discussed the higher capital requirements placed on banks and the resulting tensions for financial institutions’ audit firms.
Topics debated by the panel included the potential nature of the next financial crisis, whether regulation can pre-empt such a crisis and who is going to ‘watch the watchmen’. The consensus between the panelists from BIS, Credit Suisse, Erste Bank and SNB was that given the dramatic changes Switzerland is experiencing as a banking and trading market, the regulator is always a little behind the curve.
SIX – a fully digital infrastructure within a decade
Dr. Romeo Lacher, Chairman of the Board at SIX Group and Vice-Chairman of the Foundation Board of SFI, concluded the event with a presentation on the planned digitization of the SIX Group process chain. The company aims to transform to a completely integrated digital platform within five to ten years.
Speaking after the event, Dr Ingo Rauser, Senior Partner at Capco Zurich who hosted the forum, said: “Despite uncertainties, the economic forecast for Switzerland is strong. Meanwhile, digital interfaces are opening doors to the investment world for younger generations. Today’s discussions underline the Swiss banking industry’s readiness to embrace the digital challenge, adopt new growth strategies and governance models, and collaborate with digital enablers.”
The Capco Institute delivers thought leadership to advance the field of applied finance by bringing together leading thinkers from both academia and the industry. Learn more about the Capco Institute here.