 Welcome, everybody, to this CNBC discussion on the future of banking at the World Economic Forum in Davos. I'm Jeff Cutmore. Let me introduce to you our very distinguished panel. And we'll start with Brian Moynihan. Brian is the chairman and the CEO of Bank of America. And I'll just give you some fast facts. The stock has risen well over 30% since Donald Trump was elected on November the 8th. He's been very busy shedding businesses, I think, up to 60 in recent years. There is a relentless focus on costs at Bank of America. And just to give you a few quotes to let you know how Brian is feeling about things at the moment. On regulation, he said on CNBC, I'm interested in having a regulated system because we have to pay to clean up afterwards when things go wrong. He also described businesses as being somewhat friskier since Donald Trump came into office. Those are Brian's words, not mine. Brian Moynihan. Antonio Horta joins us. Antonio Horta Osario from the Lloyds Banking Group. Just to give you an idea as to what he's been up to recently. In the middle of December, Lloyds splashed out on the U.S. credit card business that I think Brian was pretty happy to sell them. The sum at $1.9 billion. But it represents something of a turning of the corner for Lloyds Bank, which has been somewhat on the naughty step since the global financial crisis and having to be bailed out by the U.K. government. The bank continues though to set aside money for PPI compensation claims. And if I say to you Lloyds has been very focused on rebuilding its operations as far as the U.K. retail client is concerned. Lloyds has also not been slow in thinking about what to do post Brexit. Plenty of reports suggesting that you've been looking at subsidiaries elsewhere in Europe. But does understand it? No official confirmation yet from the bank. So we'll see how we do today. That is correct. Just confirm we're very pleased to buy Brian's business as he was, please. So you're not going to confirm for us that you're currently looking at subsidiaries in Europe? Well, we are looking at them. That we have confirmed we are looking at it. We have a small presence in Europe. Our business is 97% U.K. focused. But in terms of our European operations, which represent around 2% of what we do, we'll have to probably consider a subsidiary there to have access to payment systems and business throughout Europe at a scale which is 2% of Lloyds as a whole. Well, let's not get ahead of ourselves. We're going to come back. We're going to talk a lot more about Brexit on this panel. Sergio Amati is with us from UBS. He's been CEO over there since 2011. He said here 2017 will be a very challenging year for Europe due to Brexit and a range of elections due on the continental European mainland. Perhaps controversially for the central bankers among us, he says low interest rates in Europe are fueling inequality. Just a little bit of trivia. He took the ice bucket challenge back in 2014. So if you want to see what it sounds like when a leading banker has cold icy water poured over them, you may go to that clip which you will find on the web. I may mention YouTube. Interestingly, when I looked at that clip, it sat beside a presentation on responsible leadership which also involved you. My coincidence. So very eclectic. UBS has about 5,000 employees in London. And I believe your chairman, Mr. Weber, has said there is possibly 1,000 employees that would be affected by Brexit. Correct. I mean, it all depends out. Negotiation will play out. It's at least 26 months to go. It's a lot of time. So we will find out exactly how to position, how to respond. We are well prepared. Okay. Let's move on. Mary Callahan Doge joins us. The CEO of JPMorgan Asset Management. Welcome. Let's give you a few lines here. At delivering Alpha back in September, she said investors are still afraid of what happened in 2008 and a lot of them are still sat in cash. Well, we've seen markets move obviously. So that was September. We'll talk a bit about what's happening here. In terms of how her business is doing, JPMorgan results were just out. Net income in the asset management unit run by Mary rose 16%. So I think things are just going fine over there right now. And we actually did, I think, a story with you about the secret of your success or how one can become more successful. And the line here, no one thing better than anybody else, which I think is a very good piece of advice. Mary, thank you for joining us on the panel. And let me finish by introducing Andre Costin, the president and chairman of VTB Bank in Russia. He has said we will cut headcount in London only if there is a good business case. It's not a political decision only if there is a good business case. He's very enthusiastic about Mr. Trump. We expect Trump to begin easing sanctions on Russia this year. VTB, of course, is still under sanctions, I believe, as a government-owned bank. He's recently been drawn into some debate, I think, about the funding role of VTB around Rosneft and the sale of the Rosneft stake, but I don't know whether you're aware. Mr. Costin, who's been the VTB boss since 2008, 2002, is a former diplomat. So I think he's been using his diplomatic skills to tamp down some of the controversy, perhaps, around that Rosneft story. And just to point out, the Russian economy is expected to grow possibly 1.5% this year, according to the World Bank. So banking is probably not a bad place to go if we get that growth. So that's our panel, ladies and gentlemen. Let me just make a few introductory remarks. You know, the human brain is a remarkable organ. Our capacity to overcome pain and forgive and forget is quite remarkable. If you think about why women go on and have more than one child, phenomenal. The pain of childbirth quickly forgotten. As a passionate supporter of the English cricket team, I understand pain and how quickly one can move on. And I guess until very recently, those of you who are fans of the Chicago Cubs have known a lot about pain over the years, but fortunately that appears to be resolved. And that brings me on to the banking sector, because it's, what, nearly a decade, I guess, since we had the global financial crisis. And yet in some quarters of the world, people haven't forgiven or forgotten. And there is still unfinished business, it seems to me, when it comes to regulation in some parts of the world. And those legacy issues still tend to dominate for some banks in some parts of the world. But others seem to be doing okay. And I think Trump appears to be a catalyst. People are having another look. They're getting friskier, I think, as Brian might say. And they're getting more interested in capex rather than just OPEX at a business level. So let me start by just getting some views from the panel about the reality of Trump versus the 144 characters or whatever on his Twitter feed. I mean, let me just throw this out here. Who really thinks that Trump is going to make a meaningful, short, medium, and long-term difference to the prospects for the global banking industry? Brian, I may start with you, since you've been most vocal on