Better B2B selling

It's a familiar lament: executives at business-to-business (B2B) companies say that their largest customers have never been more demanding.¹ But whereas some companies are simply caving in to price pressure, others are trying to create and capture more value through sales approaches such as enterprise selling,² key-account management, or solutions selling.³ Regardless of the label, each involves forging highly collaborative relationships, with selected customers, that can yield exciting results.

• In the mid-1990s, Alcoa's Wheel and Forged Products division began devoting more energy and attention to developing custom products for several auto manufacturers. The result was more distinctive (and often proprietary) forged aluminum wheels for vehicles such as the Special Edition Jeep Grand Cherokee, Ford Super Duty truck, and GMC Hummer. Eventually, Alcoa extended its collaboration with original-equipment manufacturers (OEMs) beyond the development of new products, to include rollout, marketing, and postsales service. During the past ten years, Alcoa has expanded its share of this market to 35 percent, from 5.
• About six years ago, Sonoco, a packaging supplier, intensified efforts to help the snack food maker Lance determine the ideal packaging for its product lines. One improvement involved the use of flexographic printed packaging film in Lance's single and multiserving Home Pack snacks for brands such as Toastchee and Captain's Wafers. Efforts like these drastically reduced Lance's packaging costs, and the company made Sonoco its "Supplier of the Year" in 2002. In an industry where most players were growing slowly or shrinking, Sonoco generated annual revenue growth of 7 percent and margin growth of 18 percent from 2001 to 2004—thanks in part to this collaboration and others like it.

Clearly then, collaborative selling can yield tailored products (Alcoa's wheels) or bundles of products and services (Sonoco's packaging and conversion). In other cases, collaboration has generated more elaborate, customized products that integrate proprietary intellectual property or expertise to solve a customer's problem. These examples also suggest, however, that intense collaboration is a complex, time-consuming endeavor. Many would-be collaborative sellers fail to master that complexity. In some cases, the buyer and the supplier aren't able to identify unique sources of value. In others, suppliers don't achieve the necessary coordination (across business units, geographies, or functions such as product development, engineering, marketing, and legal affairs) that is vital to collaboration. And some companies find moderately successful efforts so resource intensive that they don't yield a good return. As a result, roughly half of all collaborative sellers enjoy only modest benefits from their efforts, and a quarter actually lose money in those relationships, according to a recent McKinsey survey of more than 200 sales executives at Fortune 1000 companies.

For the leading sellers in our survey, however, collaborative initiatives increased revenues and profits by more than 20 percent, on average. These leaders start with a rich understanding of the customer's economics and engage the appropriate customer personnel (from product developers to purchasing agents) in joint strategy sessions to uncover mutually beneficial opportunities. They also scrutinize internal organizational issues—meticulously choosing collaboration managers, who often come from outside the sales department; thoroughly training account teams in the field; engaging senior executives in targeted ways; and fine-tuning incentives. Finally, the leading companies recognize that collaborative selling is a costly business and approach it with a hard-nosed, investment-oriented mentality by carefully selecting trial customers and by periodically reevaluating relationships, much as pharmaceutical companies stage-gate their R&D investments.

Identifying value

The experience of one large consumer goods company highlights the difficulty of identifying collaborative opportunities that are beneficial for both parties. The company established customer councils that comprised all the salespeople around the world for each of several major customers. Although the councils met regularly, data on customer volume, revenues, prices, and profitability weren't made available to all members. Even when major customers provided an opportunity by seeking global or regional pricing deals, the councils lacked the knowledge and customer relationships to do anything but put out fires with price concessions. Successful collaborators avoid such pitfalls by thoroughly engaging the customer to comprehend its business and learn how to make improvements.

Understand the customer's economics

Contrast the consumer goods company's approach with that of Alcoa or BASF. At Alcoa, teams hold weekly meetings during critical points in the customer's sales cycle and develop strategies based on a deep understanding of its economics. Scrutinizing the value chains of customers is an important starting point. In one well-known case, BASF's efforts to identify new sources of value for its automotive OEM customers ultimately led it to run their paint shops (Exhibit 1).

Developing economic insight into specific elements of the value chain requires detailed industry knowledge. Frequently, suppliers find that industry specialization, coupled with time on the road, is the most efficient way for their sales teams and relationship managers to gain expertise. There is no substitute for visiting other players in the industry, attending trade shows, and finding out which areas of a customer's operation could, if improved, yield the largest and fastest payoff.

In a best-practice example, one consumer durable-goods manufacturer engages in thorough end-consumer research, including efforts to understand the preferences and buying patterns of shoppers at its important retail customers. The supplier can thus collaborate with customers to conduct long-term category planning, manage changes in the mix of products, tailor marketing campaigns, and improve in-store sales and service execution.

Engage the customer

Armed with this knowledge, sales teams are now ready to engage with customer personnel. They have to perform the difficult task of generating insights into a customer's business that go beyond existing products—and beyond anything the customer would uncover on its own. Joint strategy sessions are frequently the tricky part. Alcoa, for example, creates teams of its own and the customer's personnel (including supply chain experts, operations managers, and R&D engineers who can validate the potential economic impact of collaborative initiatives). The teams meet on the customer's home turf.

In cases where the supplier and the customer are looking for company-wide opportunities, it is important for teams to include personnel from a number of geographies and business units. At the extreme, customer engagement—and the teams supporting it—will occur at the intersection of several industries at once. For example, in the late 1990s Sealed Air improved upon a proprietary vacuum-packaging process after detailed consultation with poultry processors and grocery retailers. The new solution drove down damage rates and waste materials for packaged products, enabling grocers to boost profits on poultry products by 75 percent, even when prices to the end consumer remain unchanged. This solution, along with other collaborative innovations, contributed to Sealed Air's 24 percent increase in sales since 2000.

