 Thank you all so much for coming. For everyone who said bankers aren't popular, well, clearly they didn't come to Davos. My name is Stephanie Ruhl. I'm with Bloomberg Television. And maybe I don't have a microphone on. And it is an honor for me to be part of this distinguished panel. So let me introduce the group, Brian Moynihan, newly named chairman and also CEO of Bank America. Distinguished fellow, Leo Ming Kang, from the Fung Institute. My former boss and co-CEO of Deutsche Bank, Anchu Jane. And let me say, for anyone who's ever worked at an investment bank, the joy I get to feel right now after working for Anchu for eight years to get to be in this seat while he's in that seat is just amazing. Take advantage, take advantage. And Andreas Sevast, he's the chairman and CEO of VTG Pactoal Brazil and Doug Flint, chairman of HSBC. Thank you all so much for joining us this morning. And I want to start talking about bank models. Five, six years ago, we talked all about the importance of being universal banks and all things to all clients. And in the last few years, it's changed so much. So Anchu, I'd like to start with you. Deutsche is one organization that continues to be in the big, big bracket, trying to be so much. Why? Stephanie, I think you've hit the nail on the head. There's no topic which is exciting. There's no greater attention right now than bank models. You also made a very accurate point. In 2008, there wasn't a bank, 2007, certainly, that didn't want to be global and that didn't want to be multi-product. Flash forward Act 2, Scene 1, the banking industry which was becoming indistinguishable six years ago has now coalesced into a four-speed world, in my opinion. As you would expect, the biggest and the most prosperous segment are the pure regional banks. Regional could be purely national, or it could be truly regional. But either way, I was seeing a report the other day which said something like 80% of the banking sector is now regional. They're enjoying the highest multiples. Some would actually argue that they have been the unintended beneficiaries of the financial crisis. So they've come out of the crisis very, very well. The second category is the one which probably would have been a lonely category six, seven years ago, what I would call a global monoline, a bank which is global but essentially only does one or two things, typically global investment banks or global wealth managers. Six years ago, they would have all tried to do much more than that, but we've seen a retreat and a narrowing of business models. The third category, which has also been probably an even greater beneficiary of the crisis, has been the shadow banking sector. So the world's big banks have got their balance sheets by roughly 30% on a global basis, maybe even more than that. And the growth in assets in the shadow banking sector is almost equivalent. Now, some would consider that a worrying development. I don't. For the most part, they're playing a very important role. In cleaning up toxic assets, they helped AIG get back on its feet faster than they would have. They've really helped European banks clean up toxic assets. So there's a very important role that they've played. But aren't they eating your lunch and getting high-margined business while you can? Regulators have created a set of incentives where certain risk classes, certain business activities, have moved, by the way, people. So undoubtedly, the 2 and 20 model, all paid out in cash, creates a very different set of incentives. But frankly, most of us have not regretted that. That is something which was inevitable. Post 2008, banks which were overly involved in principal investments in hedge fund-like activities, that model needed to narrow. I don't regret that at all. So moving that to the shadow banking sector did make sense. The fourth category is the one that you've touched on, which is banks which are global and are doing multiple products. Were the ones completely under the lens at this point? Are the ones, on average, enjoying the lowest multiples and the highest amount of questioning? In my mind, so why be a global multi-product bank? The answer is very straightforward, Stephanie, because clients want it. Not all clients do. But enough do for that to be a critical segment of the financial services sector. Too many banks have that ambition, agreed. To take it to zero would be a mistake as well. Talk to the world's really large corporations that want to buy another company and need large volume underwriting. Talk to the German middle stand, which is truly global and wants to be serviced in 30 or 40 locations. There's enough clients who tell me on a very regular basis that the business model that we provide them is required. Undoubtedly what comes with that model is tremendous scrutiny of our capital and leverage standards. And so we owe it to the regulators if we want support for a model like that to run it very prudently with low complexity and very high levels of capitalization. Brian, I suspect you would agree. Yeah, I think it goes back to the simple points why we exist. We exist to serve our customers and clients. And our customers and clients need the range of services. And especially when you look in the US context, the range of services required to be global in capital markets or into the middle market segment is absolutely requirement to be effective. So if we didn't need to do this for our clients, we wouldn't do it. And so the company, as Angie said, it's buying a company, a US company buying company in Europe or a European company buying a company in US or Asia. You pick it, needs financing, needs understanding of markets, understanding of economies. Investors around the world need understanding of economies and markets. And you can only get it with a scale and the capabilities. We spend $800 million on research a year. You can't do that unless you have the scale and approach and size to spend it. And so that model then serves the largest investors in the world, but that's why it's needed. So it works. And Andreas, is your model at a disadvantage? No, I think you have clients and demands for both situations, right? We are a regional player, even though the scenario is not as rosy as Angie described it, given the headwinds of our region. But I like very much the specialization in being regional. But being global or being regional, you need two things. One, you need to be global connected. So we do enormous effort to be global in terms of understanding the world, the flows, the clients' needs and so on. And you need to be specialized. Being regional, you have a more chance, more focus, more dedication. But if you want to be global, you also need to understand the regions that you are at a certain level. So if you're regional, you need to be global. And if you're global, you need to have a certain level of specialization. And clients require both services. So we have a number of common clients here, the four of us, and clients use us for different missions. And I