the topic. Well, when we, so we think about the role of bank plays or whatever countries that we have, big home countries or global in the world, you're going to be driven by your economies. And so what drives the economy is a lot of things, but one of things is confidence. And so you've already seen after the election a surge in consumer confidence that they saw a surge in small business confidence. And so all that is really saying to you that the population that has a lot to do with the U.S. economy, two-thirds driven by the consumer and obviously small, medium-sized businesses are much more confident. Now the question is what will happen next? And we'll find out starting tomorrow. And there'll be a series of policies and a lot of discussion, tax reform, and change in the Affordable Care Act in the United States and all the different dialogues. But the thing that has happened that has been reflected in the market is confidence has moved positively. And we've got to remember for a mid-sized company that's privately owned or et cetera, their decisioning is based on what they think. And so therefore they can not hire if they're worried and they can hire if they're not worried, irrespective of 2% growth being the constant between the two decisions. And so what we see is they're borrowing a lot more on the lines and they're saying they're going to hire more people and we'll see a play out. And it hasn't hurt your stock at all, has it? Let's be honest about this. I thought it was good management. I mean, look, there are a lot of investors. Yeah, absolutely. But there are a lot of investors in this room who are wondering why that good management wasn't reflected earlier in your share price running up to November the 8th. But aside from that, a lot of investors are looking at the banking sector and they still see value, they think. Do you think there is the potential for a lot more re-rating, not only of American banks, but banks globally, if what you're saying comes to pass? Well, if the rate structure rises, it's a very tough environment with a low rate structure we've had for, you know, six, seven years now to run a financial institution because part of the business model is the value of the cost of funds advantage you get from non-interest bearing deposits and stuff. So as rates rise, that helps. People believe growth is going to come stronger. We believe the United States are going to grow over 2 percent next year versus this year will end below 2 percent. That's good. And then, you know, then frankly, you know, the massive change that's going on is one of the themes of Davos here, which is the digital transformation of these companies allowing us to become more and more efficient. And that put together gives us a rise in earnings. We made $18 billion after tax in 2016 and we're up, I don't know, 10, 13 percent in the fourth quarter, last year's fourth quarter. Those are good statistics for people to see that coming through. Mary, you want to come in? Yeah, I just, if you step back and you think about how the U.S. government has run, it, yes, there's a president of the United States of America, but there's an entire government body that works on how the economy works. And if you think about the past 100 years of the way that the government has been run, roughly 40 to 50 percent of people in cabinet positions and above have been from business. And when you think about the past eight years, less than 10 percent of the people running the government have had business experience. So now when you think about what we're about to enter in here, it's going to be at least 50 percent. You look at the people that we've got already up for cabinet positions. And so you've got a pendulum switch here. And it's going to be positive for business. It just is. There's going to be lots of ups and downs. There's going to be lots of volatility. It's going to be very positive for businesses in the U.S. which should cascade businesses around the world. And you're going to see that lifted in every sector. Banking is a microcosm of that. And it gets to participate in each and every one of those. And so that's why it's such an exciting sector to talk about. And it's going to be a great several years, not without its ups and downs. But you're going to see the U.S. economy take off in a pro-business way that it hasn't in several years. And just on the other aspect of the Jekyll and Hyde nature of the policy platform so far, cross-border lending has collapsed since the global financial crisis. That reflects what's going on in the banking sector. But the other negative side, perhaps to the Trump message for a lot of people here in Davos, has been around trade protection and the turning back of the stream of globalization. Do you think that that's really going to happen? Or was that just part of the populist appeal to get him over the line? I don't think anybody really knows. But we are a global society and we are interconnected with one another and that's not going to go away. And when you talk about cross-border lending collapsing, it's not that banks didn't want to lend money. We have had a series of regulations causing us to all have increased capital. We have twice the amount of capital that we've had prior to the crisis. We have three times the amount of liquidity. We've got stress tests every week. We've got $9 billion that J.P. Morgan spends on controls within our company. We have 43,000 people, 43,000 people that work on controlling the risk, the safety, and the soundness of our bank. And so there's just a lot of focus that has been on the regulatory nature of making sure that we have safety and soundness, but perhaps at the sacrifice of growth. And that's cascaded across every single one of these banks you see up here representing the global nature. Just very briefly, you've said that short-term risks or a short-term approach to risk taking sort of undermines everything. But that's been very much the nature of our marketplace recently. And the trend reversals we saw in the market through 2016 were remarkable. Do you think that people are going to be able finally to kind of lift their heads up and look a bit further out? I think it's a little bit of a shock to the system as to what's happening. There's a lot of uncertainty as to whether the words and the tweets are the reality or just the art of the deal. If you read the book, you'll see that it's a lot of posturing and then very serious negotiation thereafter. And so I think you're just going to have a lot of excitement, a lot of change. And there might be a little bit of Stockholm syndrome going on here, which is all of us are sort of used to the way it's been for the past eight years. And we're going to have to get used to going back to thinking very proactively and getting excited about growth. Animal spirits unleashed once again. And yet, Sergio Almotti, those of us who do our trade in Europe, look at the ECB meeting we're going to have today, and we kind of scratch our heads. Because as you've pointed out, low rates are making it very difficult to turn a buck or a euro in the Eurozone. Do you think it's