Some customers, touting their highly centralized decision-making process and ability to facilitate effective collaboration, question the need for a team approach. In our experience, though, a customer's organization is rarely as centralized as it thinks it is, so the supplier should be explicit when choosing team members. To capture the full potential of a collaborative relationship, a company might need to start by convincing a senior customer leader who deals with consumers and also has functional responsibilities (particularly sales, marketing, or product development) that a diverse team is required.

Organizing for success

Both before and after initial contact with a customer, a supplier's internal organizational issues can create steep barriers to success. Business units—defined by geography or product—focus on their own accountability and frequently have few processes and little patience for collaborative efforts that are good for the whole but may harm their own income statements. The consequences range from inaction to the proverbial accident in the customer's parking lot—that is, when salespeople from different business units of the same supplier bump into each other on sales calls or try to pitch different products or services to the same customer. These actions undermine the "one-face" continuity that customers expect from collaborative relationships (Exhibition 2)

Consider one large services company's effort to engage a customer with global operations. Things went awry when the customer's business unit leaders retained procurement authority, thereby making it very difficult for the supplier to work collaboratively across business units to find opportunities. After investing 12 months of substantial effort, the supplier captured just 5 percent of the potential opportunity, and the customer characterized the relationship as a "two out of ten."

Effective collaboration depends on a highly skilled customer relationship manager (or collaboration manager) who can break down barriers and align the various players. Well-trained cross-functional teams, assistance from senior management, and incentives that will get everyone working together are also vital for success.

Choose the right relationship manager

While collaboration managers certainly need to be able to handle customers, they must be much more than heavy-hitting salespeople. Because substantial portions of the supplier's total revenues can be affected by a collaboration, for example, candidates must be strong business managers—a trait not necessarily possessed by some high-performing salespeople. In addition, collaboration managers must command the respect of their own senior leaders as well as the customer's. Potential managers should meet these important criteria: do they have personal networks across functions, business units, and regions that will help them marshal resources for a customer on an ad hoc basis? And can they hold strategic business discussions with the relevant senior executives in the customer's organization?

Leading collaborative sellers filled twice as many of these roles with people from outside the sales organization than less effective companies did, according to our research. Some companies relied heavily on external talent. In these cases, it is often wise to hire people to fill the gaps in knowledge about a customer's industry, since such expertise is particularly difficult to develop internally. The goal can be met by recruiting outside experts for roles that will allow them to build internal credibility before taking on full relationship-management responsibilities—and by phasing in the corresponding number of customers targeted for collaborative relationships.

Develop the account team

The collaboration manager won't succeed without a strong supporting cast. Members of a typical account team have deep product knowledge; engineering expertise; pricing skills for speedy, advantageous deal making; negotiating and legal skills to simplify the writing of contracts across business units; and service experience to facilitate postsales support. Ensuring that a team has the necessary pre- and postsales expertise means pulling in a large number of people, often more than 10 and sometimes as many as 50.

To be effective, leaders must be able to work well together and with customers. Many sales managers try to define ideal collaborative processes and communicate them to teams, only to be disappointed by the results. By contrast, one packaging company developed collaborative-selling skills through a "forum and fieldwork" approach. Each account team attended half-day training sessions, or forums, that introduced new skills (such as financial analysis or detailed strategic planning), tools (such as an approach for calculating and communicating the total benefits delivered to a customer by comparing the supplier's offering with the customer's next-best alternative), and processes (such as negotiation tactics to influence the purchaser). The forums also gave teams time to plan how to use these new tools and techniques with their important customers. Following the workshops, the teams had one- to four-week periods of fieldwork. One team began, for example, by assembling an integrated view that included the customer's current competitive situation, its total spending on categories related to the supplier's products and services, and a list of purchasing decision makers. Teams shared the fieldwork results at the next forum, an approach that promoted repetition and reinforcement, linked the teams' new skills with real accounts rather than hypothetical exercises, and created healthy peer pressure.

Involve senior executives

Oral commitments from senior leaders are sometimes the starting point for focusing entire organizations on collaborative efforts. What's more, at a number of successful collaborative sellers, one or more senior leaders oversee key customer relationships.

• At Bosch, each of the top 11 executives is linked to a major OEM customer.
• Alcoa maintains virtual teams for its collaborative customer relationships. The teams operate under the auspices of the business units' senior leaders, who play an active account-management role. Furthermore, in 2003 Alcoa created the role of chief customer officer, a position with oversight of all its business units.
• IBM introduced a separate group, led by a senior executive, that focuses on important customers.
• When Jeff Immelt, the current chairman and CEO of GE, was at GE Plastics, he scheduled weekly calls with each sales executive to review account plans and deal with any problems. He also made a point of visiting one major customer each week. Immelt's involvement sent a signal to customers that they mattered and to internal teams that collaborative efforts were important. It also kept him closely connected with the day-to-day challenges of sales teams and helped remove any barriers to their progress.

A second vital role for senior management is holding people accountable for collaboration goals—a role that the collaboration manager may not have the authority to play. In particular, the senior leadership should push sales teams to establish and meet targets for growth, balance the range of products offered, and ensure smooth transitions through the milestones (such as the introduction of a new product, service, or solution) in a customer relationship that cuts across business units.

