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last three or four years when friends have asked me what I'm doing I've told them that I was working on a book on Chinese banking and they would look at me and they say oh good you're going to write about the coming collapse of Chinese banks and I would take a deep breath and say oh no actually I'm going to write about how the Chinese banking system works rather well and they would look at me sadly and think put him yes and read the newspapers he doesn't know it's all going to collapse and so over the years we've had this unremitting yeah unremitting a critical garage in the press and from I'd say the majority of the investment an analyst and these are three samples have a favorite is from the Nobel prize-winning economist Paul Krugman who says China's remarkable success over the past 25 years notwithstanding the nation's rulers have no idea what they're doing when wonders what they would have done if they had known what they were doing but this is basically what I'm up against and reading this ongoing critical garage which was so at variance with what I was seeing working within two Chinese banks over the course of 13 years during which they transformed I decided that I should write a book on the subject so the result is Chinese banking transformation which is available for sale here and also in Kellyanne los sorry and I wrote the book first to provide a more balanced perspective on the Chinese banking system than you get from the people who are writing about the day-to-day events secondly though I discovered as I was writing it that if you understand how the banking system works you have to understand the political environment the economic environment the cultural milieu and that means that banking the banking sector serves as a case study for how China works in general so it's really a broader book about the overall Chinese political economy and how it works seen through the prism of the banking sector and whatever come is it is to explain the bay how kind of works from a Chinese perspective rather than a Western perspective now there are three main messages in the book and first is that the critical barrage on China the negative consensus is largely ill-founded uninformed and needs to be counterbalanced what are the people who write the critical barrage what are they missing well two things I think essentially one is specific to the banking sector they're unaware of the total transformation of the banking sector that has occurred over the period from about 2000 up through today and second of all they are unaware of the larger political economic environment in which the banks function which makes them which makes the banks what I call hybrid institutions that is to say they in many ways look like their Western counterparts they have converged with them in their structure in their management in their systems etc but the underlying rationale for the banks is fundamentally very different very Chinese and very much a part of a market socialist economy so the night and day transformation of the banks the first of these messages I will speak only briefly about because I think in the audience today only a few of you are bankers and I will speak more about the overall political economy but just very briefly on the banks the convergence occurred through enormous and very aggressive borrowing from Western banks which were perceived by the Chinese as embodying global best practice so they did it through everything from World Bank came in and got involved in at the ADB Boston Consulting McKinsey 80 Carney strategic partners were found foreign banks invested in them Bank of America went into the construction bank put a huge amount of effort into modernizing it foreign IT companies IBM was brought in they got deeply into the bank's constructing the systems that they have and the occasional odd maverick like myself was brought into either a board position or into management so there are sponges for absorbing foreign ideas and foreign technology and they were extremely successful at a speed with which it worked was simply incredible colleagues of mine in the ever bright Bank said when they started this process around 2003 2004 and they were awash in bad debt still they were primitive and their management systems very little corporate governance and all they looked at Western banks and I thought can we ever be like that and 10 years later they were it's incredible thing so we could talk at great length on that but chapters four five and six of the book will give you the details on that let me now move on to the issue of how the Chinese economy and the Chinese systems of the economy differ very fundamentally from American counterparts and I use American here as sort of a proxy for the West in general being well aware that Western economy little economies have tremendous variance between them there's the anglo-american model is actually something of an outlier an extreme example of it some of the European economies tend to be more collaborative capitalism cooperative capitalism somewhere more between the American and the Chinese model but using the American model as the prototype of the western one China and the West increasingly converge in areas of how life exists goes on day to day whether personal life or business life if you go to a Chinese major city you see the same brands you see a lot of the same lifestyles etc converging with the West same way in the bank's they are increasingly resembling their Western counterparts but the political economy in which they exist has not been changing in the 90s Americans rather naively thought that when China became more prosperous it would automatically become more capitalistic and it would eventually move to democracy that of course has not happened the Chinese have preserved their own model how the political economy should work and so when I try to encapsulate very briefly just the chief underlying differences between the Chinese model and the American I come up with two points and one is in China group is very important this goes way back 3,000 years if you read in the Analects of Confucius you read about the importance of family you read about the importance of the individual being loyal to parents being loyal to state etc in the u.s. of course it's all about individuals so in China group Trump's individuals if one can still use the word Trump in the u.s. individuals Trump the group we're