time for our own central bank in Europe to get with the game, start talking more actively and vocally about tapering, and just point out that there is a big opportunity out there that, quite frankly, people like Brian and others are coming over to take? Yeah, maybe just to quickly add on everything that Mary just mentioned is that it's not just only the amount of capital we need to hold and the liquidity. Is that that liquidity is not fungible, cross-border, because more and more we are asked to keep capital and liquidity in a very nationalistic way. So basically, the fact of promoting lack of internationalization, even when it's totally viable and sustainable. So that's only a point. Well, it's also being used for US settlements, of course. Why not? That's nothing to do with the way we are regulated. We have to run our liquidity ratios and our capital ratios. There is a view that while there are rules like Basel and core colleges and people talking constantly together between regulators, the trust between themselves is not as high as one would have expected in order to facilitate 10 years after the crisis. A more constructive approach to the benefits of international capital markets and liquidity. So in that sense, when I look at why there is this also constructive, let's call it that way, approach to the election of Trump, is that in the back of the human mind, as you mentioned before, there is a need, a desire, to think positively. And you saw that coming out in very few weeks. Now, the true of the matter is that we will need to see if it delivers or if it's just yet another false positive event. Now, back to your question, I think that's yes. The real question that is how do we hopefully see the ECB or even in Japan or the Swiss national banks that have a zero or negative rates policies, not to take advantage of a potential fed hiking mode and keeping the differential as it is today, instead of trying to, particularly for the euro zone, promote a further evaluation of the euro and a short-term gain in terms of the attractiveness of Europe in terms of the export. We all know that this is not the medicine for Europe. Europe needs more structural reforms to get into a sustainable framework to be competitive. So short-term monetary policy, it was an acceptable response to the crisis, somehow close to what the Fed did, although we don't have a fiscal system in Europe. We don't have such a clarity also in the political front. And therefore, that tool has exhausted its validity and is creating too many side problems that needs to be tackled. And I would absolutely welcome any decision to start to normalize. Well, let's cut to the chase of Sergio. I mean, you've described this as a perfect storm. And it's hurting Swiss customers. The BIS put out a paper recently, 606, if you want to go and look at it, called Market Volatility Monetary Policy and Term Premium. And in that, they suggest that the evidence demonstrates there's no statistically significant real impact despite having a sizable negative effect on the term premium of unconventional monetary policy post-crisis. Now, that's a shocker to me. But if that's the case, and we're here to talk about responsive leadership, do we need the politicians or the central bankers to start changing their attitude and their view on how the economy is run? I mean, which is it? Who needs to snap out of it and get real with the program? I think that the central bankers already did more than enough to be part. The central bankers are should focus to basically facilitate a phase into a new political model or desire to transform the economy. And therefore, it's all then welcome to be very expansive in a moment in which you need to go through structural reforms. But you need to have the structural reform first. You can't basically allow politicians to go on and ask for more central bank intervention in order to address these issues. I mean, actually, it's now crystal clear that it's not working any longer. Yeah. Antonio, let's come to you. I mean, we've had a similar experience in the UK with rates, but we seem to be getting some momentum back in the UK story. But let me use this as an opportunity, perhaps, to bridge to Brexit. Trump and Brexit are a couple of issues that the markets are thinking about differently. Give us your line, then, on the UK and Brexit. Yeah, sure. Pleasure. Just before we go in just to add on what Sergio and Mary just said, I think when you look from the crisis into today, the biggest changes you had in the last 10 years were clearly, as was said, more regulation in general and more capital in particular. So as a consequence, banks had to do three things. First, to prune less profitable activities, which were exposed by the additional capital. Second, reduce the number of jurisdictions because of the first point and also because of not having the burden of those multiple evolutions of regulation and different conduct approaches. And thirdly, they had to focus on where they had comparative advantages because of the first two points, big changes. Now, with President-elect Trump, you have more optimism. I think that's positive. He wants banks to have a bigger say in economic growth. And I fundamentally think that is an extricable link combination. You don't have strong economies in the long run without strong banks and vice versa. Banks are for the economies like the blood is for the body. And therefore, I think I see that as very positive. When you look longer term, I think that contrary to these trends of the past, the two most important trends that will shape banking in the next 10 years are the interest rate level. We go back to Sergio's point. Now, especially in Europe, half of the balance sheets of banks, especially retail and commercial banks, is a bit useless, if you want, because margins are compressed and deposits are not useful economically speaking. And secondly, digital fintech is a major trend shaping the fintech. Well, let's not get ahead of ourselves, right? Because we're going to come to fintech later. So these are more long-term important trends. So Brexit. To your question about Brexit, Brexit is obviously a very important issue in terms of the UK. The UK has a prominent position in financial markets. It has all the conditions to continue to do so. You know, time zone, language attraction of talent, infrastructure. And as was said before, depending on how this deal is negotiated, you will have more or less implications. I think the prime minister was very clear yesterday about what type of deal she wants. And now we have to see how this is implemented in a way which is a win-win for both Europe and the UK, as she said, and not a lose-lose situation. But it's very disappointing. There are significant recap, so let's see how this is played out. Yeah, but it's very disappointing, isn't it? That the city of London makes up such a significant contribution to GDP growth. And yet, I heard nothing in her speech yesterday about passporting, about special pleadings for the financial industry. I mean, I know sometimes politicians feel it's an inconvenient truth that financial