think it's just different segments. And honestly, I like this kind of global landscape in the financial industry. It's healthy. It's useful for our users. It's simpler for regulators to understand. And it's not a bad landscape for a global financial system. If it's healthy, why do you think we're hearing some analysts say firms like J.P. Morgan should be broken up? Doug? Because why are they saying it? Because I think it's a very interesting question to always oppose against any model. Is there a better way of doing it? Is there a counterfactual? I think that those of us that are large have always faced shareholders saying, is there a different way you could organize yourself that would create more value and be more efficient? And I think that we're at a time when that question is always posed. I think there are extraordinarily strong arguments that put the counterfactual to that argument. And J.P. Morgan have done it. And if we were asked the same question, we'd give the same answer. And I think that you should always be able to justify the state that you're in. Because if you're not able to justify it, why are you shaped the way you are? And I think that one of the implications of the last six years is that the regulatory framework has set a much higher level of capital for the industry, which has meant that everyone's looked at their business model saying, if we've got to have that amount of capital and there are restrictions on our leverage and also some things that didn't used to exist in the past, how do we deploy that capital most efficiently? And then everyone comes back to their core business model where their core customers are, where their core differentiators are, where their core regional strengths are and say we're going to concentrate on those and we're going to simplify down to doing that. So one can still be a very sizable firm, but we've all shaped our businesses differently to respond to the regulatory demands and indeed the competitive landscape. As Anshu said, six years ago, seven years ago, everyone, there was enough growth in our marketplace, probably bad growth in many respects that everyone could think they could get a little bit bigger. Today people are concentrating on that so much healthier market. Liu, have the regulators done so much and required so much out of banks at this point that they can't really service their customers? Whether we're talking about big moves in the market in October or just last week with the Swiss franc, are banks in a position at this point that they can be nimble and service clients when they need to or have they had to become so trimmed down because of regulation, they can't? I think talking about the banks model and it's heavily impacted by the regulation, the supervision and I think nowadays the talking about the regulation, I think the regulation needs to keep pace at the rate of the changes, the worldwide, and especially I think what happened nowadays because we are looking at the Asian market, what happened is the name banking areas, they are developing very fast, especially the mobile internet finance and so on and so forth. And that caused a huge stir in the traditional banks. What I should say in talking about the banking growth models, several things won't change. One thing is who do customers trust in long term? Still the banks have traditional help, they have been based on their face-to-face interactions with their customers. And that is something very, very valuable and I think that won't change. The second thing is that the regulators should add to the market practitioners should believe that banks physical presence, I agree with what they said earlier, global or home, it doesn't matter much. The presence could be changing but won't disappear. Even we are talking about digital disruption, the effects coming from elsewhere or the worldwide. But one thing I'm sure is that regulation needs to keep pace with the rate of the changes and they must leave some of flexibility over there and make sure that there's no corner with the non-regular to the world. Otherwise it's not fair in the level of premium field. It's a great idea, but aren't you, is it realistic to think that the regulators are going to keep pace with the changes? Steffi, let me begin by saying something that may surprise you. In my view the bulk of regulatory reform was much needed, much needed, so the bulk of it. So if we go back to the lessons of 2007, 2008, did banks have enough capital for the risk they were carrying? No, as an industry, not. Our leverage ratios grew out of all proportion in the five years prior to that. Were banks doing too many things? Undoubtedly, we were doing private equity, we were doing principal investments. We had hedge fund-like activities inside a regulated bank entity. OTC-derivative markets had leapt far ahead of regulators' ability to monitor them. And if you think about the trust of regulation, it's aimed really at those three principal things, OTC-derivative reform, capital structure reform, business model reform. All of which, in my opinion, was right and is headed in the right direction. I think for the most part the banking industry is a lot better today for the regulation. Not to say we wouldn't have done it anyway. I'm a firm believer in free markets and the fact is our supervisory boards, our shareholders, our own management would very much have taken us on the same journey. Would we have moved as fast and at this quantum I don't know. The issue which you're raising which is very, very worth pondering is has regulation also overshot in certain directions and could be wind up at the risk of regulatory overshoot and certainly the Treasury flashed crash last year. I would say the death of securitization in Europe, there are a few things which we can see. Frankly, bank lending being constrained in certain ways as well, which could lead to unwanted consequences and that's why I think it's important for the dialogue to happen. I think most bank leaders will tell you that we don't oppose what's taking place, we think it's a step in the right direction. The quantum and the nuance has to constantly be analyzed and we have to make sure we don't wind up with undesirable outcomes, particularly going into the possibility of a fed turn where if you go back and you're a student of financial history and I am, there's been disruption every time. Banks act as shock absorbers in the financial system and if you incent us to really run very lean inventories and so on and so forth, our ability to provide that shock absorption could wind up being impaired. Brian, Ling said, customers need to trust their bankers. Can bankers trust their regulators? At this point, it just seems like it continues to be such an adversarial relationship that from an outsider's perspective, it doesn't seem like regulators are working with you. It seems like they're just scolding you again and again. Well, I think you gotta go back to, as Angie talked about, there was such a deep recession and the anger