Establish incentives

In addition, many profitable collaborations can adversely affect the balance sheets of individual business units, so it is frequently necessary to use internal accounting mechanisms to compensate business units or operating companies. Nokia, for example, uses a detailed transfer-pricing system to ensure that business units and individuals working toward joint customer goals receive the proper recognition. Systems like Nokia's are complicated to implement because of the potential for disagreement about fair transfer-pricing levels, so these crediting mechanisms are most likely to succeed when accompanied by measures to improve understanding and interaction between parts of an organization. Rotating leaders among large account teams, business units, and geographies helps the sales force develop an enterprise-wide perspective, for example. Holding regular cross-team meetings highlights points of friction before they can cause counterproductive behavior.

Such efforts pay off. Our survey of sales executives showed that top-quartile companies were one-and-a-half times more likely to view incentive systems as a core element of their collaborative efforts than were companies delivering stagnant or negative results. In fact, one in four respondents from the poorer performers considered incentives "barely" or "not at all" important to the successful management of a collaborative sales initiative.

Investing wisely

Aligning the organization and identifying unique sources of value require a lot of time, talent, and financial resources. Even if suppliers do everything else right, they run the risk of earning poor returns on collaborative investments if they don't work with the right customers, measure results carefully, and modify their approach accordingly. Common mistakes include paying attention to squeaky wheels rather than investing in relationships based on a solid understanding of relative customer value, continuing investments when they are unlikely to be profitable, and failing to maintain a pipeline of collaborative initiatives.

Although collaborative relationships are not ideal for all large accounts, many suppliers segment their customers and select collaborative targets according to the revenue each account currently generates. A better approach is to consider additional factors—such as potential revenues, profitability, a customer's willingness to partner, the importance of the supplier's products or services to the customer's business, the supplier's ability to serve the customer's needs, and changes in the customer's circumstances (such as rapid expansion, a merger or acquisition, or a shift in competitive dynamics)—that might create collaborative opportunities. It's not unusual for half the customers at the top of a size-based ranking to fall out of a more nuanced segmentation. And even for attractive customers, suppliers should husband scarce resources by clearly delineating different types of transactions. IBM Global Services, for example, builds tailored offerings with selected customers while simultaneously selling standard products to them.

Once collaborative efforts are under way, it's important to track the value created for both sides. A detailed understanding of a relationship's profitability helps a supplier know how to handle customers seeking discounts. And regular progress reviews with individual customers reinforce each relationship's value and create excellent opportunities for suppliers to cross-sell and to expand the scope of the partnership. The focus should be on such measures as sales and profits as well as on activities or intermediate outcomes—such as the number of proposals in the pipeline or the depth of relationships with a customer's senior management—that indicate whether the collaborative effort is on track (Exhibit 3).

The consumer durable-goods manufacturer we described earlier combines its detailed end-consumer research with predictive, industry-wide economic analyses and input from retailers and wholesale distributors to track the impact of its efforts on each collaborative customer's key consumer segments. Within a year of adopting this approach and acting on its results, the manufacturer's annual net profits increased by more than 10 percent—twice the previous growth rate and significantly higher than the industry average.

A robust set of metrics also helps companies evaluate their investments on an ongoing basis. Given the magnitude of the resources involved, it's important to use stage gating during the sales cycle and to review serious collaborations every 18 to 24 months to determine whether they still make sense. Stage gating involves tracking the development of customer relationships from initial networking to one-off negotiations to full-fledged partnerships. Each stage requires different types and amounts of resources, and customers shouldn't remain at any one stage indefinitely. Without stage gating, collaborative selling can become very expensive; with it, suppliers have a better sense of which relationships to end and when to identify new sources of value for current customers. Collaborative efforts that aren't regularly renewed eventually wither and die.

As large customers get more demanding, B2B companies need not resign themselves to taking a beating on price. Collaborative selling can help companies create and capture more value—but only if they improve their approach to customers, the organization, and collaborative investments.

Source: https://www.mckinseyquarterly.com/Marketing/Sales_Distribution/Better_B2B_selling_1626

Equity markets: Shares and shibboleths

IF THERE is a sacred belief among investors, it is that equities are the best asset for the long run. Buy a diversified portfolio, be patient and rewards will come. Holding cash or government bonds may offer safety in the short term but leaves the investor at risk from inflation over longer periods.

Such beliefs sit oddly with the performance of the Tokyo stockmarket, which peaked at the end of 1989 and is still 75% below its high. Over the 30 years ending in 2010, a “long run” by any standards, American equities beat government bonds by less than a percentage point a year.

In the developed world, the period since the turn of the millennium has been a particular disappointment. Since the end of 1999 the return on American equities has been 7.6 percentage points a year lower than that on government bonds (see chart 1). That has left many corporate and public pension funds in deficit and many people with private pensions facing a delayed, or poorer, retirement. Understanding why equities have let investors down over the past decade will help them work out what to expect in the future.

The long-term faith in equities is based on the theory that investors should be rewarded for the riskiness of shares with a higher return, known as the “equity risk premium” (ERP). That risk comes in two forms. The first is that shareholders get paid only when other claimants on a company’s cashflow, such as workers, the taxman and creditors, have received their due. Profits and dividends are thus highly variable and can disappear altogether when times get tough. The second risk is that share prices are volatile, more so than bond prices. Since 1926 there have been seven calendar years when American equity investors have suffered a loss of more than 20%; investors in Treasuries have suffered no such calamitous years.

