THT 2012 plenary opening_closing

Treasury Hot Topics

16 February 2012

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Our Supporting Organisations/Speakers

Agenda

13:45 - 14:30 Opening panel

• Financial/Sovereign Debt/Euro CrisisLessons learnt – What’s next?

14:45 - 15:45 Break-out 1

• Treasury Organisation - A global crisis needs a global solution -Has your treasury model evolved to meet today's challenges?Has your treasury model evolved to meet today's challenges?Peter van Rood (Akzo Nobel), Damien McMahon (PwC)

• Risk Management Commodity Trading - No longer just for thetraders!Greg Leck (Triple Point), Richard Cornielje (KYOS)Olivier Kaczmarek (PwC)

• Bank account management - BAM or eBAM? For sure, time toonboard. But when and where to start?Francois Masquelier (RTL Group), Yves Garagnon (Equity),Carlo Palmers (Swift), Sophie Parker (HSBC), Richard Delvaux (PwC)

15:45 - 16:15 Coffee break

Agenda

16:15 - 17:30 Break-out 2

• Governance & Regulation - Regulation, regulation, regulation,are you prepared?Richard Raeburn (EACT), Hans Candries (PwC)

• Technology - Latest Treasury Technology - New tools to navigateyour way through the stormPeter Reynolds (Reval), Patrick Coleman (IT2), Jon Purr (SunGard), StevePeter Reynolds (Reval), Patrick Coleman (IT2), Jon Purr (SunGard), SteveLambillotte (SAP), Gaëtan Dumont (UCB), Daphné Smets (PwC), DamienMcMahon (PwC)

• Tax - Taxation to pay the debt burden – Who will pay the bill?Philippe de Clippele (PwC), David Ledure (PwC)

17:30 - 18:30 Closing panel

• Impact of the Financial Crisis - Bank & corporate views

18:30 - 20:00 Cocktail and Italian Wine Tasting Session

Questions

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Opening sessionFinancial/Sovereign Debt/Euro CrisisLessons learnt - What's next?

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Opening sessionFinancial/Sovereign Debt/Euro Crisis Lessons learntWhat's next?

• Peter De Keyzer(Chief Economist BNP Paribas Fortis)

A happy 2012 ?

DE KEYZER PeterChief Economist

Brussels, 16th February 2012

| Janaury 2012 |Economic Research 9

Outline

• The Big Issues

• Growth

• The trouble with Europe


• The trouble with Europe

• Convergence or divergence?

• Regulation

• Conclusion

The Big Issues


The Big Issues

World growth

Growth world economy (in %)

3

4

5

6

Forecasts BNPP


-1

0

1

2

3

92-01 02 03 04 05 06 07 08 09 10 11 12 15

Emerging markets versus submerging markets?

GDP growth: past and future

4

5

6

7

8


0

1

2

3

4

World Advanced

Economies

US EMU Japan Emerging

Economies

1983-2000 2016

Debt or alive?


Source: IMF

To boldly go where no central bank has gone before…

Policy Rates

12

14

16

18

20

ECB Federal Reserve Bank of England


0

2

4

6

8

10

Jan-8

0

Jan-8

2

Jan-8

4

Jan-8

6

Jan-8

8

Jan-9

0

Jan-9

2

Jan-9

4

Jan-9

6

Jan-9

8

Jan-0

0

Jan-0

2

Jan-0

4

Jan-0

6

Jan-0

8

Jan-1

0

Jan-1

2

Growth


Growth

Loss of confidence…

Business Confidence

0

1

2

3

Evolution of nominal long term interest rates over

the last 5 years

4

5

6


-4

-3

-2

-1

0

00 01 02 03 04 05 06 07 08 09 10 11

ISM IFO BNB

0

1

2

3

jan/07 jan/08 jan/09 jan/10 jan/11 jan/12

German Bund 10Y US Treasury Bond 10Y

The United States is alive…

US: Real GDP Growth (% YoY)

1

2

3

4

5

6


-6

-5

-4

-3

-2

-1

0

00 01 02 03 04 05 06 07 08 09 10 11

…but still on intensive care

Case Shiller House Price Index

175

200

225

Unemployment rate (in %)

8

10

12


75

100

125

150

jan

/00

jan

/01

jan

/02

jan

/03

jan

/04

jan

/05

jan

/06

jan

/07

jan

/08

jan

/09

jan

/10

jan

/11

0

2

4

6

feb/8

2

feb/8

4

feb/8

6

feb/8

8

feb/9

0

feb/9

2

feb/9

4

feb/9

6

feb/9

8

feb/0

0

feb/0

2

feb/0

4

feb/0

6

feb/0

8

feb/1

0

Growth as an export product…


Bron: IMF

The West is no longer in the driving seat

Commodities (Rebased Jan 2000 = 100)

400

500

600

CRB Commodity Price Index

Copper

Grains (Corn)

Metals

Energy consumption


0

100

200

300

jan/

00

jan/

01

jan/

02

jan/

03

jan/

04

jan/

05

jan/0

6

jan/

07

jan/

08

jan/0

9

jan/

10

jan/

11

jan/

12

Source: BP Energy Outlook 2030

The trouble with Europe


The trouble with Europe


Looked like a good time to tighten

EMU: Real GDP Growth (% YoY)

1

2

3

4

5

6

EMU: Consumer Price Inflation (% YoY)