of the world reflected to the financial system relate to that, even though there's a lot more causes and stuff, but since we were the transmitters of it and the helpful, helping it to go along, that is understandable and as time goes on, you see that mitigate. So that's sort of one thing. The second thing is that where the agendas clash is when we can't get things done and so there's been a lot of regulations that are still, you're asking about changes which aren't even effective yet. And so how the business model will develop over the next five years based on rules which become effective over the next five years will be told five years after that. And so I think that still creates a lot of uncertainty, but by and large, I think that if you look around the world, we're settling into a pattern between the regulatory fraternity and the industry fraternity that is having a deep dialogue about the precision and the unintended consequences at relatively deep levels. What we both need to do is keep the public confident that we're gonna fix it and not let it get unfixed and keep the, so that the technicians can actually work on the underlying regulations and make sure they don't have the unintended consequences. I think we're in that period now personally and I think my colleagues agree with me even talking to some of the audience members earlier that you're kind of in that period. Now the question is how do we keep it from becoming on flame again? So we could work on technical definition under TLAC or under this to make sure they work for the benefit of what's trying to be achieved from a public policy standpoint, a regulatory standpoint, and a market standpoint, and a customer standpoint. And I think we're in that equilibrium. So I think the public's view that there's still this massive bashing is really not there. What is going on is a lot of technical dialogue around very technical, deep thousand page items that has to go on to try to keep the balance. But the large pervers are largely set and if we don't, the industry's adopting to them, but a lot of it's still to be played out. Did you think for a moment last week that you couldn't conduct business as usual when there was the massive move with the Swiss franc? I mean, the volumes went through the roof and they all got traded out and people got caught off guard and we worked with those customers to figure it out. That's the way the world works. But the volumes of machines that we have that operate take tremendous volumes from every day. I mean, we have 130 million consumer interactions a week in our company, just think about that. So the volumes that go through. So I don't, I mean, I'd ask these colleagues people in the audience, hey, you know, it went through the system, it was bumpy, people lost money, but the end of the day, the system worked all day long. According to my experience, the, I think the homework for the recorders, the worldwide to do is that to enrich the tools in the tool pit, that is something we badly needed. Secondly, they got the broaden division to look at some new crisis. So it could be happened in the name banking areas because the cost to run the business is different. So you got to keep the parents between the core digit offering and the trust of the value of the money in the long run. And also I think the globalization we are facing. But anyway, the rules and the laws and the detailed the regulations are still national. That's really why we can see the, you know, certain surprise here, there. And without coordination among the nations, I don't think it's a fruitful conclusion. And certainly the dialogue and the communication and the transparency of such a dialogue in the public to build up the confidence where we are, where we're heading for, especially for the terms like TLAC and to many other sophisticated things like counter security calico buffer. What is the trickle point of the event? Not a single national supervisor and recorders dare to pick up the trickle point of time because they are having a go to the authorities or they haven't got skills, knowledge and experience to do that. And to the consequences, they're there to bear. But still it's a black and a white term knowledge about that. So we need keep digging all their sins and keep the dialogues among the markets, between the markets and the recorders. And but anyway, in general, in my eyes, with the efforts given by the FSB and BCBX, what I can see of the global financial crisis, the bank regulations has gone up a huge notch and the information disclosure and transparency of the banks are much, much better than before the global financial crisis. And the capital strengths in general are much thicker in the banking industry. The problem is that we got to look at the leakage because nowadays the whole financial worth just like a sieve, still you can see a lot of things lagging behind. And it could become a very large and unregulated world. It could be the next financial scandal. I can't because there could be a huge deposit outside of the guaranteed system and their crimes could be hit badly. Not to mention the divergence of the central bank policy appear this year. Andreas, let's talk for a minute about how regulation has hit emerging markets. Just before going specifically to emerging markets, I just would like to emphasize two topics or two challenges on the regulatory side and on the banking side of the previous debate. On the regulation side, it's very good that we have shadow banking that can supply part of the service that the banks cannot do or cannot do anymore. And do that with more flexibility and agility and help it in a certain way fixing the system. But it depends on how we manage regulation at the margin especially. We can create the perfect environment for the next crisis and being on an unregulated environment is even tougher than on the regulated environment. So I think regulators have a challenge about it need to create a clear border line of not pushing too much of the action outside the banking sector. And this would create an unregulated dangerous environment. And if we have the same situation of 07, 08 in an unregulated environment, could be even more serious. That's one challenge on the regulatory side. On the banking side, I think banks need to face a challenge that in a certain way was present before 07 and 08. And I think it's still a challenge for financial system, especially for global banks, which is dealing with complexity. So I don't think this answer is completely done or we know that probably we need to see another 10 years of managing banks on a global scale in this environment to conclude that we are ready to deal with complexity. Keep in mind that banks should deal with demanding customers, with demanding regulators, with volatile markets that will continue to be volatile. And doing that on a global scale and managing this perfectly, it's a big issue. And part of the 07, 08 crisis is not only lack of regulation or not the best regulatory environment, but