services is terribly important to the UK. But it is. Aren't you disappointed? I actually disagree. I mean, I think she said or she implied, and the briefing was in that direction, that some sectors like manufacturing automotive, she said, and financial services would have to have a special focus. She wants a free trade deal, free trade and service deal. And that is the way where some sectors can keep a prominent position. And I think she's clearly focused, as I told you both, for example, in automatives and the financial sector. Financial sector in the UK represents 8% of GDPs, one of the largest sectors. And it is a key competitive advantage of Britain. And it is obvious that the government will have to focus a lot on keeping that competitive advantage. The FCA figures say 5,000 companies in the UK have at least one passport to give them business operations into the single market. I think that's pretty significant. I mean, Brian, you must be rubbing your hands here, because anything that stops UK businesses taking advantage of the single market is an opportunity for the American bankers, isn't it? Yes and no. The competitive set that we all have among ourselves is heavy, but all of us have major operations in London that we're dealing with the same issues and uncertainty about it. And I think this is unprecedented, obviously. So everyone wants to know, are you going to move six people here or seven people? Because we don't know the rules, so there's a lot of speculation. But I think that the lack of a unified capital markets in the European context is one of the reasons why our two companies have made a lot of progress, because we're able to shed the assets, we're able to raise the capital. People have to remember the point about the synergy between banks and economy. It's also the banks, capital markets, and the economy. And anytime you divide that in pieces, it's not as effective. And it hadn't yet developed. And so I get more worried about the structural help for Europe because if the European economy does well, Bank of America is going to do well in our corporate investment banking and our capital markets. And I think anytime you divide things in two, they're a little less efficient, a little less investment, a little less a certainty, and you start to do it. And you even want to have your road map to that, look at the rest of the world that divides it in pieces, and it's not as effective. So I think what the Prime Minister tried to accomplish is something that she just talked about. But it'll be a tough sled. And so we've got to wait until they figure it out and then we'll figure out what to do. Andre, let's come to you here. You've been very enthusiastic about what you think Donald Trump is going to bring. And of course, in the context of the frozen relations between Moscow and Washington, perhaps that's not surprising. But just share with us, what do you think in banking terms the real opportunity for a Russian bank currently under sanctions is? Just first of all, I would like to underline one, unfairness, because you mentioned in your opening remarks that as a result of the election of Mr. Trump, the stocks of the major American banks, like Bank of America and J.P. Morgan grew by 25, 30%, though most of the people from the Wall Street were supporting Mr. Hillary Clinton. You also believe in America that Russia helps Mr. Trump to get the job, but our stocks are not growing. That's, I think, absolutely not right. So I think to compensate this, to eliminate this inequality, I think Mr. Trump should remove sanctions against the leading, full-leading Russian banks. That will help a lot for us. First of all, from the point of view of further privatization, we can't privatize any further because of these sanctions. We can't borrow in the West because of the sanctions, and it's no good, I think. So we definitely very much believe that from what Mr. Trump said, that he would have a much more constructive dialogue with Russia on international affairs as well as on bilateral. And as part of this, I expect that the first sanctions to fall could be sanctions against leading Russian financial institutions, could be very helpful. It didn't kill us. We're still working, we're still making profit in Russia. But of course, that's very much make our future not as bright as we expected when in 2007 and then in 2011, I think when Brian was placing our stocks in America, that was quite a good transaction. But nowadays, it's quite difficult because of the sanctions. Yeah, well, I understand your comment about helping Mr. Putin, helping Mr. Trump with his election campaign. But what about Mr. That's what you believe. Well, no, that's what you just said. That's what I'm listening to. That's what you just said. We certainly didn't say that, I don't think, on CNBC. Oh, sorry, CNN. I certainly didn't. CNN, sorry, man. It's confusing, though. Hey, it's not my job to deny anything you say about the opposition, so we'll move on. But I do want to make a point here about Mr. Putin helping Mr. Putin or helping himself, because I go into Russia a lot and interest rates in Russia at 10%, the inflation rates a little over 5%, and central bank governor is aiming for 4%. Now, to me, that suggests there's quite a lot of the headroom to bring rates down. But you know that Elvira Nabilina says it's not going to happen until the country engages in proper structural reform. And quite frankly, that would also be good news for the banking system. So do you think Mr. Putin actually needs to get on with doing a bit more of the harder work around restructuring the economy and perhaps freeing up a bit more capital, some more loan growth? Well, I'm always criticizing the central bank for the higher interest rate. But women, they are very cautious. They prefer to make smaller steps. And if we take inflation, for example, we consider it a historical achievement that last year we had 5.4% inflation. And next year, oh, sorry, this year already, the target is 4%. And our estimation is probably 3.8%, which will be quite unique for Russia. We just, a few years ago, we had double-digit inflation. And so from this point of view, there's certain achievements in macroeconomics for which the central bank is praising for these results. And we expect that the interest rate will go down to 8, maybe 8.5% later this year. But yes, I mean, the answer is yes. We should do more to restruct the Russian economy, though structural reforms is not only applied to Russia, probably there's a lot of discussions here that in many parts of the world, the structural reforms are needed, including the subject we discussed today, what to do with the banking sector. So yes, our Russian banking very much depends on what's going to happen in Russia, of course, definitely. But we also very much, we became a Russian banking sector from the very beginning, was building up as a part of international financial system. And we very much welcomed the participation of American banks, all the investment banks were very active in Russia. And Citibank is doing very well in Russia in retail. So we consider ourselves as a