The big question, however, is how large that extra return should be. Here it is important to distinguish between the extra return investors actually achieved for holding equities (what could be called the ex post number) and the return they expected to achieve when they bought them (the ex ante figure). Academics started to focus on this problem in the mid-1980s when a paper by Rajnish Mehra and Edward Prescott indicated that the ex post return of American equity investors had been remarkably high, at around seven percentage points a year. It seems unlikely that investors expected to do so well.

Premium puzzle

There are a number of possible explanations for these very high ex post returns. One is survivorship bias in the numbers. America, which is the benchmark for ERP measurements, turned out to be the most successful economy of the 20th century, but it might not have been. Before the first world war investors doubtless had high hopes for Argentina, China or Russia—only to be disappointed.

Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School (LBS) have analysed the data for 19 countries from 1900 to 2011 and found that the ERP relative to Treasury bills (short-term government debt) ranged from just over two-and-a-half percentage points a year in Denmark to six-and-a-half points in Australia. They found a premium for America of five percentage points.

Another explanation for the high returns is a paradoxical one: that equities have become less risky. In the early part of the 20th century corporate accounts were more opaque and less reliable (though shareholders in Enron, a bust energy company, may disagree). Most stocks were owned by private investors with only a handful of individual shares. This left them more exposed to the risk of a single firm failing, which meant they put a lower value on shares—or, to put it another way, they demanded a higher premium for owning them.

Today most equities are owned by institutional investors who can assemble a diversified portfolio. Even small investors can own an index fund at low cost. The impact of one company failing is thus far smaller. This reduced risk has prompted investors to pay higher prices for shares; in other words, to accept a lower dividend yield. That may well have increased the ex post risk premium (other things being equal, a fall in the dividend yield from 4% to 2% means investors double their money).

The size and persistence of the ERP led some commentators in the late 1990s to come up with an ingenious, if flawed, argument. In their book “Dow 36,000”, for instance, James Glassman and Kevin Hassett argued that the reliable outperformance of shares over bonds meant that equities were not riskier at all. As a result, there need be no ex ante risk premium.

This time is not different

If this belief were correct, equity investors should have been willing to accept a lower earnings yield. (This is the inverse of the price-earnings ratio; if the p/e is 50, the earnings yield is 2%.) In the course of moving to the lower earnings yield, the market would have soared to the 36,000 level of the book’s title. A lower ex ante risk premium implies higher returns in the short term. The authors were proved right in one sense. Investors who bought shares in 1999 did not earn a risk premium. But that will be of scant consolation to those who believed the book, since 13 years later the Dow is at around 13,000, not 36,000.

One obvious problem with their reasoning was that, although equities might have beaten bonds over most long periods, the horizon of the average investor is much shorter. There have been many equity bear markets in history and investors are exposed to the real risk that they will have to sell in the middle of one. Most shares are owned by professional fund managers, who have to report to their clients every three months. If a big bet on equities goes wrong they cannot wait 20 years to be proved right. Clients will have deserted them long before then.

The late-1990s debate illustrated a familiar pattern at the top of bull markets. When share prices have already risen a lot, commentators scramble for reasons why they should rise even further. In the 1980s those who queried whether the Japanese stockmarket was expensive on a minimal dividend yield and a sky-high price-earnings ratio were told that “Western valuation methods” did not apply in Tokyo. At the turn of the century many assumed that, because the achieved ERP had been high in the past, it would be so in the future. But investors had their reasoning backwards. When share valuations are high, future returns are likely to be low and vice versa.

Given the history of the risk premium, what will the future reward for equity investors be? This question is discussed in a new set of papers* issued by the Chartered Financial Analysts Institute. The collection is a follow-up to a similar exercise undertaken in 2001, where the range of estimates of the premium varied from zero to seven percentage points a year.

The first step is to define the equity risk premium more exactly. Mssrs Dimson, Marsh and Staunton break it down into the following components: the dividend yield, plus the real dividend growth rate, plus or minus any change in the price/dividend ratio (the inverse of the dividend yield), minus the real risk-free interest rate.

In the period 1900-2011, the average world dividend yield was 4.1%; real dividend growth was just 0.8%; and the rerating of the market added 0.4%. That comes to a real equity return of 5.4% (the calculation is geometric, not arithmetic). Stripping out the risk-free interest rate, the ERP was 4.4% versus short-term government debt and 3.5% versus longer-term government bonds (see chart 2).

The dividend yield comprised the vast bulk of the return. This was true across all the countries studied by the authors. Had investors consistently bought the highest-yielding quintile of equity markets over the past 112 years they would have earned an average nominal annual return of 13.3% compared with a return of just 5.4% for those buying the lowest-yielding quintile. High-dividend markets have also performed best so far this century.

The importance of the dividend yield is ironic, given the lack of focus on the measure in most modern investment commentary. Many analysts argue that the dividend has been superseded by the share buy-back which (particularly in America) is a more tax-efficient way of returning cash to shareholders. But Robert Arnott of Research Affiliates points out that, although buy-backs reduce share capital, companies are also finding ways to add to it. Firms issue shares to pay for acquisitions, for example, or to reward executives through incentive schemes. Historically, net share issuance has been around 2% of total equity capital a year. This dilution of existing shareholders is part of the reason why real dividend growth has been so low, well below GDP growth.