all about freedom secondly and this goes back long long way in the u.s. we think we should constrain the power of the state in China the state has a responsibility to secure order for people and prosperity and this has been true whether you look at the Han Dynasty dynasty the patterns here persist right up to the present day so we can see all of these differences in how the banking sector works I've listed out here a few points that I want to go into in a bit more detail in the limited time we have that I think are key manifestations of those two differences that I mentioned first is China has market socialism this is what they themselves call it I think it's an apt and accurate description in the u.s. of course we have market capitalism and in Europe you have things that are in between collaborative and cooperative capitalism huge difference secondly in China you have this remarkable organization the party which is everywhere we have nothing like that in Western countries no equivalent body at all third extraordinary power of the state in China to affect outcomes people often underestimate this they because of the fact they feel the state has responsibility to provide order and prosperity for the people therefore they are ready to use the power of the state to intervene as they think necessary to achieve their objectives fourth stability stability stability expressed in many many different ways they do use the word stability a lot in China when no ending but they also use the fear the opposite greatly disorder one that is something that they want to avoid so stability is something that the government feels is its primary responsibility to deliver to the people next is strategic focus Steven Roach former chairman of Morgan Stanley wrote a wonderful book from his new position at Yale University two years ago called unbalanced and he says very clearly in it the Chinese are goo at national strategy the u.s. does not do national strategy very simple the u.s. international strategy is say Obama had done one Crump comes in that's the end of the national strategy you don't have that problem in China you have a continuity the strategy that is adopted by the highest level say in the who won period has been worked on but the people that take over after who what and it's got their buy-in or it wouldn't have become national strategy so and then they are extraordinarily adept at borrowing everything from overseas except money they don't borrow very much money but they borrow ideas they borrow people and they then adapt them to Chinese needs and the idea will will become a hybrid idea and lastly I would just mention that earners if they understand how the system works they can prosper very well in China a prime example of this is the Hong Kong Shanghai Bank which has done extremely well in China and as I explained in the book it's because they really came to grips with the Chinese system and immersed themselves in it okay let's look at some of these concepts a little more detail market socialism market socialism has been described very succinctly by cgn ping as we should make good use of the roles of both the market the invisible hand of Adam Smith and the government the visible hand the third plenum of the Communist Party meeting in 2013 as you all know past 60 reform resolutions and highlighted in that that from that time forward market forces would be decisive well that is indeed true but it's misinterpreted in the West in America market forces are sacred to Creed in China they're a means to the end they're a technique a technique they believe in I think competition is good and they know that market using supply-and-demand achieves good results but this is not the end the end his wealth and power of the nation and the people the state owns strategically important players often overlooked and in this whole market socialism we often forget the Chinese didn't pioneer at he was actually pioneered by a german economist in the early 19th century named lists who was at his ideas were adopted by bismarck to go the german state then they were translated into chinese and became the underlying ideas of the meiji reformation used by japan after world war ii used by korea used by taiwan and now to a great extent with adaptation used in china so there's a whole idea of the developmental state with a very strong role for the government that intervenes strongly in the economy has been around for a while it's all contrary to the neoliberal washington consensus that the results speak for themselves the decisive role of the party as i look at it the party has three big roles you never see it when you deal with china you deal with the government but behind the government is the party it makes policy it communicates policy and an enforces discipline now underneath that is a very interesting department called the organization Department of the Communist Party to rebel which many people don't know anything about it tries to keep itself very hidden it's the largest human resources department in the world and particularly in the banking sector it's very good at his job and nobody works in senior management of a Chinese state-owned bank if they aren't appointed by the organization Department and nobody sits on the board and all the people on the board with exclude the ever bright Bank except for me members of the party so they're approved by the party and they all get policy it comes down through the party lines our the state often underestimated Chinese have the national balance sheet people forget that the banks are owned predominantly by the state great many of the debtors big state-owned organizations the local governments they're also known by the state so it's left hand right hand under the developmental state model they get the deposits from the people and they use those to fund the development of the country a lot of which is done through state-owned enterprises and through local government platforms so they China has a lot of money and if a Chinese local government department is got a particular project which is having a cash flow problem or understand to think that that will become a bad debt it doesn't because money is brought in from one place or another to resolve the problem as one person put it to me and I mentioned in the book in the West money freeze problems in China when he goes to problems it solves the problems they also have no ideological hang-ups about how they use state power it's