4

5

6

All Prices Core Prices


-6

-5

-4

-3

-2

-1

0

1

00 01 02 03 04 05 06 07 08 09 10 11

-1

0

1

2

3

91 93 95 97 99 01 03 05 07 09 11

Big divergences

Consumer Confidence

(European Commission Surveys, standardized))

-1

0

1

2

3

4

Business Confidence

(National Surveys, standardized))

0

1

2

3

4


-8

-7

-6

-5

-4

-3

-2

-1

00 01 02 03 04 05 06 07 08 09 10 11

Belgium

Greece

Germany

-7

-6

-5

-4

-3

-2

-1

00 01 02 03 04 05 06 07 08 09 10 11 12

Belgium

Greece

Germany


Europe does not have a debt problem…

Public Debt in 2011 (% GDP)

150

200

250

Primary Budget deficit in 2011 (% GDP)

-4

-2

0


0

50

100

150

USA EMU UK Japan

-10

-8

-6

-4

USA EMU UK Japan

…but a governance problem


The boat gets rocked

10Y Government Bonds: Interest rate spread

with German Bund 10Y (in bp)

2500

2750

3000

3250

3500

3750

4000

Belgium

Greece

10Y Government Bonds: Interest rate spread

with German Bund 10Y (in bp)

2500

2750

3000

3250

3500

3750

4000

Belgium

Greece


0

250

500

750

1000

1250

1500

1750

2000

2250

2500

01/00 01/01 01/02 01/03 01/04 01/05 01/06

Greece

Italy

Spain

Portugal

France

Ireland

0

250

500

750

1000

1250

1500

1750

2000

2250

2500

01/07 01/08 01/09 01/10 01/11 01/12

Greece

Italy

Spain

Portugal

France

Ireland

…German rates but no German behaviour

Competitiveness (1999 = 100)

100.0

105.0

110.0

115.0


80.0

85.0

90.0

95.0

jul/94

jul/95

jul/96

jul/97

jul/98

jul/99

jul/00

jul/01

jul/02

jul/03

jul/04

jul/05

jul/06

jul/07

jul/08

jul/09

jul/10

BLEU Germany

Greece Spain

France Ireland

Italy Netherl

Convergence or divergence?


Convergence or divergence?

Eurozone gangreen


Source: BIS

…affecting everybody

Bank Credit Spreads

(senior 5-year CDS)

400

500

600

700

US Europe

Asia UK


0

100

200

300

400

jan/08 jan/09 jan/10 jan/11 jan/12

Sovereign

The Unholy Trinity


Financial InstitutionsEconomy

Quid…

EFSF: €440bn ESM: €500bn


ECBIMF

Change in Primary Budget Balance (% of GDP)

2012-2011

Greece

Portugal

EMU

UK

USLOOSER TIGHTER

Change in Primary Budget Balance (% of GDP)

2013-2012

Greece

Portugal

EMU

UK

US

TIGHTER

…pro quo


-2 -1 0 1 2 3 4

Belgium

France

Germany

Netherlands

Spain

Italy

Ireland

0 1 2 3 4

Belgium

France

Germany

Netherlands

Spain

Italy

Ireland

Ready for the climb?

Cyclically adjusted primary budget balance

(% of potential GDP)

2

4

6

8


-10

-8

-6

-4

-2

0

75 80 85 90 95 00 05 10

Austerity for years to come…

Required

CA

PB

,2020-3

0


Required

CA

PB

,2020

Highest primary balance, 10-year rolling average

Regulation


Regulation

Basel III: the message to banks

1. Reduce leverage ratio => smaller balance sheet

2. Higher solvency ratio => hold more capital

3. Liquidity coverage ratio => have high quality liquid assets to survive stress

4. Stable funding ratio => hold more stable liquidity


• More selective with risks

• More selective with long-term credits

• The dash for cash

Conclusion


Conclusion

Conclusion

• Growth => not enough in the West

• Debt => far too much in the West

• Austerity => for years to come

• Inflation => structurally low and sensitive to commodities


• Inflation => structurally low and sensitive to commodities

• Policy rates=> central banks keep rates low to help deleveraging

• Regulation => Banks more careful with liquidity and credit


“The best thing about the future isthat it comes one day at a time”

-

Abraham Lincoln (1809 -1865)

Rooms location

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Rooms location

Opening session

Break-out 1Treasury Organisation

Break-out 1Risk Management Commodity trading

Break-out 1

Einstein ABC

Einstein ABC

Baekeland

Newton BC

Level -1

Level -1

Level -1

Ground floor (0)Break-out 1Bank Account Management

Break-out 2Governance & Regulation

Break-out 2Technology

Break-out 2Tax

Closing session

Newton BC

Baekeland

Einstein ABC

Newton BC

Einstein ABC

Ground floor (0)

Level -1

Level -1

Ground floor (0)

Level -1

Break-outTreasury Organisation

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Closing sessionImpact of the Financial CrisisBank & corporate views

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Closing sessionImpact of the Financial CrisisBank & corporate views

• Vincent Van Quickenborne(Deputy Prime Minister and Minister of Pensions, former Minister of Economy)

• Richard Raeburn(Chairman EACT)(Chairman EACT)

• Peter van Rood(Akzo Nobel Group Treasurer)

• Yvan De Cock(Head of Corporate and Public Banking Belgium and Member of the Executive

Committee of BNP Paribas Fortis)

• Auke Leenstra(Citibank Country Officer Netherlands and Co-Head in the Benelux)

• Didier Vandenhaute(PwC)

Thank you!

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Economy & Finance

THT 2012 plenary opening_closing