part of the international system as a result of the sanctions. We started to invent some domestic things like domestic credit cards and other things because to defend our own system, which we don't think is necessary if we have a good relationship as a global system. So yes, we should do our work, of course, and we'll be talking about this later and I was, but for us to have an open financial system when we can get part of this and enjoy all the privilege of global, it's very, very important. I want to move on to business models and talk about which business lines might really thrive going forward. But I think a critical part of that story lies partly in what happens around regulation from here. And we know there's some pushback on Dodd-Frank and Volcker in the US. We also know there's a lot of nervousness around what Varsal 4 brings in terms of capital requirements. So I'd just like to do something here and get you involved as well. Can I ask you to put up your hands if you think Donald Trump will push back Dodd-Frank banking regulation in the United States once he's president? If you could raise your hands if you think he will make changes to allow banks to go back into some areas of the market that they've been absent from, please, please put your hands up if you think that's going to happen and please on the panel, if you could put your hands up, if you think Dodd-Frank is going to change as a result of Donald Trump, you do. You do. So probably what? I think Sergio, no, you don't. No. But you're the only one here who doesn't think that's going to happen. Yeah. And largely, put your hands back up in the audience if you could. Okay, it's mixed, not too certain. Okay, fine. And Varsal 4 is slightly more complicated because you've got to read into the rules a little bit but just to tell you, every European banker is terrified about the strict terms of some of the consulting that's already been done being imposed as far as Varsal 4 is concerned on capital levels. Please put your hand up if you think there's going to be any softening around Varsal 4 ultimately when it's implemented because it's holding back European banking profitability and growth. Please put your hands up. Okay, less certainty, I think that there will be changes. Yeah, less certainty. So I spoke with Jess Staley earlier on from Barclays and his view was, Dodd-Frank and Volcker, nothing's going to change. Varsal 4 will get softened because ultimately the Europeans will be crazy not to make it happen. Sergio, do you think that's how it's going to play? Absolutely. And if so, how do we get that message across to the politicians? Well, first of all, I think that when you look at the reason why I don't believe that Dodd-Frank and Volcker rule will be massively diluted is because the vast majority of it is correct. Something that we needed to see happening globally in terms of the aftermath of the financial crisis. So maybe at the margins some intended or unintended consequences of those legislation will be somehow addressed with a more pragmatic approach also now to implement them. But at the end of the day I think that the U.S. system has been already reorganized around that. I don't think it's up to Brian and Mary to talk about that but I don't see also a lot of incentive particularly by the big banks to let that happen because it's also now become a pretty interesting competitive advantage they have. So on Basel 4, on Basel 4 for the reason that Brian mentioned before the capital market system and the function of European banks, any Asian banks to their economies fundamentally different. I'm embracing this evolution what basically the Basel committee, they call it the finalization of Basel 3, the industry and now more and more some regulators and politicians are recognized that it's the fact of Basel 4, i.e. a substantial increase in capital requirements for banks that makes absolutely no sense compared to the functions and the needs after the fact that we have 8 times to 10 times more capital than before the crisis and our functions to the economy is completely different. That's the reason why needs to be pushed back because there is not such a standard that is applicable across the board and we have to stop this notion that more capital is just better, it's the quality of regulation that is focused and to close the welcome news is that it is European regulators, the main regulators and politicians that have realized that which in my point of view was an ultimate success because once you get people to recognize their merits that they had merits in re-regulating the industry but inevitably when you do all these changes so quickly you make mistakes and the realization right now at the last minute that maybe we are going too far it's the best news we could have ever seen but not for banks, for the economy in Europe because for the reason we mentioned before there is no way you can have banks contributing to the best developments in Europe without having a fair balance regulatory framework. Mary. The question of Basel IV and Volcker everybody just wants fairness and everyone wants a level playing field and so everyone up here will have a different opinion as to where they sit as to where they stand and when you look at just regulations in general they start with the premise of they're trying to make things better safety and soundness let's not go through what we went through in 2008 and most of them have actually accomplished that but when you look at regulations after they sort of balloon themselves Dodd-Frank itself has 25,000 line items that we have to follow 25,000 restrictions that you have to follow on a daily basis if you look at regulations in general in the United States of America over the past eight years there have been 256 regulations that have caused $100 million or more of cost to the U.S. economy 256, 229 of them have been negative for each of those sectors and they're regulated by CFTC, SEC, Fed, OCC Health and Human Services, Department of Energy Department of Labor and you go through, we're a bank we're one institution, we operate in 100 countries we have 250 regulators on Dodd-Frank alone, one rule we have five regulators for one rule so it's not that the rule was intended to be bad it was intended to do all the right things it's just that we have gone on for eight years and we're still not even done and we're still working through harmonizing it globally we have got to stop we have got to take out the things we're asking a lot of the European companies have been asked to talk about give me proof as to what has worked and what hasn't that's a great exercise we should do that globally we should take off the things that are stopping business growth and then we should just move forward we've done enough we've got it in a good place the safety and soundness of each one of these institutions that are standing up here represented and the ones that aren't are making the economy in a much better place so that we can continue to go back and grow but I talked a little bit about pain and forgiveness at the beginning of the program and you know there'll be people