intensely pragmatic whatever works that's it stability stability is stability immortalized by put in town as the harmonious society when you say that with Chinese they get a wry smile they have a sense of humor about it but it does indeed embody a concept that we want an ordered society and we like stability they are avoid risk they avoid big bang's in the West when we do things we like to do them very quickly roll something out get it done with a lot of collateral damage that's too bad we also don't have the patience to wait for very very slow rollout of programs China everything's about step by step gradually to a pilot first if it was a Chinese rolling out Obamacare they would have started it in one County of Nebraska and discovered the computers collapsed crashed but Obama couldn't do that here to roll out the whole country Chinese really roll something out whole country they start in a few pilots and then when it works they expand if it doesn't work they adapt they think of with it until it does work strategic focus I've already mentioned they're very good at this and they prioritize so when you see the 60 reform planks of the 13th of the third plenum in 2013 people now are saying we're not seeing it moving out basically that was heating things 10-year plan of what he wants to do while he's in office and it's bit-by-bit being ruled out but is prioritized also and open lots of things just in any corporation you do a big project you've got a Gantt tribe what comes first what comes second what comes third don't try and do it all at once they prioritize but once they commit to a strategy which often takes years to develop great deal of building of consensus etc and then years to really unfold once they commit to it it will happen because there's a continuity to it unless it turns out to have been a bad strategy in which they back off but the speed at which they do it depends on many many different circumstances so let me conclude here by giving you example which I think proves some of the or illustrates some of the points that I've made and that is as a we reform which is a major part of the resolutions of the third plenum of 2013 interestingly in that there's no mention of privatization two years later kind of came out with this SOE reform detailed program and a lot of the Financial Times the New York Times that article or some were so disappointed there's no mention of privatization the Chinese never gave the slightest indication in their official strategy that they were any intention of privatizing that's not what they were going to do they were going to try and do what they had done ten years earlier with the banking sector take state-owned banks make them highly competitive put top people in them change the management take changed the governance etc and then make them efficient organizations they did with the banks so they feel they can do it with with other organizations as well we may agree with that or we may not agree with that but it's what they're going to do there may be isolated cases of privatization particularly at local level companies but the big national strategic players they will stay with the government but reforming them is going to take years just as it did with the banks they will move and I think the anti-corruption thing is one of the first steps in that to begin to clean up the corruption and then in the state sector and I think it's my own f
eling that they will move towards what I call financialization something along the lines of Temasek in Singapore government-owned holding companies that's effectively what they've done with a lot of government holdings of the banks everybody Bank Bank of China Bank of Communications the biggest shareholders are biggest shareholders which in central which is a government financial holding company they put people on our board and they relentlessly push for better performance better profits avoiding risk etc because way chin needs dividends in order to justify itself to the State Council so this I think is one way they can go and the speed though at which they do anything will always have to be balanced off against this priority given to stability so in the West we think is it reform or is it stability which do they want actually they want both and they it's like an orchestra directing the orchestra whatever more of the trumpets now then we might have more of the violins over here the Chinese are very good at handling contradiction both in the marxist sense but going way back into yin and yang they can deal with two opposing concepts at the same time very effectively and if at any point the SOE reforms would begin to look like it would result in massive unemployment the only time they did this because they had really very little choice within the 90s but now they will be inclined to avoid excessive disruption in the interests of stability lastly I think the reduction of SOE debt which they are looking at doing now and you probably all read that China is considered to have too much debt & pratik in particular corporate debt individual debt the government that is not too high but the corporate debt is too high so how do you go about that there are many ways you can do it the immediate reaction of a Western analyst is to say well you have to declare the men pls no that's not stability that's not the way Chinese do things that work it out slowly quietly over a longer period of time a first step that is occurring is that equity swaps make the banks change from being a debt holder to a an equity holder what they haven't said but I think it ties in with my ideas on financialization is that the bank president will say well now I can no longer accrue interest on the loan I've got a an equity investment that no dividends are coming out it's dragging down my profitability so I'm going to put somebody on the board to push or turning around this has so we and so I think techniques of that sort we'll see more and more over the next two years but in the meantime the Menier do an ED equity swap the debt burden of the state-owned enterprises has come down so that's an example of how I think is various [Music] Chinese characteristics of a market socialist economy how I think they play out so with that I will conclude my presentation there are lots of things in the book I haven't mentioned and some people's reaction is well that's a bank rossion approach to interpreting China to which my response is China for the last 20 years