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00:00I do actually want to start off asking about the news of the week, which is this detente of sorts between President Trump and President Xi.
00:08There's going to be a meeting on Thursday. Do you see that and think, OK, this is good for my business?
00:13Yeah, of course. It's good for the world. If the U.S. and China can de-escalate, it's going to be good for confidence.
00:19It's going to be good for growth. Of course, it'll be good for the U.S. and it'll be good for China.
00:23So these are all good things. Our business really does well in kind of any scenario that's not extreme.
00:32The extreme scenarios of the U.S. and China spiraling into a really bad place, which looked possible, but I don't think was ever likely, that's a bad scenario.
00:42But the good scenarios are ones where the world gets back to business and is focusing on investing, creating jobs, goods, services, trade, cross-border.
00:50And it looks like we're a step in that direction.
00:53How have tariffs affected the bank?
00:56I'm really not at all so far. So what we've seen is, on the one hand, a number of our clients are looking to basically hedge the outcomes.
01:06So there's been much more activity in financial markets.
01:08There's been a lot of preemptive funding of future projects or future capital needs, which is good for business.
01:14So business is probably as good as it's been.
01:18On the other hand, we know that tariffs defer some investments.
01:21So some of our clients who, for example, have been looking at how they would diversify their manufacturing away from China into other markets, including many Chinese companies, in part because of tariffs, but in part because that's the nature of the evolution of business now with other countries having low-cost capabilities that can complement China's.
01:37Those investment plans go on hold when there's so much uncertainty.
01:41So on balance, it's probably been neutral to our business.
01:45But I think clearly in the medium term, decompression of these tensions is going to be good for our business, is going to be good for the global economy.
01:52I was on a panel with the UAE trade minister a couple of weeks ago, and he made this really nice analogy.
01:56He said trade is like water. It will find a way to flow.
01:59That's exactly right.
01:59And I wonder whether for you that's also created an opportunity, the rerouting of some of these trade flows.
02:06Well, it's a huge opportunity for us because a standard charter bank operates globally, but concentration on the ground across Asia, Middle East, and Africa.
02:15And big business in China and Hong Kong, every ASEAN country, every South Asian country, everywhere in the Gulf and the Middle East, North Africa and Africa.
02:23So the investments are led by Chinese companies and other companies are moving into all of our markets where we have a natural home position.
02:33Of course, China is investing heavily as well, and the new economy sector in China is absolutely booming.
02:39And that's a great business opportunity as well.
02:42But you're right.
02:43The analogy of water flowing through a rock is perfectly correct, and water will come out the back end.
02:49And interestingly, when it comes out through the rock, it's cleaner than what it was when it came in.
02:53All right.
02:54We have to credit the UAE trade minister with that, Dr. Thani.
02:58Look, let's talk about the Middle East.
03:00And speak to me about which parts of your business you see growing the fastest in the next couple of years here.
03:07So we're president across the Middle East.
03:10We've got a full bank here in Saudi, which, of course, is growing very fast.
03:13In your opening comment, you referred to a liquidity squeeze.
03:17The flip side of that is we're seeing an investment boom.
03:20It's public sector investment and private sector investment.
03:22That needs to be financed.
03:23That is the source of the liquidity squeeze.
03:26But this is because the opportunities are so great.
03:28So the Saudi is booming.
03:30We've been in the region for over 100 years.
03:33So this is Dubai and Abu Dhabi, which are together but distinct, are both growing extremely nicely.
03:40We opened a full bank in Egypt three years back.
03:42Egypt is on a wonderful path of recovery, which is also great to see.
03:45And also across North Africa and the other states in the GCC, all of which are doing well at the moment.
03:52Yeah.
03:52How about your wealth management business over here?
03:54I feel like so many people I speak to are really beefing up their wealth management presence.
03:58It's becoming a lot more competitive.
04:00It's very competitive and it's very sophisticated.
04:03But our traditional hubs for wealth management have been Singapore, Hong Kong and Jersey and UK.
04:09We've had Dubai, but we've invested, like perhaps others per your question, investing heavily in Dubai to serve the region.
04:16And I must say that's going very well.
04:18Let me ask you a broad macro question, because, again, we've got the Fed meeting coming up tomorrow.
04:26The U.S. economy seems to be doing okay, but there will be an interest rate cut.
04:30But at the same time, there were some credit fears that popped up a couple of weeks ago.
04:35How do you see those double incidence of tricolor and first brands?
04:38So, thankfully, we don't have material exposure to either.
04:42So we don't have the insight into what went wrong.
04:45But I think we remind ourselves that these are probably one-offs, but the credit cycle is still alive.
04:54I mean, there is a credit cycle.
04:56We happen to be in a very benign phase of it.
04:58But we've never suggested to our shareholders or anyone else that we would be in a benign phase forever.
05:02We don't think that the world has changed.