was the challenge, the simple management challenge of dealing with complexity. So I still think that we have this challenge in the industry, this answer is still not there. Going to the emerging market environment, I think the regulation change impact is much smaller, much smaller for two reasons. First, in most of the more liquid, the emerging markets, the banking regulation came after and came in the last 15 years, basically, where some distortions of the G7 regulation was not there. So things were done for the first time and they were done probably on a more efficient way. So this helped a lot. And second, it's a system as a whole, much more user to deal with extreme volatility, with big crisis, with big uncertainty, with political or economic crisis. In this sense, the financial system in emerging markets, broadly speaking, was more prepared in terms of regulation than the G7. That was much more user to deal with stability, with less volatility. So in this sense, the impact has not been so big. And in a certain way, regulation is migrating to this kind of the leverage ratios, capital requirements, which use it to be on the more sophisticated emerging markets, much higher than G7. Now, we are closing this gap. So that's an interesting phenomenon, because we have probably a different intuition about that. But that's the reality. Doug, I want to talk for a minute about market impacts. We can see this year. So ECB QE program. As you look at it ahead of us, how are you going to oversee, run an organization, knowing that that's what we have? What a question. I think the last several years have taught us all to expect the unexpected and prepare for the worst and hope that it's better than that. I think that over the next several years, the next several months probably, things will happen that are outside of our expectations. And our experience has been you address that by ensuring that you've got very good control systems in terms of identifying where stresses can come. You run with a very good capital base, and you run with a large amount of liquidity. And that enables you to deal with unexpected events. I mean, all of us last year went through multiple stress tests, none of which predicted an all-price bill of $50. So we went through massive things around economic changes, around interest rates, around foreign exchange rates. But the all-price wasn't part of the stress test. So it tells you that things will happen that we can't foresee at this point in time. And therefore, we should assume that that will happen and go into the environment that we're in at the moment with liquidity, with capital, and with a management team capable and experienced in dealing with unforeseen circumstances. Then I have to ask, Anshu, when Doug says, expect the unexpected, prepare for the worst, the stress test, regulation, it's been a really rough slug for the last five years. And the jobs certainly don't pay what they used to. Why do you want these jobs? I mean, Kevin Overick's laughing in the audience, saying, I don't work at Goldman anymore. I run a hedge fund. Why do you want to have these jobs? Let me first pick up on the first part of what Doug said, because I think it's worth spending a minute on that. Quantitative easing is going to be, is already, and or the anticipation is already, and the reality will be, of profound importance for Europe overall, but particularly for banks operating in Europe. So it'll mean two things for sure. It will mean stability in Europe, the funding crisis that we were suffering at the sovereign level two years ago are unlikely to occur, especially if they wind up buying between 500 billion to a trillion euros of peripheral debt. Is that enough, 500 billion? Markets will tell you that 500 will be slightly disappointing. 750 is expectation. Trillion euros would be bullish. That's what I'm told. We'll see. We'll find out tomorrow. But coming back to what QE means. QE means stability for Europe, which is good. It means a better loan loss provision environment, fewer bankruptcies, a stable European landscape, which ought to be good for banks. Equally, it means very low interest rates and a real destruction of net interest margins, which of course is going to be a huge challenge. So the best parts of our business, the deposit taking businesses, our flow franchise businesses will all suffer from that. So we really have to adapt to this environment and frankly it's here to stay till European growth turns around, which could be a while. So for me, QE is not an unmitigated positive or negative. It's going to have a profound impact on all aspects of our business model and we'll just have to adapt to it. And we've been doing that over the last two years. Why do we want these jobs? For me personally, it has to be a mission which is a bit beyond the normal ways in which you measure careers. It's a chance really to make a difference. Running large banks, hazardous as it is and complex as it is, you still have a tremendous impact on all aspects of the system. And if that's something which is fun and challenging, I can't imagine a better job than this one. It has its set of challenges for sure. Brian, the Fed taking a turn in 2015, what does that mean for your business? Well, as Angie pointed out, the environment with low interest rates is not good for banks in a higher interest rate environment. We'd make more money because a substantial part of our funding is non-interest bearing accounts and obviously they don't go up in a rate structure and the loans repriced. But the technical answer is one thing, but you gotta step back. If the US Fed raises rates because the US economy is growing strongly, that is a good news for the US. It's good news for the world. And right now, our estimate for the US GDP is three and a half percent per 2015. And if that comes true, and for your lips, God's ears as they say, this would be great for the world because the US consumption helps drive the economies in the US and obviously around the world. And so I would get less about, would we make more money, yes, but I get more focused on the environment by which the US is continuous to strength and is good for the world and good for the growth in the world all over. So I hope they raise rates for that reason. If they raise because they have to fight off some, yes, Doug said some unexpected outcome, a spike in inflation, that's not good, but it's a reason for the fundamental reason the economy is growing. We'll make more money, but the rest of these, everybody in the audience will make more money and the economies around the world will benefit by it. Andrea, so if we were having this sit down in the United States, people feel really bulled up. They feel great about the economy. They feel great about balance sheets. But even though we've basically just arrived in Davos, there is some sense of pessimism here. The geopolitical risk, cyber hacking, Russia, Paris, as you go into work, as you're dealing with running your organization, is there a risk that