has been the most successful political economy the world has ever seen and it's spectacular growth rate has been funded by the banking system very successfully so I think it's incumbent on the China Bears the China sceptics to sit back and say why I have my forecasts been wrong year in and year out for a decade thank you very much [Applause] thank you Jim for that wonderful presentation and we have about 15 20 minutes for for your questions okay anybody like to get started with a question over there yeah just at the end you mentioned is that as said or that agrees for us a social tool in China to tackle the non-performing loans or the bad loans I think actually this has been tried in many Western countries before and I think it didn't work out that well why do you think it works in China because in the Western market capitalist societies that had China's market socialist it won't work immediately perhaps obviously you're you're trying to deal with some very deep-seated problems in the SOE --is-- but the same thing was true of the banks and if the determination is there to make these SOS be reformed and as I said when the Chinese announces mandatory they will get it done but it may take a long time the financial reforms that I've talked about were announced in the third plenum in 1993 they started to be implemented into they were completed I hate the completion of it about 2010 a long long lead times on this true room G one of the things he did in the financial reform is after stripping out the bad loans from the banks big banks he then listed them on the Hong Kong stock market which basically was outsourcing the supervision of the banks to our own shareholders because the price of their shares then would be an incentive to the bank managers bank CEOs to make their bank successful and so a Chinese bank CEO has a dual responsibility on the one hand he has to deliver profits that's how the organization Department of the Communist Party which is his real boss that's how they keep score what kind of return of equity are you getting what kind of losses you in correct but at the same time if you look at Bank of China's annual report the Chairman will say dear shareholders in the year that is just past your bank has assisted in carrying out the development plans of the economy of China and of 818 percent return on your equity so it's a dual kind of a rule now with the state-owned enterprises it will take time no question but the same things I was emphasized look to the Past to understand why how it will work in the future if you look to the west you'll come up with answers that turn out to have been wrong because too many things in the Western models in the Western paradigm simply don't work in China they take the Western things they change it into their own way and the entire structure of governance is different now you may be right it may not work in China what I predict is that if it doesn't they'll abandon it go do something else that we're pragmatic about that hi pretty good I know you commented on the very orderly and stable world of Chinese banking meaning the big policy Bank could you say something about the wild west side of the financial system in China which is these insurance companies that have become very very large in the offering consumer business and some of the other internet-based banks well how does why did they let that happen and how will they get it under control okay first of all they prioritize all the things I've said about the health of the banking system basically applied to the banking system only people often you find a lot of confusion on this in the press when a kosher king became the new head of the CBR see three weeks ago he gave a press conference and he talked about chaos in the financial system but when you looked at what he meant by that he was talking about the non banks not the banks if you look at the banking sector by itself there are also plenty of problems in the smaller banks many of the city banks many of the local banks they have a lot of problems you leave the banking sector and you look at the non banks there's the shadow banking area there's the insurance and all of these things but as I said earlier prioritization is one part of China's ability at strategizing so it was quite obvious to true MP that he had to start with the banking sector because that China funds more of the economy than any other country in the world through banks other than Hungary but every place else has a much lower dependence on bank lending so you start with the banks in the banks who do you start with you start with the top four first and you proceed to the joint stock banks now they're getting into the city banks some of them are turned around maybe they'll work their way down but the smaller ones by and large are not presenting system systemic risk the stock market the bond market the insurance sector very underdeveloped still but I think they recognized they certainly want to reduce the reliance on banks what they call D banking do that you've got to develop a viable stock market they really messed up on that very badly a couple years ago I think they learned a lesson from that there are huge areas that fall between the three principal regulatory agencies and I think you will see in the next two or three years those being attended to the whole area of financial technology is not properly regulated by anybody and that's got to be looked into and it's moving faster in China than anyplace else people who know financial technology say the Chinese are three years ahead of the u.s. and that and in your last point there was why if they let these things go on for so long I think partially it's a matter of prioritization if they don't see it as the systemic risk then they aren't going to focus on it until the right time comes now clearly it's time to look in the FinTech because they could explode on but also for instance shadow banking why have they let that go on and I mentioned in my book I've been puzzled for for years where they let it go go on but they're very bright people who are looking after these things so you have to ask yourself what why indeed have very bright people fully aware of everything that we know about shadow banking prepared to go on my guess is that as they clamp down on bank lending to real estate companies and local government lending platforms they felt that you had to have a little breathing room so that these smaller ones lend money