As a starting point for estimating the future ERP, this is not encouraging. The current dividend yield on stockmarkets is lower (at 2.7% in the countries covered by the LBS data) than the historical average. Dividends tend to grow (at best) no faster than GDP, and usually slower because of the dilution effect. Nor is there much hope of a boost from a revaluation of the market. Since the yield is low, relative to history, it is more likely that any revaluation will subtract from returns. In another paper, Cliff Asness of AQR Capital, a hedge-fund group, uses his estimates of dividend yield and likely dividend growth to come up with a forecast for future real equity returns in America of around 4% a year.

Future imperfect

Although this figure is lower than the historical average, it still means that equity investors will earn a risk premium. The real yields on short- and long-term debt are zero, or negative in some cases. Nominal yields are close to historic lows. If the risk-free return is zero, then the entire return from equities will count as a risk premium. And a 4% premium would be only a little below the long-term average for America.

That still would not be high enough for many pension funds. In America, local-government pension funds base their contributions on the assumption that they will earn 8% (in nominal terms) on their investment portfolios. Treasury bonds yield 2% at the moment, so a 4% risk premium suggests a nominal return of 6% on equities. That means pension funds will fall well short of their targeted return.

Pension providers have two options: increase contributions or cut benefits. Cutting benefits will be difficult for many American states since pension rights are legally or constitutionally guaranteed. So taxes will have to go up or other services will have to be cut. Companies that have offered pensions linked to final salaries may have to divert money into their pension schemes, cash that could have been invested to boost the economy. Individuals who rely on private pensions (or on so-called defined-contribution benefits, where the company does not promise a payout) face the same problem.

Equities are not a miracle asset that will turn measly contributions into a generous pension. Those who want to retire in comfort should save more.