has you the most concerned right now? I think the world is always a collection of risks of our financial world and the best way of facing and managing this risk is understanding that, right? As was said here before, who would imagine that six months ago, one of the most liquid markets in the world, the oil market dropped at 50% in four months. So, and nothing really special happened, right? If you think, it's the opposite. A geopolitical environment around the oil probably deteriorated during this period. So it's an absolutely uncommon outcome. So the best way to manage financial exposure and financial risks is understand that it is what it is. In terms of the world risks. I think what I don't like in terms of risks is us moving too far on unconventional policies. And it's good news for Europe. What does that mean? The amount of QE that the world is doing right now. And we have now five of the seven economies and G7 with negative rates. We are in absolutely unprecedented QE in Japan, Europe in two days. And the US, we have zero interest rates for five years in a row, which never happened in global financial history. I agree with Brian. I would like to see interest rates going up in the US, not because we have an inflationary threat on the middle term. I don't see that by no means. But I think as soon as we go back to normalization, and the US is probably moving in terms of its fundamentals to normalization, it's good that we go back. And when we extrapolate unconventional policies, I think this is the highest risk. I don't think we should appoint Russia, oil, emerging markets, or Europe, or Greece, whatever, as a key risk. I think the global risk is moving too far on something that is unknown and not clear what are the real side effects of that. So I would urge US or the Fed to go back slowly in a moment that we don't see any big threat to normalization. We don't need to move to tight monetary policy instance. But to normalization, I think it's a good recommendation to avoid real big risks and unexpected risks. The ones that you listed or I listed are those that we are all managing. What always worries me is the one that we are not seeing. So that's my comment around risks. Not sure. Let me pick up on what Brian just said, because I think he made a very key point. You guys are being way too nice to each other. You like Brian and Brian like Doug. Can't you disagree? Yeah. We'll disagree with you. Yeah, pretty much. The point being about the resilience of the banking system, if you think about what's happened in the last six months, we've digested a 50% drop in oil prices. We digested actually one of the largest standard deviation moves in the US tenure in a matter of a few hours. And this has become routine. These moves would have caused enormous pain two, three, four years ago. Yes, we still lose money, but the reality is the banking system has proven that it can handle very large market moves in a pretty efficient fashion. What worries me, now moving to the big risk, in Europe, certainly, is political risk. We've got Greek elections on Sunday. We've got Spanish elections coming up. Dare I say, we've got UK elections coming up with some fairly uncertain outcomes and consequences of it. To me, really, the nexus between political outcomes, regulation, and finance are very, very tight. And I think with so many key pivotal elections coming up, the unpredictability of outcome is something which I worry about, because that's hard to predict and perhaps hard to manage to, depending on some extreme outcomes. Jack? Yeah, I think these things, it's always two sides of the same coin. I agree with what Angie said, just to get this, because it's kind of collective sort of admiration going. But on one hand, if QE is successful and creates confidence, that's a great thing. The risk of that is that the political progress towards structural reform and competitiveness gets put in the back burner, because central banks seem to have solved the problem. So and if QE doesn't work, then the kind of magical impact that central bankers are deemed to have suddenly isn't perceived to be there. And you've got a lack of confidence. I mean, that's part of the risk at the moment. The financial system can only transmit economic policy. At the end of the day, if we're going to get growth, it's all about demographics, competitiveness, innovation, and structural reform. That's what's important. The financial system can transmit that. It can accelerate that. It can improve that. But it can't create it. And I think at the moment, there's too much dependency on what the financial system and particularly what the central banks will do to solve problems. They can buy time. They can create the environment where confidence can improve. But if that time is not used wisely by political processes to create the necessary environment, then we lose the opportunity. And then the next stage of QE or whatever the next unconventional measure is has even less impact than then people begin to have a lack of faith. So it really is double edged. You really need the system, the central bankers, and the political processes to be aligned to use the time that will be bought by unconventional measures to do the proper changes that are necessary. Liu, is there a risk right now that you're most focused on, concerned about? Yes, of course. We can witness what happened because with a very low interest rate and a very low year, and in the market, they have much too much carry trade. And now when the headwinds changes and the refreshing in general doesn't work, and in the meantime, the US is picking up. And definitely at any point of time this year, the US interest rate hike, then everybody wants to rewind what they are carrying. So that will cause huge turbulence in the market. So I think this talk is very important, critically important of this year. And looking forward, I think in general, the QE policies adopted by Japan or EU or elsewhere is just to buy time. They buy time for further reform, political reform, fiscal reform, and so on and so forth. If that couldn't be followed by the physical reform, fiscal reform, and the political reform, and the consensus, it's no good. And also, each time we witness several times in my life, when each time when the US rate hike, then immediately a huge surge in the market, huge capital growths, and a huge rotation of risk appetite in the market. So that definitely will happen this year. And so in general, keep your powder dry. Brian, after last week's move with Mr. Frank, do you trust central bankers less? Have you changed the way you look at things? So far I've gotten asked, do I trust the regulars? Do I trust the central bankers? Do I trust the media? Is that the next question? I mean, you had to have woken up and said, you got to be kidding me. Well, I think the whole world woke up and said, you got to be kidding me, a single day movement. But these people, I think it's what Douglas is saying, is that the overreliance on unconventional means can