but at higher interest rates we can clean that up next which I think probably is something coaching will have to do yeah thanks for some very insightful views here my question is about something you said earlier in your presentation you said that the prediction that China would become more democratic did not what they were misguided predictions and I'm just wondering what the prospects are for in your view for for democracy in China or whether that is something that we should even be hoping for maybe maybe democracy's not only cracked up to be straying out of my bailiwick that has a banker but I will hazard a couple of remarks on it because it's all part of the political economy is democracy is not part of 2000 years Chinese tradition and the limited attempts at it that have been made at the local level have been very limited and not entirely successful some successes but not very successful interestingly enough there's a book by a an academic passed away two or three years ago at Duke University who did very detailed studies he was himself Chinese so he was able to do very detailed studies of concepts of democracy in Taiwan and China and as grassroots level and he did it in cake and together with the age of foundations and what he found was that the average time we need felt that they had too much democracy and it resulted in a lack of stability and a lot of disorder that they didn't like when he talked to the people on the mainland they said oh yeah we have democracy now the government basically is doing the things we the demos want and I think there's a lot of truth in that that I've always maintained the Chinese government constantly runs scared because they know what happens to governments over Chinese history that loses the Mandate of Heaven well there's no longer heaven ultimately the people in the final analysis will decide to pay to the party so they care a lot about whatever people want and for 20 years they felt what people wanted was a refrigerator and then a house and then a car and they made it available to them housing ownership ratio in China is around 90% one of the highest in the world very important to try to use to own their houses and they created enormous wealth for people through the transfer of housing to them so I certainly don't see the next five or ten years democracy would moving in other direction right now is Xi Jinping as clearly likes the idea of control and there are certain alienated portions of particularly intelligence fear that resent this they resent teaching things personal control within the party if you know he's turning his back on what tongue shall gain wanted which was much more checks and balances and beyond that they just don't like the control that is being put on domestically but I think that's a small number of elite the average Chinese thus far still feels that is getting what he wants but way out of my field here thank you for the very optimistic for once you know young Chinese banking sector uh you were talking about the power of the party and you were also talking about power of demos the people and I was wondering what if those two don't rely in as far as the banking sectors concerning in particular as of today exercises in China which are basically behind the result of China's banking problems I need to ask raise doors to the balance beam as depositors time the people will have to pay for the bills and they already paying for the bill they've been paid for longtime interest rates in China have been negative in real terms for years and that's only going to continue so what if at some point in time that people realize that it's been ripped off how will the party react to that okay I didn't get one of your question but part of it has to do with being a very low interest rate effectively negative real interest rate and which set the essence of it basically it's a basic bulk of they won't call them in PL but we know that cosmic debt is sitting in the bank's balance sheet actual mg/l we include all kinds of non-performing loans are only in GL account to at least extent of toponyms in China police abuse sum up what the losses are how they will be distributed the creditors behind our household those are the only ones who have excess savings today in China got it thank you okay a two parts to the question first is the negative interest rates that the householders who are the people are paying well as part of the developmental stated model that you mobilize savings from the people and it has been channeled into the areas through the banks that the government wants to emphasize for years that was heavily the state-owned enterprises and the local governments predominantly building heavy industry and infrastructure and trend has done a great job on building infrastructure it still needs more despite what you hear from the critics that is probably a phase in the development that is about reached its maximum utility and in the future this idea of suppressing they were repressed interest rates by state control the interest rate regime has now been freed up and so the market will gradually push interest rates up providing greater income to the depositors but it was a conscious decision Korea did the same thing Korea went so far as for a while Park Yong II forced the banks to lend money at even lower than the deposit rates just to it was total distortion in order to support development while the Chinese have not done that but they have kept interest rates down to provide cheap funding for all of this infrastructure etc now the second part of your question on a NPR's there is an implicit assumption in your question that the npos are large and that they will materialize well that again would be true in a market capitalist xiety why have the major audit firms not forced Chinese banks to declare say local government lending platforms that whose projects are having class cashflow problems to declare those loans as NPLs very simple because the auditors know they will not stop paying interest why because the governments have plenty of money to siphon into it I'll give you an example a few years ago the Beijing government will fit the Ring Road around Beijing to alleviate traffic and they borrow the money from the big banks and the security for repayment was the tolls collected on the 15 standard sort of project finance but then making people didn't use the fifth ring role because they didn't want to pay the toll so we said you know they failed in the objective so they stopped collecting tolls so the bankers all ran to the mayor of Beijing and said you can't do that how are we going to get paid back now there's nowhere we just change the loan agreement I'll find other money to pay you back it won't be an NP l people forget these are all sovereign obligat
