Interview published in the Ecofin magazine on 28 January 2015
– Explain to those of us who do not know
how markets work what a Fund Depositary is.
Generally, the depositary is a credit institution, although in the case of collective investment institutions, even if only marginally present, securities firms may also be depositaries. But most importantly, the Depositary is one of the pillars on which collective investment and supplementary social provision is based.
In short, depositaries are custodians of the assets of investment funds, SICAVs and pension funds, and supervise the actions of fund managers, with the responsibility that this entails.
– Cecabank was founded to provide service to other financial institutions, initially savings banks; but today it has different customers: banks, credit unions... How can we explain this transformation and how can we invite different market stakeholders to entrust their services to Cecabank?
Cecabank is a young bank founded in 2012, but with more than 80 years of experience as a credit institution specialising in wholesale banking. We are a Spanish bank, independent, neutral because we have no retail business, with an open model for providing financial services to all types of banks and institutions (national and international banks, securities firms, fund managers, insurance companies, large corporations and public bodies), based on expert knowledge in our 3 main strategic lines:
Securities Services, which encompasses the depositary of CIIs and pension funds, and the custody of securities.
Treasury & Global Markets, with one of the most active trading rooms in Spain.
And banking services, such as payment systems and methods, and technological outsourcing.
All of this with a capital ratio of 22.96%, well above the average of the main European financial institutions.
The transformation you mentioned and the opening of our services to all types of institutions present in the financial markets are already a reality. In fact, in services such as fund depositary services, Cecabank is already the leading independent Spanish depositary with assets under deposit in excess of €64,000 million.
– Cecabank has promoted these awards for Professional Excellence in Financial Markets. Is there excellence or greed in the markets? Is the image of the markets badly damaged by cases of scandals? Do you think a Spanish Madoff would have been possible?
In financial markets we essentially encounter both risks and opportunities.
In order to take advantage of opportunities without too many surprises, it is important to have sufficient financial literacy, and access to expert advice is highly recommended.
With regard to the Madoff case and scandals in general, in Spain we can boast that the collective investment and pension fund industry has not suffered any major shocks, largely due to the professionalism of the fund managers, marketers and depositaries; and due to the demanding Spanish regulations governing our activity, together with the efficient supervisory and inspection activities of national supervisors.
– Is this a good time to regain confidence in the markets and regain the image of credibility? Do we have outstanding professionals in Spain? Are we better or worse off than other markets?
In Spain there are outstanding professionals and large institutions dedicated to advising, managing, brokering and depositing the investments of savers.
In my opinion, the professionalism of the agents, the Spanish and European regulations, and the sound work of the Spanish supervisors, place our industry in a position to compete with other financial markets without any complexes.
– Why are these ECOFIN Awards for Professional Excellence in Financial Markets important?
Initiatives such as these awards help to showcase best practices in the financial markets, and at Cecabank we are convinced that these best practices must be the cornerstone for the development of the financial management and advisory industry in Spain.
– Let's talk about Perspectives 2015, because there is also a conference on this topic on 4 February at the Madrid Stock Exchange: What is your analysis of the close of 2014? What is your outlook for 2015? Is it a year to have faith, to invest, to take risks?
In terms of collective investment and pension funds, 2014 was a spectacular year. We also expect growth in 2015, but it will be more moderate. The current levels of interest rates and the expectation that they will remain at these levels in the medium term, assisted by European quantitative easing, will continue to encourage savers to invest in financial markets through mutual and pension funds, to the detriment of deposits, but logically at a slower pace of growth than in 2014.
As for the markets, analysts’ consensus predict a year with a favourable outlook for European equity markets, albeit with higher volatility, and modest returns in fixed-income, which, as in 2014, will lead to a shift in assets from more conservative funds to funds with a somewhat higher level of risk, such as mixed funds.
– Does the development of investment platforms and access by a non-professional public introduce risk into the system? Should agents and brokers be the only players managing these investment robots? Where will this technological development end and will it lead to the potential disappearance of the brokerage professional?
I do not believe that the development of automated investment systems and access to them by the general public with sufficient financial training and experience in contracting the available products are factors that increase the risk per se. Even less so in the case of traditional retail investors, who do not move significant volumes.
With regard to the second question, I see no reason not to give the end-investor access to these types of technological developments. On the contrary, alternatives or new systems should be made available to investors, and it is up to them to decide whether or not to use them, depending on whether or not they satisfy their investment needs or objectives.
Finally, as with any technical advancement, systems will improve over time and with experience, but they will not threaten the survival of quality, expert financial advice.
