A run on a bank, Private Equity & the ACT/JPMorgan Global Cash Management Survey

The ACT’s offices in Moorgate are directly above the City branch of Northern Rock. We therefore had a remarkable – and hopefully, just once in a lifetime – opportunity to observe an old fashioned “run on the bank” developing, much as we had studied in Economics 101. The queues and the attendant media phalanx inconvenienced ACT staff just a little but helped underline that we at the ACT should be monitoring and assessing the crisis.

Although many of us share the view that the period of surprises and uncertainties in international markets is not over, the broad feedback from our members is essentially positive. “Weathering the storm” on the back of financial resilience seems to be the message. However there is undoubtedly concern that renewals of existing borrowing and incremental funding may – following the long overdue re-pricing of credit risk – prove more expensive. There are obvious implications here for the macro economy, if there is to be a step change in the cost of capital and consequentially greater challenge to the viability of investment schemes.

The BBC news website carries a thoughtful piece along these lines by our Assistant Director of Policy & Technical, Martin O’Donovan; his views reflect contact he has had with ACT members over the last couple of weeks.

One of the areas of the economy that will surely be impacted by the events around us is that of private equity. Our half-day conference on Private Equity and the Role of the Treasurer was always timed (22 November) to allow us to draw reflectively on events in this field over the last six months. We have an excellent group of participants, including John McFall, the Chairman of the Treasury Select Committee. The conference will be chaired by John Singer, who will I hope not be offended to be described as a veteran of the private equity field; those who heard him speak at The Treasurers’ Conference in Edinburgh earlier this year will know that he will make an excellent contribution. We are also lucky to have Simon Walker joining the panel discussion; Simon has just been appointed as the new Chief Executive of the BVCA, which is the private equity and venture capital industry body.

The ACT/JPMorgan Global Cash Management Survey is nearing completion of input gathering and I encourage you to participate if you have not already done so and your organisation would benefit from the benchmarking allowed by the results. We have in fact agreed to extend the deadline to 12 October, primarily to allow for further participation by continental European groups.

Finally I should mention that you can now start to make nominations for the Deals of the Year competition. We have each year expanded the scope of Deals of the Year and in early 2008 we will for the first time be holding a dinner to celebrate the awards.

By richard.j.raeburn@gmail.com