watching this program who are shouting at the TV right now and saying hell yeah hell yeah because we had tarp because we had trillions of dollars that bailed out the global economy in the wake of the financial crisis of 2008 absolutely they hear what you say but is there a better way that we could have done it without putting all these additional costs and these line items on the banks because clearly you know if you have to spend the money there that's not money you're lending out to grow a small business or to help someone buy a more you know get a mortgage to buy a house so I mean is there a better way well that's the point I mean we have to figure out all the trap liquidity if you just took all the trap liquidity that sat up here represented by these institutions and put it out in the lending community and had the multiplication effect of that raise global GDP Antonia I think you put exactly the right question I mean relating to Basel I basically think that except my boss is watching this absolutely the right question because Basel as the regulator said should not provide significant capital increases so as we all are saying here that should be delivered and I think that the French and German banks in particular are very mindful of this thing being a reality because as you said they don't want and in Europe that is more much more prominent than in the States they don't want their support to the real economy in terms of providing for example mortgages or lending to SMEs to be significantly affected so your question goes to the corner of this process we don't want any of us ever again taxpayers money to bail out banks so we want banks to be very safe but as you said we don't want to interrupt the credit flow to the economy and the proper support to the economy what else beyond ever rising capital increases can be used and there are three very important things first more assertive supervision which regulators have been doing since the crisis that is done second much more much stronger liquidity levels which as Mary said are a reality for example in Lloyd's case Lloyd's had 300 billion pounds of that six years ago now it has only a hundred and on the other side of the balance sheet we have a hundred billion pounds of guilds so net zero that and thirdly very important the resolution plans of which ring fencing in the UK is a key part in the measure that it exempt separates investment banks from retail banks and therefore provides a much better resolution if for example the investment bank is into problems and therefore if you have good resolution plans if you have more liquidity as you already do and more assertive supervision that does not require ever rising capital levels which would damage the credit flow into the economy I want to move on because we've only got about 20 minutes left and I want to get FinTech in and some other Trump as if I can but just very briefly I mean there is no one perfect bank model so much of it depends on where you're located and what your customer base looks like and so on and so forth but it would be useful I think if you could just briefly share with us as a panel some ideas about what are going to be the growth drivers in the industry in 2017-2018 as we begin to what seems to be clear emerge from the very sclerotic rates of growth we've seen up to this point effectively since the financial crisis so very quickly the universal model of having retail banking commercial banking, wealth management and capital markets and investment banking we've obviously firmly believed in it's how we run the company because the integration between our research platform and what they come up with and how we use the wealth management business or the institutional businesses is helpful the insights you get the scale and technology scale for cybersecurity defense the ability to drive costs down through scale and then give it to the consumers by lowering their costs these are big benefits that go through the society so we believe that model works there'll be other models there'll be big banks there'll be small banks that have for a long time specialized institutions there'll be institutions of more general import but you know I believe the universal model is what the large large economies need at some point because of the ability to arrange a loan that J.P. and ourselves can arrange you can't do with a hundred banks out there at a hundred million dollars a piece you have to have a couple of big banks come in and take it so the real economy can turn to the size and scale and scope it is so we believe in the integrated model and the growth will be along all those dimensions everyone in this business should grow even in a 2% growth rate there's opportunities there's general economic growth there's competitiveness and we'll draw them forth open floor who wants to jump in well one of the reason why we had such a devastating outcome from the financial crisis that was you know for the previous 15 to 20 years banks in general of any size even in the continent here in Europe had global ambitions across the board across the business alliance Brian just mentioned but also from a geographic standpoint of view and that has created this idea that in order to be competitive you need to do everything everywhere to everybody now from my standpoint of view it's now clear that while we share the same banking license we can be all the same because the history and the DNA and the client base we have is different and the way we operate is different so from our experience is that we had to rethink about certain aspects of who we are without compromising global ambitions so that's the reason for example we see ourselves as a global specialist a global franchise in wealth management a universal capabilities in a small country like Switzerland and then we have selective competitive positions in other areas that are complementary to a integrated business model where applicable but if you try to be competitive across the board everywhere you're just going to repeat exactly what happens so it's very fundamental for the banking system to understand their DNA, their client's needs and adapt and live with that so big banks, global banks and small banks needs to coexist personally I think that the ability and even you see it also the big US banks the ability to do retail bank everywhere in the world for example it's almost impossible but I know that you have said that the US and China represent your big growth opportunities going forward and yet you're a Swiss bank with a big domestic banking business so there's no growth in Europe anymore relatively speaking for sure not and we see growth in the US and Asia in our wealth management businesses also in capital markets because of economic dynamics in Asia for historical reasons we have been there for 50 years and we see growth coming through in Europe banks cannot grow wealth will not be created if there is no sustainable economic growth so we are a wealth manager so many money is coming in as a function mainly of share of wallet gains not as a function in Europe of wealth creation in Asia and the US you have