Source: http://www.economist.com/node/21550273

Ngân hàng loay hoay tìm doanh nghiệp vay vốn

Tìm cách cho vay để bớt đọng vốn Phó tổng giám đốc một ngân hàng nhỏ cho biết ngân hàng ông hiện vẫn có đến 1.000 tỉ đồng dành riêng để cho vay doanh nghiệp. Mức lãi suất dao động từ 18-20%, tuy vậy ông cho biết trong cả tháng qua nhân viên tín dụng đã tìm kiếm khách hàng để cho vay nhưng không được là bao. Theo vị này, với mức lãi suất như trên nếu so với ngân hàng có vốn nhà nước hay ngân hàng nước ngoài thì không thể cạnh tranh, trong khi đó, các doanh nghiệp có hồ sơ tốt thường liên hệ với các ngân hàng trên để vay. “Cũng có một số doanh nghiệp có nhu cầu nhưng khi xét hồ sơ thì không đủ tiêu chuẩn”, vị này cho biết. Ông cho biết thêm số tiền trên hiện đang dùng để đầu tư ngắn hạn và chờ để cho doanh nghiệp vay. Với chỉ tiêu tăng trưởng tín dụng trong năm nay được Ngân hàng Nhà nước giao là 8%, ông còn cho rằng chưa chắc ngân hàng sẽ đạt được mức tăng trưởng như trên trong năm nay. Giám đốc khối khách hàng doanh nghiệp một chi nhánh tại TPHCM của Ngân hàng Quốc tế (VIB) cũng cho biết, trong thời gian này, ngân hàng ông đang tìm doanh nghiệp để cho vay, và tranh thủ giải ngân vốn. Tuy vậy, để tìm được doanh nghiệp đủ khả năng là không dễ vì các rủi ro đến với doanh nghiệp trong thời gian này là rất cao, khiến cho ngân hàng nếu không thận trọng thì nợ quá hạn sẽ gia tăng. Đa phần các báo cáo tài chính mà doanh nghiệp chuyển đến đều được ngân hàng xem xét kỹ càng và giải ngân đúng theo nhu cầu chứ không theo số vốn đề nghị của doanh nghiệp. Hiện tại VIB đang đưa ra nhiều gói hỗ trợ cho doanh nghiệp xuất nhập khẩu, thực phẩm đồ uống, với lãi suất ưu đãi, thấp hơn 1,5 điểm phần trăm so với mức cho vay thông thường. Từ đầu tháng 3, Ngân hàng Phương Đông cũng triển khai cho nhân viên tín dụng tại các chi nhánh về việc tích cực mời gọi khách hàng vay vốn. Ngân hàng này cũng đã giảm lãi suất xuống còn 18%/năm cho các khoản vay trong vòng 1 năm. Theo nhân viên tín dụng của ngân hàng này, việc xét cho vay sẽ được thực hiện tỉ mỉ và cân nhắc hơn, để tránh tăng thêm nợ xấu cho ngân hàng, trong khi việc thu hồi nợ trong điều kiện hiện tại rất khó. Theo thông tin từ OceanBank, ngân hàng này đang áp dụng các chương trình ưu đãi đối với các doanh nghiệp, hợp tác xã, hộ gia đình, cá nhân… hoạt động trong lĩnh vực nông nghiệp, nông thôn, lâm, ngư nghiệp, diêm nghiệp… nhằm phục vụ phát triển nông nghiệp, nông thôn với lãi suất thấp hơn 2- 3%/năm so với biểu lãi suất cho vay thông thường tại OceanBank. Đồng thời ngân hàng vừa quyết định dành một gói tín dụng ưu đãi trị giá 500 tỉ đồng với lãi suất cho vay khoảng 17%/năm cho một doanh nghiệp ở phía nam. Trao đổi với Thời báo Kinh tế Sài Gòn Online, chuyên gia tài chính Lê Xuân Nghĩa cho rằng, hiện tại vốn ở các ngân hàng đang dư thừa, không tìm được khách hàng vay. Điều này đã dẫn đến nhiều ngân hàng bỏ tiền mua trái phiếu chính phủ, kỳ hạn dưới 5 năm với lãi suất khoảng 11%/năm. Theo số liệu của Công ty chứng khoán Bảo Việt, tính đến hết ngày 9-3, tổng giá trị giao dịch toàn thị trường của trái phiếu đạt 47.575 tỉ đồng, trong khi cả năm 2011, con số này chỉ là hơn 73.000 tỉ đồng. Bảo Việt cũng cho rằng ngân hàng thương mại là đối tượng chủ yếu mua trái phiếu trong thời gian qua. Trong buổi họp báo công bố giảm lãi suất huy động ngày 13-3, Thống đốc Ngân hàng Nhà nước Nguyễn Văn Bình cũng cho biết, tính đến ngày 8-3, tỷ lệ tăng trưởng tín dụng đã giảm 1,27% so với cuối năm 2011. Thống đốc Ngân hàng Nhà nước lý giải rằng do yếu tố mùa vụ trong sản xuất kinh doanh ở kỳ nghỉ Tết Nguyên đán và tiếp đó, nhu cầu vay vốn còn hạn chế khiến cho dư nợ tín dụng giảm. Lãi suất vay giảm chưa đáng kể Trong khi ngân hàng đang tìm mọi cách để mời gọi doanh nghiệp vay vốn, thì trong buổi tọa đàm về tiếp cận vốn ngân hàng do Thời báo Kinh tế Sài Gòn tổ chức vào hôm 12-3, đa phần các doanh nghiệp tham dự đều cho rằng lãi suất hiện vẫn còn cao, nếu vay kinh doanh thì không có lãi. Đại diện các doanh nghiệp có mặt cho rằng mức lãi suất huy động giảm 1 điểm phần trăm, dẫn đến việc lãi suất cho vay giảm 1-2 điểm phần trăm tại một số ngân hàng chưa phải là mong muốn của doanh nghiệp vì mức giảm này không đáng kể. Theo bà Lê Thị Kim Thư, Giám đốc Kinh doanh Công ty Owtex Thiên Hòa , mức lãi suất trên dù giảm vẫn quá cao đối với doanh nghiệp, và mức lãi suất hợp lý mà công ty có thể chấp nhận được vào khoảng 8%. Bà Thư cho biết, hiện tại việc vay vốn chủ yếu để duy trì sản xuất, đảm bảo công ăn việc làm cho công nhân, không dám nghĩ đến lợi nhuận. Vì cái khó của doanh nghiệp hiện nay là tiêu thụ hàng, nếu tăng giá thì tồn kho sẽ tăng nên công ty cũng không dám đưa tất cả chi phí vào giá bán. Trong khi đó, ông Phan Văn Dũng, Tổng giám đốc Công ty cổ phần Thép Hữu Liên Á Châu, cho biết việc lãi suất cho vay được giảm xuống 1 điểm phần trăm thì sẽ giúp công ty ông tăng thêm được 5% lợi nhuận trên vốn chủ sở hữu. Vì vậy, việc giảm lãi suất là rất quan trọng, nhưng ông Dũng cũng cho biết, khi lãi suất giảm xuống còn 12% thì doanh nghiệp mới có thể có lãi. Còn ông Nguyễn Trí Kiên, Tổng giám đốc Công ty Túi xách Minh Tiến, cho rằng hiện tại doanh nghiệp nhỏ có ba cái khó: tiếp cận được vốn ngân hàng, được vay với lãi suất thấp và có thêm các chính sách hỗ trợ của Chính phủ để vượt qua những khó khăn hiện tại. Ông Kiên nói mức lãi suất trên đang bào mòn lợi nhuận của doanh nghiệp. Theo ông Kiên, vấn đề quan trọng hiện nay là nhà nước nên điều chỉnh dòng vốn chảy vào các doanh nghiệp sản xuất, kinh doanh, các nơi tạo ra giá trị thặng dư cao cho cả nền kinh tế. Lãi suất giảm mới chỉ đến được với doanh nghiệp lớn còn doanh nghiệp nhỏ và vừa dù cho nằm trong đối tượng ưu tiên cho vay vốn vẫn chưa được hưởng. “Như vậy, liệu việc giảm lãi suất có tạo ra tác động tích cực cho nền kinh tế hay chưa, trong khi doanh nghiệp nhỏ và vừa đóng góp một phần không nhỏ trong việc tạo ra tiền cho nền kinh tế và công ăn việc làm cho xã hội”, ông Kiên đặt câu hỏi. Ông Võ Thanh Liêm, Tổng giám đốc Công ty TNHH Nguồn Sinh Thái, cho biết hiện tại doanh nghiệp “thở đến đâu hay đến đó”, không dám mở rộng sản xuất vì không có vốn. Nếu phải vay vốn ngân hàng với lãi suất 17- 18% thì xem như hoạt động kinh doanh sẽ không còn mang lại lợi nhuận. Ông Liêm cho rằng, hiện tại doanh nghiệp phải tái cấu trúc mình để tìm được vốn, nhưng ngân hàng cũng phải xây dựng đội ngũ thẩm định dự án cho chuyên nghiệp, chính xác, trung thực thì mới mong vốn rót vào đúng chỗ, không ảnh hưởng tiêu cực đến cơ cấu nợ của ngân hàng, và ngân hàng sẽ mạnh dạn cho vay hơn. Source: http://www.thesaigontimes.vn/Home/taichinh/nganhang/72983/Ngan-hang-loay-hoay-tim-doanh-nghiep-vay-von.html

Buttonwood: Pausing for breath

IT IS known as the “reflation trade”. The theory is that rich-world central banks will do whatever it takes to revive their economies, even if that means tolerating a period of above-target inflation. As a result, investors feel an incentive to buy “real assets”, those linked to nominal economic growth (notably equities) or to rising prices (commodities).