lead to, when they normalize, it has a pretty good reaction. But haven't we become addicted to overreliance and unconventional means? And I think that's what the colleagues on the panel are saying. And I think it masks the need for, at the end of the day, the excesses in housing in the US, for example, were covering up a lot of things that weren't going right in the economy. And the leverage available on housing and people being able to use it as an ATM, so-called, and spend the money. So these excesses cover up real fishers and economic strength of companies, fiscal discipline, competitiveness, and all the things they said. So when we go to normalize, the move is more dramatic. And so when the Fed raises rates off of five years of zero to something, it's a massive move. And they're telegraphing, heck, I won't surprise people. But it still will take a while for the system to absorb and as they move up. Because it's been so low for so long that you have whole groups of people that entered our business and have existed in our business that never known anything. But zero interest rates in the United States. I mean, it's a five-year career. There's people that says all they know. So when it moves, the whole world will change them. How other people in our business have been around a long time. The prime rate was 23% at one point or whatever it was. So I just think the excesses are coming out. So the word trust is overused in these contexts. But I think people shouldn't be surprised that central banks will make adjustments to normal at a pace that may surprise them because of their fear if they don't start moving the normal way ever get there. And I think that's gonna, they'll all surprise people in actuality, but I think that the theme will be the same. How do we get back to normal so that the world gets back to the right driver's economy as opposed to over reliance on sort of the bridge builders to the next dimension? Trust is overused and technology as a term is often overused. Anshu, when we look at how technology has changed so many industries in the last five years or so, how much has it really impacted your business and the way you run an organization? I would bifurcate my answer. On the wholesale market side, we were early adopters of technology. So electronic execution, low latency, very rapid market access electronically and so on and so forth. I would give the industry high marks for adopting technology early. On the mass retail, particularly mobility side, if you look at other industries, you look at music, you look at apparel, you look at detailing, generally there's been a revolution, cost of storage has dropped dramatically, big data analytics have really progressed amazingly rapidly in a short period of time and other industries have really adopted disruptive models. We've been slow to do so and I think there's a variety of reasons why that might be the case. I think the 2008 financial crisis may have a lot to do with it. Our focus was very much in getting out of that and recovering from it and all the regulatory stuff we just talked about. Times come, I think for us to really pay some attention to what technology allows us to do on the retail side as well. And I think our industry, I would predict that our industry will go through now some of the same rapid evolution that other industries have. There's a lot of tools at our disposal and we haven't deployed them as an industry as fully perhaps as we will in the coming years. But isn't it very tricky because as an industry, you've been in a cost cutting mode for the last five years. So to really adopt all this potentially new and exciting technology, that's a big cost to you. It's a J curve like anything else. You make that investment and you reap very rich dividends down the road. I'm confident. Or none. Or none, yeah. That's the nature of e-investments. That's true. Andreas, what do you think? I think I agree with Anju that up to now technology has been less disruptive to financial sector than other sectors in the economy like retail or any other, almost any other. On the retail side or consumer side of banking, I think that technology has the potential of still to be disruptive in the near future. And I think this story is still an untold story. So I do see some big changes. It's a simple, you can do a simple test. Ask anyone younger than 25 years old if they ever been to a banking branch. And the answer probably will be no. They never went to a banking branch. And the big banks, big retail banks globally, they have thousands and thousands of brands that of course have a lot of functions. But if the customer is not doing there, that's one point of reflection. So I do see for the future on the consumer side some potential for disruptions with the new technology uses. On the wholesale side, and I agree with Anju on the different answers for different segments of our industry, I think it's a little bit the opposite. I think technology is helping and helping to managing better risks. Electronic trading execution has been very good for security, for cost reduction. The potential has been cost reduction. And I don't see even on the middle term disruptive environment caused by technology. So I have this dual answer also and we were not disrupted by technology on the retail segment, but I think we have a good chance of being the next decade. All right, we need to open up to questions. We have a few more minutes. Mr. Stazinski. We'll bring you a microphone. Thank you. Stephanie, I thought given your market's background, you would have asked this extraordinarily august panel to comment on their most relaxed and also worst fears about liquidity in the markets and what could happen to cause another liquidity crisis in the next 12 to 18 months. I think she, that's what she was asking us. And that's the real issue that I think goes to the question of the Treasury moves or the Swiss franc and the disruption that goes on and whether there's enough liquidity or whether we as an industry can provide the same kind of liquidity provided to firms before. And the answer right now is we can't provide as much that we did before just by the nature of the rules. And I think that'll be the kind of thing over the next weeks, months and years. We got to work to make sure that as a core provider of liquidity, the markets that we're in a position to do it. And I think the regulators would agree with that. The question is, is then when does that turn into proprietary trading at levels they don't want and how do you, or the carry trade at levels they don't want? And that's kind of the tension you're in right now. But overall, you know, we're all running less inventories, less ability to provide liquidity because the cost of that is so high and that's gonna, that's had an impact on market. We'll continue to have an impact on markets. And I think until the fear that we all have until we straighten that out, you could have things come and happen that create many crises in that context. So you're