wealth creations and therefore you may capture market share at the expense of competitors but most importantly you have your own clients who growth in their assets Mary I would just add a bank is no different than any other great company that's run in the world you make great products and services for your clients and you are the sum total of the history of what your clients ask for and so the heritage of J.P. Morgan is to be the bank to the major governments and sovereign wealth funds and billionaires in the world we don't have a choice as to which countries we want to be in we have to be in the countries that our clients are in and our clients move money around every day all around the world $5 trillion moves in and out of J.P. Morgan every day and that requires us to be everywhere that our clients need us to be and we're not going to be fair weathered friends we're going to be in these countries we're going to be in these businesses whether they have high ROEs in one year or another year because of regulations or not has nothing to do with the long-term nature of us being there for our clients in Russia we have very important debates some of my colleagues say in 5-10 years we'll be no banks we want to be technological company Alipay has 400 million clients more than any bank in the world so no more banking in traditional way no matter where is wealth management whatever we are high-tech company in few years time we should stick to high technology and that's it I think it's a little bit too much I think I still believe that we should use high technology definitely we should use it more and more but still to assess the risk to manage the risk that's something which the bank should do and this would be a very high-tech model of new banking but still major functions Antonio let's bring you in on this if I can and let's expand on this whole idea of fintech and see if we can just come away with some real clear signposting as to what's going to happen here I think the financial sector is incredibly flexible and has been really good at absorbing challenges over the years and reshaping and reinventing itself so is fintech actually just nothing more than another technology cycle where the banks go yep that looks kind of interesting I quite like the way I can buy a credit card company that just uses a chip to wave it over a payment device we'll just buy them and absorb them is that ultimately what happens in this fintech story that the banks just become a bit more technically savvy that your customers just engage with that what would they naturally do with any evolution in the way their account is managed well that's another great question and I think that obviously as everybody said banks have to concentrate where they have comparative advantages so every business model is reasonable as long as it concentrates where the banks are good at and it is a coherent strategy in our case we have decided to focus lots in the UK and in retail and commercial banking and that's the cost to income and to your point and now looking at the future I think it is a complete revolution so I would not see it as just a tech app or innovation it is in my view a revolution we have embraced digitally more than three and a half years ago by creating a digital division at the top of the bank at group executive committee level because we wanted to fully embrace digital and fully digitize the bank and in our view we now sell more products we fulfill more of our client needs on digital, on the phone that we do through all other channels of the bank when five years ago we had zero mobile customers and therefore I see this as a fundamental shift and if banks don't embrace it I think they will be in severe problems in terms of cost structure so what to do with distribution networks how to be able to improve your customer experience as you digitize end-to-end processes giving the customer a much better experience and at the same time given you simplify the process you lower your costs tremendously I think is the way for a retail and commercial bank in the future if anybody is in any doubt here Brian just remind us what it costs you to ship coins and cash around within the business and if you could just get rid of that cost what would that add back into the bottom line it's about five billion dollars a year it costs to move paper, currency coins, checks and all the stuff it keeps coming down but it's still big and I think everything racially says right but the thing that is changing for the consumer business and banking is on a given day people deposit checks by taking pictures of the phone in the United States and that has the same activity as 900 branches it's a noodle on that a second and that's gone from zero four years ago to that level so what causes that? it's not the idea of a digital image we've been doing at the ATM you could go and do a digital image it was the ability to distribute computational power on a phone and the always on intimacy of it and it willing to use it and so that has changed and so that ability for us to help the unbanked become banked to help people manage their finances better to help people warn them that their balance is low to help them buy products that is far different than what people think it is and so where it leads the customers will lead us but all the themes here as you talked about are unpredictable because that is wholly different than having to sit down on a computer and open it up and log in that you had to do up until 8-10 years ago and then power those phones and the acceptability look out there people are on their phones people are picked up a receiver and called out in the middle of a meeting they've been thrown out and so the ability to be that contact is unbelievable so think about that and that goes on and whether it's wealthy clients or mass markets it's wild there are a lot of people here walking around saying you guys are dinosaurs right and that blockchain is going to change the world and ultimately what evolves from blockchain is a system of moving money around and paying for things that doesn't involve additional banks at all do you think that's ever going to happen no we're not dinosaurs and yes things like distributed ledgers like blockchain will have a big impact on the business but so did the Swiss system many years ago so did the ATM system but you're not frightened you're just going to absorb these new challenges and blockchain will be part of the Bank of America offering there's a great technology investor sitting in front row we spend $3 billion a year on pure code development in our company ask them how many companies they had an operating budget of $3 billion a year and by the way so they're just massive amount of spending and by the way we partner to get it from other people are spending hundreds and billions of dollars in their development whether the big companies or small companies these things will always change but we were sitting there 20 years ago it would have been computer 25 years ago computer banking when I was in high school it would have been an ATM the ability to get cash out of the machine