ons China is not a federal system and the United States Fresno can go belly-up Detroit can go belly-up it can't happen in China because they don't have a federal system it's all the same Ballantrae including me as that weeds the money is certainly there now the money runs out and you got to worry that there's still a lot of money in China has a six and a half percent growth rate which lasts here at counter put third of the world's growth is plenty of money the Chinese you keep having to go back to these basic patterns and how Chinese deal with problems so big bangs no disruption no unemployment don't cause our state banks to lose money we will find solutions to problems a particular state-owned enterprise and a province gets into a problem the chairman of the bank flies down there they're all members of the same employer the party they find a way over a year or two to sort out the problems that's why all these forecasts year in a year out of these NPOs it doesn't happen as one economist to say Oh to the State Council who served with me on the board of ever bright said to me he said Jim all of these criticisms of the foreigners are correct the only problem is by the time the foreigner noticed them we're already working on the solution now a bit of who person but it's also true so you got to start with your assumption on the NPLs are are those NPO is going to be lawsuits that's the basic thing you have to go back to and in fact over ten years they haven't been could change but as they say I always use the patterns of what has happened in the past in a rather conservative country like China to understand what's happening today and to make predictions about the future Hygienist characters talk more about the city commercial than those small banks because I realize most of the examples in the presentation are based in big four banks and joint stock banks which more properly long but those are the smaller Bank city commercial banks commercial banks credit unions versus they are not controlled by the central government they're controlled by local government and second I think as a supervisor I mean I know that people in central government other varieties and smartest of China's talents but the local people I mean very good question and also because it talked more about the cop common and corporate governance structure and risk management standards in the smaller banks are they up to the standard of the big four or a bear like like ten years to go or like twelve years and the years ago okay a good question is China has a rather complicated financial structure huge range for banks from these huge behemoth we down a little micro micro lending on things community banks all kinds of things so that they've achieved extraordinary depth in their financial access that almost everybody one way or another has access to banking facility not necessarily loans but to banking facilities and if they don't have access to a branch they have it through cell phone banking it's been a great success of China the city banks are quite right they are owned by cities or provinces and they vary tremendously in quality I can speak for the Bank of Beijing because I have friends who serve on the board of bank of Beijing is right up to the best top levels you get some of the other banks clearly you drop off a great deal in standards now you said they're not controlled by the central government partially true their own autonomous shareholder will be a local government which will be able to sway them in a way that it can't with a national because they have a right bank they go and talk to the branch manager and say great oh it's got to get approval for anything big from Beijing but if he talks to a great show provincial bank now they can decide right there in the governor's office so that is a risk what counter bails it is that they are still regulated by the CBR seat so you do have central government pressure on it and behind it all the party there are all members of the same party so they're not going to be defying the central government I think we have time for one last question if not oh okay right there can I ask where you see the major challenge for the banking system moving forward a really good question within their present operations I see it in their lending to the private sector they are lending now lots to private sector a lot to SMEs and those will not be bailed out by the state so NPOs where they arising arising in the private sector lending and in my experience the account officers in Chinese banks they're young they're bright they lack experience and they've not been trained in credit analysis the way Hong Kong Bank does Standard Chartered because they haven't needed it before let into a state-owned enterprise it doesn't take a lot of analysis but you then to local go local SMEs you've got to analyze balance sheets and then you've got to realise the balance probably is not a truthful statement of reality you got analyze management got analyze ownership it's all new to them they've not got gray hair gray hair is very valuable in credit analysis having just seen an awful lot of loans and also they've not been through a downturn in the economy so I see that is a big risk the other challenges will be two big ones one will be disintermediation as the stock market and the bond market developed the some of the best clients best strongest as so ease will begin to no longer need bank funding because the way General Electric designate in the United States they'll issue bonds or money market paper banks will be disintermediated and lastly financial technology FinTech it is happening so fast and how the government manages that process between the Alabama is the 10 cents and the banks will be fascinating to watch thank you very much okay um thank you sir for that wonderful presentation and I want to thank you all for being here I grab a copy of the book if you're a member there's a member price for the book so please and welcome we have some great events this month so we look forward to seeing you back thank you for joining us today and thank you again Jim for a wonderful presentation thank you