05:05So whether this is the precursor to some stepping up of credit losses or one-offs, I don't know.
05:11So I can tell you, and I'll be very careful because we report our earnings tomorrow, or Thursday, actually.
05:18So I obviously can't talk about our earnings.
05:20But broadly, what we said up until this moment is we see no signs of stress in our portfolio.
05:26And it doesn't mean that there aren't problems out there someplace.
05:29We just don't see them.
05:30Yeah.
05:31What about private credits?
05:32Again, you know, this explosion of interest in the space over the past year.
05:37Are investors getting adequately compensated for the risks they're taking now?
05:41Well, that would be the big question.
05:42But a lot of the noise and drama around private credit is, you know, somehow that there's a whole bunch of risk that's hidden in the system because it's no longer in the banking system.
05:52And that's going to present some systemic exposure.
05:55I don't see it.
05:56I think private credit is, these are professional investors, excuse me, professional investors who are managing the money from pension funds, insurance companies, wealthy individuals.
06:08And they're not leveraged or they're not leveraged very much.
06:12And that to me says, yeah, of course, at some point, if the credit cycle turns down, they'll have losses.
06:17Okay.
06:18And those investors will have lower returns or negative returns.
06:20But that's business.
06:21But all said and done, are you positive about the outlook going into next year?
06:25I'm, as I sit here today, I'm very positive for the rest of this year and into next year.
06:30We're in a sweet spot of interest rates are high enough to keep things moving, not so high as to this time of growth.
06:38The credit environment, as I've said, remains robust so far.
06:42Trade is actually increasing.
06:44And the trade flows are changing in a way that suits our business.
06:48So, yeah, I'm quite positive.
06:49Yeah.
06:49So, I want to ask you about something else that I know is a project of yours, too.
06:53Digital assets.
06:55I interviewed Eric Trump again last week and he was talking about their big believer.
07:00I mean, the Trump organization have a lot of money tied up in crypto.
07:03But he made this pretty much quite outlandish statement saying that traditional banks are going to be pushed out because they're not offering cryptocurrency and the ability to trade or access to cryptocurrency.
07:14You take a different approach.
07:15We've taken a, well, that's just, it's just not correct.
07:18We, so there's, first of all, make the distinction between cryptocurrency and then digital assets more broadly.
07:23Cryptocurrencies have a place in the world, but they're, you could say they're alternatives to conventional money or you could say that they're speculative instruments.
07:33Because the digital assets, probably most obviously in the current market being stable coins or variations on the stable coin theme, those are the lubricant.
07:43Those are, those are the money that makes the, the digital economy run, not cryptocurrencies, but, but it's USDT, USDC, and central bank digital currencies.
07:54Many of the, and we're just getting started there.
07:57Yeah.
07:57So my, and I'll be talking about this later in the forum, I'm sure.
08:01I think we're at the beginning of the phase of one of the most profound evolutions in my working life, which is the digitization of money.
08:08You know, the digitization of money.
08:10All money will become digital, which is not cryptocurrencies.
08:12That's one part of it.
08:14Yeah.
08:14But interestingly, the infrastructure to support that digitization of money starts with cryptocurrency, which is why at Center Chartered, we have the leading institutional grade cryptocurrency, digital asset custodian, marketplace, the third largest minter and burner of US dollar stable coins, meaning the onboarding and outporting from fiat to digital, digital fiat.
08:35The first two are digital native companies, Coinbase and Binance were the third.
08:39And the reason is that we're playing a critical role in helping the, call it the real economy, to bridge between the old way and the new way.
08:48And the new way.
08:48So one of the obvious challenges there is regulatory divergence, no?
08:51Because there's no streamlining of various regulatory jurisdictions.
08:56I mean, look at the UAE.
08:57It's a completely different business climate for cryptocurrencies than it is for Europe.
09:01So again, I'll make the distinction between cryptocurrencies and other digital assets.
09:05As a bank, and most banks, we can't hold cryptocurrencies.
09:11We're technically allowed to, but the capital charge is so penal that as a practical matter, we can't.
09:15So while we have a cryptocurrency trading license, we're the only G-CIT bank that has a cryptocurrency trading license, and we are making markets in cryptocurrencies, we can't have an overnight position without it being very dilutive to our returns.
09:28That could change over time, although there's no sign that that's going to happen immediately.
09:31But the infrastructure, we can own and operate completely.
09:35And, you know, when we get right down to it as a bank, we do the plumbing.
09:40We do the plumbing.
09:41And we built that plumbing over seven years.
09:44It's best in class.
09:45We have great partners like Circle who have come in to partner with us on that infrastructure.
09:50And other, many, many corporations, financial institutions.
09:55The custody business is truly institutional grade.
09:59And this is part of the maturation of these markets, and we are 100% there.
10:03So in this case, we're 100% there.
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