was pretty neat but you go back absolutely we can't be complacent about technology and fintech but having said that you go back 30-40 years our industry was the biggest user of technology and if you look at the evolution of how we are using technology in our day-to-day business it's quite remarkable the way we invest and we keep up to the needs of our clients I'm always puzzled when I see your people that say well we're going to be a technology company because honestly they have a totally different approach and businesses we're going to continue to be a big user of technology that doesn't mean that you are a technology company and actually you should never be a technology company but so the focus has to really be also in understanding that you know for example all this regulation is becoming so complex that is no other way for us to embrace technology in order to make it easier for artificial through artificial intelligence for example to manage compliance and very complex rules and things that you wouldn't be able to absorb let me jump in a bit and let's just sharpen that up I know that you have said that maybe we're looking to a future for a super bank that takes care of back office operations I mean maybe that's something that can be shared by competing organizations I have to be I have to be because this is very much what every single other industry outside banking has been having to address and going through in post the industrial revolution as they needed to change their business model they had to embrace and by the way banks look at stock exchange clearing houses and so on back 30, 40, 50 years ago in history they were co-using utility-alike concepts of course then people decided that it's better to give it back to private, do IPOs and do short-term gains but in effect the notion of sharing infrastructure in the banking industry is nothing new we need to re-embrace it and we need to make it part of the way to operate so would you do it with Credit Suisse with anybody has nothing to do with a single bank actually critical mass is important to create quality of service ability to reinvest in this technology developments and also to fend off potential new competitors by the way those new competitors as Andre just mentioned before I hope one day or the other and I understand why it's not the case today they're also going to be faced with having to ask for a banking license if they do banking and then absorb a banking that comes with with being a bank Jeff did you see this cartoon that Davos in 2050 whatever all robots sitting here and all robots sitting there that's Davos that's what we can expect now very nice no job while we're on the subject of robots Mary can I bring you in here because you know one of the noises in the asset management industry has been about the asset allocation decision being taken over by robots somehow so you can have a very sophisticated sort of cookie cutter approach to building a pension fund just by punching in some buttons and saying well this is my risk profile at now give me a bespoke solution to how I should organize my portfolio is this just nonsense or is this really going to happen no I mean there's great utility to it if you think about all the work that banks have done to deal with the unbanked think about all the people in the world that are the uninvested right they start their first job they're not focused on their retirement we all know that if you start early in your life and you compound those assets that you have a better chance for a healthier retirement so if a robot will get you to do that because you're a millennial that doesn't want to talk to anybody and you just want to like play with your computer all day long if you could do it on the computer God bless and at least you'll get some money invested the problem is is that a robot is going to have a really hard time talking to you and convincing you not to take your money out in the times of crisis and that's the time where we all know that it's the most important time that you need advice so I think that there's a lot to the robo nature of things I think it's going to help a vast vast swaths of people but it's not the answer for everybody and it's not the answer through tough times I just want to finalize on the FinTech conversation everyone thinks of FinTech as the exciting new growth opportunity ways to do things it is just as important if not more important on the cyber front and all of us worry greatly about the safety and security of the assets of our clients and our clients all rely on us to be to be dealing with that and so when you think about the cyber attacks that happen to our companies we get 5000 of them every minute inside of our bank you expect us to have those fronts and you expect us to make sure not only are we protecting the cyber protections on your asset but also the data privacy everything we know about you the usage of it whether we're selling your data out to somebody else so they can and so all of those things become a very very important part of the dialogue that we should be having around digital that's where we spend the bulk of our money well it's been a great 59 minutes let's just close here I want to leave the audience with something that they can meaningfully take away so Mary let me ask you you got a number of banks here that operate in different geographies in different markets which one of these guys stocks do you actually want to own for 2017 well as head of JPMorgan asset management we do not buy JPMorgan stock so I would start with buying the US banks as my short term nature and America would be the first one but for my medium term for my children's education I'd be buying the European banks and then for my retirement plan it's a deal so you know there is a right to reply and I don't want to appear sort of gender sex is there anything like that so anybody on the panel want to say they're putting JPMorgan in their private pension at the moment just so that we reflect a balanced opinion it's a great bank it's a great bank it's hard to match such a diplomatic response well we're going to have to move to the final wrap up here I just have one last question and that really is a sort of Rubiniesque black swan grey swan you know what the Italian banks still have unresolved issues trillion euros worth of NPLs anybody on the panel here want to put up a hand and just offer one grey or one black swan potentially for the next 24 months Brian? Mary mentioned earlier the cyber security geopolitical mix is something we just have to be ready for every hour and so I characterize as a black swan would act like you don't expect it to happen ramifications are black swanish okay I don't see too many other answers I think this is more a convergent of many factors that can really create a black swan event a single event on its own is quite difficult but a convergence of issues well I guess we'll just have to watch Mr Trump's Twitter feed closely for some guidance ladies and gentlemen thank you so much to our panel if we could just give our applause to them and thank you very much everybody for watching and be safe