From October 4th to March 1st, the MSCI World equity index rose by 21.4% and the S&P GSCI commodity index rose by 23.8%, vigorous rallies by any standard. Bullish sentiment was driven by a sense that quantitative easing (QE), the creation of money to buy assets like government bonds, had become a competitive sport.

America and Britain had been in the vanguard but in September the Swiss central bank pledged to create sufficient money to peg the franc against the euro; and in February the Bank of Japan added {Yen}10 trillion ($128 billion) to its asset-purchase programme and unveiled a target inflation rate of 1%. For its part the European Central Bank has lent more than €1 trillion ($1.3 trillion) in three–year loans to banks, in what is widely seen as a case of QE by the back door.

But the reflation trade took a bit of a dent on February 29th when Ben Bernanke, the Federal Reserve’s chairman, gave no hint of a third round of QE in testimony to Congress. Admittedly, there was a bullish underpinning to Mr Bernanke’s speech: a better performance by the American economy means there is less need for further action. Nevertheless, the Fed is seen as “pump-primer in chief” by many in the markets. Gold fell by $100 an ounce after Mr Bernanke’s statement.

A setback was probably inevitable after such a strong rally. A bigger question, however, is whether the rationale behind the reflation trade makes any sense.

Central banks have undoubtedly expanded their balance-sheets during the crisis. Back in 2008 the monetary base of the euro zone (in effect notes and coins plus reserves held at the region’s central banks) was around 10% of GDP; the equivalent figures for the Federal Reserve and the Bank of England were in the 4-6% range. Now the monetary base in all three places is between 16% and 18% of GDP.

However, expansion of the monetary base does not necessarily lead to growth in broad money, which measures the supply of credit to businesses and consumers and which ultimately drives inflation. Money-supply growth still looks sluggish in Britain, Japan and the euro zone (see chart). Only in America does it look robust.

The problem is that many banks remain unwilling to extend credit given the need, among other things, to shore up their capital. Figures show that total euro-zone lending to households and non-financial firms has declined in recent months, despite the ECB’s actions. Dhaval Joshi of BCA Research says that “banks have destroyed money just as fast as the ECB has created it.” Jennifer McKeown of Capital Economics concludes from the data that “bank lending remains extremely weak, suggesting that a lack of credit will continue to hold back economic activity.”

In short, the reflation trade may be based on a false premise. The rally may well have been driven by a lifting of the intense economic gloom that enveloped the markets in the autumn of 2011 and a sense that the European authorities had removed the immediate threat of a banking collapse, while simultaneously halting the rapid rise in Italian and Spanish government-bond yields. But now that investors have paused for breath, they can see that the economic outlook is still pretty murky. On March 5th, for example, China lowered its growth target to 7.5% (see later story); survey data on activity in the euro area’s services sector were also weaker than expected.

Furthermore, the markets are starting to lose a key source of support. As the global economy emerged from recession in 2009, profit margins surged thanks to falls in borrowing costs and weak wage growth. But European profits are down by 7% compared with the previous year, according to HSBC. Even in America, which is doing rather better, Bank of America Merrill Lynch is expecting corporate profits for S&P 500 companies to grow by just 6.4% in 2012, down from 14.8% last year.

It all looks remarkably like 2011, when an early-year rally also ran out of steam. So long as the yields on other assets like bonds and cash are so low, it is hard for stockmarkets to collapse. But those yields are so low because central banks are frightened about the economic outlook. That makes it very hard for a bull run to be sustained.

Source: http://www.economist.com/node/21549966

Inter-bank interest rates: Fixing LIBOR

EVERY weekday, at around 11.30am UK time, trading screens update with that day’s new London inter-bank offered rates (LIBOR). The numbers are supposed to measure the interest rates banks pay when they borrow from each another. Along with other benchmarks like central-bank rates and government-bond yields, LIBOR rates are one of the foundations of finance. Contracts worth around $360 trillion, five times global GDP, are based on them.

Something this important needs to be rock solid, and there are concerns that LIBOR is not. A 2008 study by the Bank for International Settlements, for instance, spotted days when financial risks spiked but LIBOR did not. Given that lending rates should be highly influenced by credit risk, such disconnects have led some to suspect foul play. The Canadian antitrust watchdog is searching for evidence of collusive conduct between banks, including price-fixing. Competition authorities in Switzerland, America and the European Union are likely to probe the same thing. Financial regulators in America, Britain and Japan are also investigating LIBOR; they may look at whether banks have acted alone to manipulate LIBOR to their advantage.

LIBOR was developed in the 1980s to simplify the pricing of interest-rate derivatives and syndicated loans. Such loans blend funds provided by several banks; a common yardstick for the cost of cash was needed. In response the British Bankers’ Association (BBA) started publishing LIBOR rates in 1986 and they quickly became a vital reference point for the pricing of financial instruments.

Libor is set, or “fixed”, every day. Unlike other benchmarks it is not based on actual borrowing costs. Instead, each bank estimates the rate it would be charged if it borrowed cash that day, across 15 maturities in ten different currencies. The amount borrowed in this hypothetical contract is not specified, it just has to be a “reasonable” amount. This process ensures that full LIBOR coverage is available every day, even in lesser-used currencies.

