Capital Markets Corporate

May 11, 2018

Our Weekly Newsletter


Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.

Insurers Face Transparency Crackdown

After years of coverage and case studies showing that, with insurance rates, it often ‘pays to switch’, the industry has now pledged fairer premiums to crack down on differences between new customers and existing policy holders. The move will see the way insurance providers communicate to customers force a shift in marketing strategies. (From BBC News, 8 May 2018)

Risk Averse Brits

A recent survey by Tilney Investment Management has found that nearly half of UK adults (43%) now prefer to keep their savings in cash over a five year period instead of other investment vehicles, despite low rates and high inflation. This lack of trust in the investment sector appears to be underpinned by our extreme fear of losing money. Could this aversion to risk be fuelled by a generation that lived through the financial crisis? (From The Times, 5 May 2018)

Debt Balloons Since Lawson Boom

Research from Fitch has found that, for the first time since the 1980s’ “Lawson boom”, UK households are borrowing more money than they are saving. While consumer spending has helped to support the economy in recent years, debt levels are rising nearly 10% annually, while average earnings are up by less than 3%. Without a shift in consumer habits, is there a crisis in the works? (From The Daily Telegraph, 7 May 2018)

Blue Blood Bankers Make Way For Millennial

Are banks out of touch with the times? C Hoare & Co, Britain’s oldest bank, might have found a way to be both a family business steeped in tradition, and an institution moving with the times. Last week, the bank revealed plans to replace two of its octogenarian family board members with a 32-year-old partner to inject some “millennial thinking” into the family-controlled institution known for its upper class clientele.. From The Financial Times, 6 May 2018

Chinese Investors Invent Crypto Slang To Avoid Big Brother

The Chinese government may closely monitor chat apps such as Weibo and WeChatt, but innovative crypto-traders are finding ways to trade ethereal coinage after China cracked down on crypto exchange platforms. Much like the London underworld of old, young Chinese investors have developed a jargon to obscure their intentions from prying eyes and keep their trades discreet. (From Quartz, 30 April  2018)

What does succession success look like?

2018 has been a big year for leadership successions in financial services, with several high profile announcements taking place over the last few months. The reception has been somewhat mixed. So, what might then be the key to communicating high profile executive moves?

In recent months, the London Stock Exchange (LSE) was embroiled in a particularly nasty fall-out from its boardroom changes. Outgoing CEO Xavier Rolet announced plans to leave the exchange, but reports quickly followed suggesting  he was being pushed by LSE chairman Donald Brydon. This led to a very public battle involving activist shareholder Chris Hohn, who tried to oust Brydon and keep Rolet, complaining that the lack of communication from the LSE gave him no confidence in those at the top. The battle raged between activist and chairman, drawing comment from the governor of the Bank of England. IN the end, Brydon survived, Rolet left and Hohn was left with a bloody nose. It was eventually announced that David Schwimmer, a banker from Goldman Sachs would be taking the reins as the LSE’s new CEO, but the succession battle forced the exchange toissue something of a mea culpa  to assure markets that such an ugly row would not happen again.

But succession communication need not be so turbulent. Rothschild is also preparing for the succession of its senior leadership role, with procedures underway to promote the seventh generation of the boutique banking dynasty. A well-placed leak reported that Alexandre de Rothschild will take on the top executive role from his 75-year-old father this year before the firmmade the plan official a couple of months later. Cool Swiss heads have assured no clouds will rain on the next Rothschild coronation, a crucial move for a bank that trades on the power of its family name.

Similarly, a well-thought out plan tied to wider market changes works just as well. This week it was announced that the UK’s oldest bank, C Hoare & Co appointed a 32-year-old, and 11th generation family member, to its board. The bank smartly placed the announcement alongside messaging that it is seeking to move into the digital age by injecting some fresh millennial thinking into its leadership.

Timing and control is key to best manage the communication of a big succession. The LSE has now pledged to ensure regular communications with its board to see that everyone is in the loop when the next executive succession plan begins. This is wise. A long-term plan and an eye to the wider business messaging strategy is the best way to avoid surprises and ensure successions run smoothly.

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