exactly right. I just, there's not a great answer because we can't change our basic trading posture to provide the kind of liquidity we might have done 10 years ago because it just would be so prohibitively expensive that one day you need it, you'd have to pay us so much to the end and we wouldn't pay us. But how do you straighten that out? Onsho, in October, after there was that brief moment where the markets really froze up, specifically in the credit markets, did the regulators knock on your door and say, gosh, this must have been a really hard time. We should have a talk about this. Or is it tough luck, what are you gonna do? Brian's right. When the bank CEOs meet the top regulators, that the dialogue is now very sophisticated and that's a concern which particularly US regulators have at the forefront of their minds, I would suspect. Look, sometime in the next six, max 12 months, we are going to get that fat done. All panelists have agreed on one issue. That's gonna be very significant. We've had an extraordinary period of last monetary policy for a long period of time. That will come to an end. You'll also get differential movements. Europe will continue. Japan's continuing. The US will go in a different direction. Nobody knows exactly what that means. Both to answer the question and to go back to your earlier point. My fear, not my prediction, would be an unruly event in credit markets. Sovereign debt we've now seen. It's a deep enough market. There are enough natural players that even if the street doesn't step up and provide the kind of liquidity we used to, there's been enough stress testing where I'm relatively comfortable that if there is a huge unwind of the treasury carry trade, there are ways of working our way out of it. Frankly, the same thing were to happen in investment grade credit or worse still, high yield or leverage loans where there's been a desperate search for yield now for multiple years. That would be at the forefront of my concerns. A disruptive credit event following a Fed turn would be at the top of my worry list. Combined with, sorry, banks not willing, as Brian said, to provide not able to. We're not even in a case of not willing to. Not able to provide the same liquidity for the structural reasons which we all understand very well now. Doug, these are real fears and concerns. Could you see yourself saying to HSBC, let's get out of these markets. We don't need to be in high yield, investor grade, leverage loans. The risk is too big and most banks haven't made money in those markets in 12 consecutive quarters. No, I couldn't see us doing that. And in fact, I think one of the outcomes of this, which will be probably an unintended consequence, is that as my colleagues have said, liquidity will be priced much higher. So indeed, banks may actually do quite well in providing the limited liquidity they've got to the marketplace at that point in time. If I can step back for a minute, I think John's question's absolutely fundamental one at the moment, which comes back to the heart of, the last five years have done a huge amount to define what the banking system shouldn't do. It's done very little to define a vision of the future. The question I'd love to ask is, go forward five years, you've got everything you want, what does it look like? Because one of the questions would be, where is the liquidity provision? The shock absorbers used to be the banking system for a whole bunch of things, mostly to do with leverage, it won't be in the future. We talk in Europe in particular, we want to get a securitization market, we want to get a capital markets union, we want to get people investing in infrastructure. So we're saying to the pension funds and insurance companies, we want you to invest in long dated illiquid assets for which there will be very little liquidity. And they're going, why would I want to do that? So if we design a system where we make it very difficult to hold the very assets that we're incenting people in public policy to own, we've somehow got a disconnect between economic policy and regulation. And that's the piece that should be addressed. But is it going to be? Well, it will do if everyone gets round the table. I mean, and you can probably wax far better than I can in this, we've talked about, we now call it capital markets union, but we must have been talking for the last four years about reawakening the securitization market in Europe, which by the way did not have the problems that were in the US RMBS market. And yet, four years on, the regulation environment for pension companies, insurance companies, the regulation from bank is disincentive of securitization. Everybody gets in a room and says, we need to do something about it. Everybody agrees. And then we come back in six months time, we continue to agree, but the policy framework doesn't incent it. So what is going to spark the policy framework to change when we sit here a year from now and have the same conversation? Are you going to say, aren't you and I are going to have been talking about this for five years now? What's going to spark actual change? A crisis? Certainly crisis on a traumatic way. You say that with a giant smile. I think we are intelligent enough and smart enough to act before that. When we mentioned the risks I mentioned before, after five years of zero rates and huge monetary expansion globally, you have a huge distortions in price. And it's not only where are the carry trades or the subsidized securities. You don't need to go to sophisticated markets, right? You go just to global equit markets and it's difficult to judge S&P valuations after five years of zero rates, right? It's real value. What is, how valuations are being done in a world like this? That's I think what is by no means the key risk or the most relevant risk. How we go back to normalization and how far it takes. Second, the liquidity issue I don't think is related to that's related to regulation. And what is a consequence of a little bit a little bit maybe over regulation or over trust in these quasi bank structures to provide liquidity in the markets. And it's very scary the lack of liquidity. Even in supposed very liquid parts of the market, right? Certain areas of US treasury is now quite liquid. And we talked about the most liquid fixed income security in the world or areas of high grade and so on. The liquidity issue can potentialize the next wave of risk aversion. And even though regulators talk about that, I think it's still not enough serious in my view in terms of priority of to move and fix and help at least to have a more optimized framework that what we have today with probably the unintended consequence of regulation. I think more realistically today, I think there's the urgent mission for every nation that is that national regulator, the central bank has got to have a quality communication with major market participants in terms of liquidity crisis management. Talking about- Any central bankers disagree with that? I think every