Up to 20 banks submit their best guesses of lending costs. Once these are all in, Thomson Reuters, on behalf of the BBA, ranks them, removes the top and bottom 25%, averages the rest and then publishes the day’s LIBOR fixing. At this stage every bank’s individual estimate is revealed, too.

So LIBOR is subjective by design. It is a bankers’ poll, not a statistical measure. And there are reasons to believe that banks have an incentive to cook the numbers. Banks whose actual borrowing costs are high do not want to admit they are seen as risky by creditors. And some banks’ liabilities are more closely tied to LIBOR than their assets. By lowering LIBOR, these banks’ interest costs would fall more than interest revenues, boosting profits.

Accurate benchmarks are vital if risk is to be correctly priced. According to Zohar Hod of SuperDerivatives, a derivatives-pricing firm, there has already been movement away from LIBOR towards using overnight index swaps to discount cash flows on certain instruments. In the meantime the BBA is considering a LIBOR revamp. It is needed. Where actual rates are available, these should be used. If estimated rates are required, incentives to report accurately need to be sharpened. Collecting each bank’s estimates of its rivals’ borrowing rates would help identify any over-optimistic self-assessment. Keeping these cross-checks anonymous could promote truth-telling. Such steps could lead to an accurate LIBOR fix, not just a fixed one.

Source: http://www.economist.com/node/21549961

Why the ‘risk-on’ rally will not last

The recent rally in global markets has been led by what most investors are now calling “risk-on” assets. Their counterparts, risk-off assets, have lagged. We question the longevity of this risk-on trade. Indeed, we believe that the secular investment theme remains risk-off.

Investors use the hackneyed term risk-on to refer to assets that have tended to outperform when investors are bullish. Commodities, real estate and emerging markets would be prime examples. Risk-off assets are perceived haven assets such as US Treasuries, German Bunds, the US dollar and even US stocks.

Yet few investors seem to understand the implied economic forecasts of the risk-on/risk-off trades. Our research shows that risk-on assets’ outperformance during the 2000s was directly related to the inflation of the global credit bubble. The most popular investments during the decade were all credit-related investments. When one buys risk-on assets, therefore, one assumes that the deflation of the global credit bubble will subside and that credit will again expand. The implied forecast of a risk-off trade is the exact opposite, ie, that the credit bubble will continue to deflate.

During 2009-10, it was widely thought that the deflating credit bubble was solely a US problem, and that economies in the remainder of the world were still healthy. Consensus at the time was that the US was de-basing the dollar, and the euro would soon be an alternative reserve currency. In 2011, investors fully realised that there were credit problems in Europe too, and talk of the euro becoming a reserve currency ended.

Despite 2011’s dismal emerging markets equity performance, investors continue to believe that the emerging markets are largely immune to the developed world’s credit hangover. But cycles often begin in the US, travel to Europe and then end up in the emerging markets. This cycle will likely follow that historical precedent. The emerging markets’ difficult tugs-of-war between inflation and growth indicate that the emerging markets, rather than decoupling from the developed world, were perhaps the biggest beneficiaries of the global credit bubble.

If risk-on assets are credit-related assets, then it follows they should outperform when credit is expected to expand, and underperform when credit is expected to contract. Accordingly, we expect risk-on assets’ outperformance to be periodic when policymakers attempt to reinflate the global credit bubble. Risk-on assets outperformed subsequent to the Federal Reserve’s attempts to stymie US financial sector consolidation, and they have been outperforming more recently as the European Central Bank made moves to thwart European bank consolidation.

The question is whether policymakers can fully alleviate the effects of a deflating global credit bubble. Longer-term investors should be sceptical.

Bubbles create overcapacity within an economy. For example, towns were formed during the California gold rush in the 1800s as the population of California swelled with hopeful prospectors. These became ghost towns once the gold bubble subsided and people moved elsewhere to find more productive work.

During credit bubbles, overcapacity builds on bank balance sheets. When credit bubbles deflate, bloated bank balance sheets are no longer a productive use of assets, and they inevitably contract. The only uncertainties are the means and the speed of balance sheet contraction. Economic history shows that the faster bubble-produced overcapacity is reduced, the quicker economies rebound. Economists, therefore, generally prefer speed in capacity rationalisation because they want assets to be used more efficiently. Politicians abhor such speed because it often means job losses and weak voter confidence.

The performance see-saw between risk-on and risk-off assets reflects this fight between economic and political realities. When policymakers take actions to attempt to counteract the economic reality that bank balance sheets must contract (as the ECB has recently done), then risk-on assets outperform.

But economic history is also full of stark reminders that bubbles cannot be reinflated despite best attempts of politicians to soften the blows of consolidation and deflation. When these economic realities prove more powerful than policy, the risk-off trade outperforms.

Could the secular investment theme for the 2010s indeed be risk-on? We doubt it. Risk-on assets’ performance during the 2000s was propelled by credit. The global economy is now on the downside of a credit bubble, the full effect of which has yet to be felt in places such as emerging markets. The history of financial bubbles and their subsequent deflation seem to favour the secular underperformance of risk-on assets.

Risk-off assets will likely be the secular investment theme of the 2010s. US-based assets (both stocks and bonds) continue as our favourites. In fact, this significant secular shift is already under way. Despite the recent attention-grabbing rally in risk-on assets, the S&P 500 has outperformed Bric equities for more than four years.

Source: http://www.ft.com/intl/cms/s/0/b2656e54-5f06-11e1-9df6-00144feabdc0.html#axzz1oV10N64R