00:00We talk about reverse Yankees, how American companies are now looking to Europe to raise funds, presumably because of the risks in the US.
00:08How are you looking at this?
00:10I think corporate looks at the way they can raise funds globally in the most efficient manner.
00:17So ultimately, I think for many of them, it's when you swap it back into dollars, what is the cheaper way to do it?
00:26And probably right now, for a variety of market dislocations, there is an opportunity to issue what you call reverse Yankees in Europe.
00:34And they're taking the opportunity, they're maximizing the opportunity.
00:38What we are seeing also, which is interesting, is at the beginning of the year, there was definitely more of a European interest into the US when you and I met.
00:49And that was probably the peak of the euphoria in that context.
00:53And right now, you actually see a little bit of the opposite trend.
00:56The US companies that are thinking, you know what, Europe has still a cheaper valuation, notwithstanding the weaker dollar.
01:04And therefore, there is a little bit more of an interest from the US into European names for some potential M&A deals.
01:11You've got to wonder how feasible the movements are, considering that if you take a look at Brussels, how it's cut the Eurozone's GDP forecast.
01:21There's trepidation. There are questions about growth.
01:24I mean, there is always questions about growth when it comes to Europe.
01:27And as a European, it pains me because it's always, oh, Europe is, you always have the feeling that we are lagging behind the rest of the world.
01:36The reality is, my impression, the European economies have been incredibly resilient in what has been a complex, a complicated geopolitical environment.
01:45And the ECB is cutting rates and probably will be below 2%, one and three quarters by the end of Q3 this year.
01:53But the economies have been remarkable. Most of the problems with Europe or some of the problems with Europe come from a very codified and stringent regulatory environment
02:05that often does not allow the flexibility that would be required when you have external shocks.
02:12Tariffs is an example where, you know, Europe will take longer to adjust to the environment compared to what we have seen the UK doing
02:21or other countries around the world, including China, have been dealing with this administration.
02:28But I remain optimist. As a proud European, I remain optimist for the continent.
02:35People are talking about diversification and Europe might just benefit from that.
02:40I think there is definitely an element of that.
02:42Give us a sense of the kind of inflows you're anticipating. Give us a sense of the kind of deals you might be looking at for.
02:48So, when we talk about Europe, often we tend to bunch all the countries together.
02:54In reality, you are dealing with many different sub-dynamics.
02:59The UK has its own dynamics. All continental Europe has its own dynamics.
03:03Then you have Central Eastern Europe, which is dealing with a different set of circumstances in the Middle East and Africa.
03:09Each one of them operate in different ways. And it's difficult to just say, oh, there is a story that is common across all of these countries.
03:18There are some secular trends. On one side, Africa, you have the urbanization and demographics that are playing in their favor.
03:26You have the Middle East moment that you are feeling definitely right now. The global sub-narrative is definitely being positive for the Middle East.
03:36And you have all continental Europe, which is trying to implement what is fundamental, which is the Draghi report.
03:45In our world, Capital Markets Union is probably the single most important thing that would be required to implement many of the suggestions from the Draghi report.
03:59You talk about the Draghi report. It also talks about the need for banking consolidation. We've seen some activity in that space.
04:07How are you assessing that? Historically, JP Morgan's side of the family has always been the bank of the central governments and the bank of the banks across the world.
04:21That's kind of our historical DNA. Therefore, we tend to discuss and advise many of our clients across the world in that context.
04:33Europe has been lagging pan-regional consolidations because the regulatory environment doesn't make it easy.
04:44You see some attempts to it, but most often than not, it's only happening when the acquirer has already a license in the other country
04:56because it makes sense to upstream deposits and so on and so forth.
05:02Otherwise, it is still largely a domestic set of consolidations. In my own country, Italy right now, it's probably in the spotlight in that context.
05:12Europe would definitely welcome from having larger banks because banking, financial services in general, has become a game of scale.
05:22Think about the investments that you are required to have every year in technology, in cyber and so on and so forth.
05:28So having larger European banks will help propel that growth that in the continent, in the old continent, has been a little bit anemic over the last few years.
05:41I want to talk about the Middle East because we know that out of Doha, we heard that JP Morgan will be hiring more in that region.
05:49Yes.
05:50Where are the opportunities?
05:51Which sectors in particular?
05:52Look, the Middle East is benefiting, as I was mentioning earlier, from this Global South narrative.
05:57For a variety of reasons, it feels that right now it's the Middle East moment.
06:02It's the Middle East moment.
06:03We have an historical presence over there and this year we are celebrating our 90th anniversary in Saudi.
06:09And therefore, we are building and we are investing further into that part of the world, in all the relative countries, because you feel that there is a sense of capital moving there, opportunities moving there, and there is a change in the economic landscape and restructuring of some of the economies that is taking place.
06:31Saudi first among all of them, that is making it very exciting.
06:36So it feels that right now it's the time of the Middle East.
06:41And that excitement is being felt by your rivals as well, right?
06:45UPS, Goldman Sachs are also looking to expand.
06:47So what's the strategy?
06:48How are you looking to grow?
06:49How are you looking to scale in the Middle East?
06:52Across all the products, across all the lines of business.
06:55For us, every time we go into our country, the business model is always relatively simple.
07:00We want to be there to help global clients doing business in the countries and similarly, local clients who want to do business offshore.
07:10It's our strengths is creating those capital connections, which is the theme of our 21st Global China Summit, create those capital connections in the countries wherever we operate.
07:23And that's for the narrative.
07:25We are hiring whether it's bankers, whether it's colleagues in payments, whether it's an AWM, asset and wealth management.
07:31That's what we're doing across the board.
07:33Filippo, how much of the excitement on the Middle East was prompted by President Trump's visit to the region?
07:41He talked about trillions of dollars of deals being signed.
07:43I think the narrative was already there.
07:46They have been going to the Middle East frequently over the last six months.
07:50You could feel the excitement already in the middle of last year.
07:54It has been propelled by a variety of different reasons, but it was already there before.
08:01Let's talk about Saudi Arabia in particular.
08:04Trump said that it accounted for about $600 billion of investments.
08:09How are you looking at Saudi Arabia in particular?
08:12We take a look at how it's been the provider of capital for so many years.
08:17And now it's reversed. How are you looking at that?
08:21It's interesting because for decades Saudi Arabia was the provider of capital globally.
08:27And now because of the changes that are being performed to its economy and the investments in infrastructure,
08:35it's actually borrowing capital, which makes it interesting.
08:41And the changes that you have seen over the last decade are really remarkable.
08:47More than 50% of our colleagues in Riyadh are actually female colleagues,
08:52which 10 years ago would not even have been possible.
08:56So there is an enormous set of changes.
09:00You can perceive them when you are there.
09:02And therefore, that's where I think the excitement is coming from.
09:06Okay, so your priorities in the next 12 months?
09:09Across global banking or across?
09:12Both.
09:13Global banking, I think finalizing the integration of the three lines of business that you mentioned earlier.
09:18It's a long process that will be done by the end of the year.
09:23In Europe, it's definitely be there and support the clients in every country and jurisdiction where we have presence.
09:31Looking at the Middle East, looking at Sub-Saharan Africa too.
09:35And just be there for our clients.
09:39Ultimately, that's our job.
09:41It's there to support them through good times and bad times.
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