Treasurers' conference sets out how to deal with the new normal

ACT Annual conference

We have just returned from the ACT's Annual Conference in Manchester. This year was perhaps the most important conference we have held given the events in the world’s financial markets.

We heard from a broad range of speakers – about treasury related issues of course but also about how treasurers should be reacting to the recent events and whether we are at the low point or whether we will see further bad times before markets and confidence improve.

Jon Moulton of the private equity group Alchemy, told us that "survival was a priority over prosperity" and that we needed to be sure that we were pessimistic enough – he did not for one minute accept the Chancellor’s prediction that the economy will only decline by 3.5% in 2009.

Paul Boyle of the Financial Reporting Council has promised a report, shortly, that addresses the need for companies to provide detailed explanation of accounting information but warned that we live in a complex world and we had to live with the consequences.

Jon Wood of HSBC told us that banks had focused on yield at the expense of security – a few local authorities might have done the same but the ACT has been consistent for years that the priority must be security, liquidity and yield (SLY) - in that order.

Both Jon Moulton and Jon Wood wanted to see banks focusing on the basics – to be boring. In Jon Moulton’s words:

 we need innovation in banks like we need innovation from 747 pilots 

The track sessions covered a wide range of issues and the exhibition hall was buzzing. The conference will be reported on in the next edition of The Treasurer magazine to add to the extensive coverage in the FT by Jeremy Grant on 27 & 29 April as well as on gtnews.

The conference and our other recent events have emphasised the need for treasurers to be fully integrated within their businesses to ensure that they can help deal with financial risk effectively. If you are the treasurer but do not mingle with the operations you are almost certainly missing a trick or three. Dev Sanyal (BP) was clear that the treasury function with its view of all the activities was in a unique position to add value.

If you weren’t at the conference you missed a great event. Make sure you’re there next year 26 – 28 April 2010 also in Manchester.

Bank regulation

In the last month or so I have attended meetings addressed by Vince Cable MP and John McFall MP. Both bowled me over with the appliance of common sense. Recently there was the breakfast addressed by John McFall. I have been concerned that all the aggression whipped up and directed towards banks might result in a plethora of new boxes to tick imposed on us by the regulators.

There is hope that if the Government listens to John we can get better regulation. Why am I confident? As an ex head master John McFall said something along these lines:

 I used to peer around the corner and look for those pupils that were misbehaving in break – and would deal with them later. That is exactly what regulators should be doing and have not been doing" 

Three cheers for that MP – and full support for the application of common-sense regulation!

At a dinner a few days ago Paul Tucker, Deputy Governor, Financial stability, Bank of England, made a similar point to our conference speakers:

 the current model will have to change – it is untenable to expect the tax payer (via the deposit guarantee scheme) to absorb the pain if banks take big risks whilst leaving the upside with the management/shareholders 

Given where we are today I do think we need innovation from central banks and political leaders, with an eye on the long term not the next election – please.

By Stuart Siddall