national bank should national central bank. It's that mission to keep the stability. So I think there are two stories got to talk about in terms of the liquid crisis management that one is how can we keep the liquidity over there? And to attend this aim, what is acceptable collateral in terms of need? You've got to have the detailed technical arrangement beforehand. Second, how to keep the cost stable in the road. This is a very, very urgent issue. I think we got to talk about that. Then we've got to feedback, trace back to the FSB and BCBS to see if we can nourish some consensus. Microphone up here. Thank you very much for the very interesting discussion. I understand you and banking sector had a problem, no issue with the central bank or regulator or some cost of IT or lots of issues there. From my different viewpoint, I am now wondering where to invest 2015. The financial sector including bank is a proper sector for investment of the security and fixed income. This is my question. Where to invest in 2015? Yes. Bank of America stock, is there anything? Yeah. I can disagree with that. Oh, okay. This agreement point of the panel. This is for over. Yeah, I mean, I think you have lots of experts advise on that. If you look at, most people want to invest in growth and I think in the potential, so I think if you look around the world, the growth paradigm for a lot of the reasons that have been discussed is shifting to very few economies and you're seeing money run to those economies pretty strong, India being a case end point and you see the money really rushing in there. So, I'd be careful, I think that's, if you look at where the economy's gonna grow and if you read the research out there from our firm and other firms, you basically see growth in the US and that's become very interesting. There's a ton of interest in the US. Competitiveness, stability, rule of law, energy, all those things. You see a lot of interest in India because of the new government enthusiasm around that and you see in China continues to grow. Countries like Brazil have slowed down and people are trying to figure it out and so they're really following the economic prospects and I think that's what you see. As far as fixed income investments and where rates are, if you think about it, these are long-term lows and rates so that's what they're trying to achieve is to get you to put your money in a real risk in the equity side and I think those countries and those economies are clearly the ones that are and various economies in Europe are differential but I think you just follow the growth pattern and that's where people are doing. That's what we see. Investors are invested in, leave aside they pull money out or not but they're really invested where they think the prospects for growth, sustainable growth are and that's usually measured out in the projections for economic growth around the world. And that's not telling you anything you don't hear 100 times but that's the simple math. We're almost out of time. Real quick, Doug, starting 2015, are you more optimistic or pessimistic than you were last year? I think slightly less optimistic. I'm still optimistic. I think we'll get through this year but I think it's not, I think if we start this year a little bit more cautious than we were six months ago. This time next year, will HSBC have more or less employees? I don't know about the same, actually. Andreas? I'm more optimistic because we can see sustainable growth in the West and reversal to the mean in terms of monetary policy and the challenge in Europe and Japan I don't think are new challenge. They are the same that we have been for a while with different phases, magnitude or actions that I'm more bullish because of US. Lower commodity price will help more people than create problems. The issues on emerging markets I think is just a normal noise. I see institutions very strong in the key emerging markets. They will face the challenge of the moment. So I'm more optimistic than I was one year ago. How about your institution? Bigger, smaller next year. Bigger? Aren't you? I was not very optimistic this time last year and so definitely more optimistic now and really focused on two or three things. People have talked about these themes. This US recovery feels very real. It's the world's biggest economy and it's not just running on one turbine. It's running on multiple turbines, technology, interest rates, consumer demand, shale. There's a number of factors which are positive. Oil stays at these levels. It's going to have a stimulative impact on global demand. I agree with Brian. India and China are both now looking very strong and here's a contrary view. I think Europe with a much weaker euro and with QE behind it will start to emerge from its doldrums. I don't think it'll go all the way to where it needs to be but I'm hoping for incremental progress there as well. Unprecedented liquidity for the most part will continue. So yes, there's geopolitical risks. There are plenty of things that can go wrong with this scenario. Oh, sorry, the most important one for our industry. Finally, we are starting to see knock wood, regulatory certainty. We may not like where we wound up but the reality is the number of issues which are open have shrunk dramatically and that's something we have to be thankful for. Finally, we can plan with some clarity. I say that of course and next week we could get the raft of new things which surprises but that adds up to optimism for me. Do I just shrinking or growing? Ask him that question. We're in the process of a strategy review which will be communicating publicly in a very short period of time. I think that means shrinking but what do I know? I just told you I'm optimistic. I'm cautiously optimistic. The reason is three because the lesson is steer fresh. Second, we have more political consensus globally than before. Third, the market practitioners are monitoring the surprise carefully and closely. And so in the new year I think with hand in hand maybe we can work together and to fight against some new challenges. Brian, optimistic, pessimistic. I am very optimistic again for the reasons that the colleagues spoke about. But I think the thing about the US growth that I get concerned about is that the world becomes too dependent on it. And I think that's the concern I have other than pessimism. I'm optimistic about the US growth but I'm concerned that the rest of the world has to catch up and we can't have the dislocation to prescribe. In terms of people, is that your next question? I was going to ask you the price of oil one year from now. We'll have more front office people and less back office people because of technology. I mean, that's just a relentless thing going on in the industry. So you'll have more people selling and serving clients and less people processing paper. All right, gentlemen, thank you so, so much. Doug, Andreas, Anshu, Liu, Brian, and thank you all for saying your participation and John for your great question. Thank you.