The financial storm is gradually beginning to abate, as the money world moves towards a normal state after months of turmoil in global markets and a massive restructuring of company business models. That is the view of Gerald Hassell, the president of the Bank of New York Mellon. "As it relates to financial institutions themselves, which is the first order of business, things are starting to calm down a little," he said. "The whole purpose [of measures by authorities] was to create stability and confidence in these financial institutions; we couldn't go through weekend after weekend of dealing with a problem child."
Mr Hassell said real fundamental changes in financial institutions would continue to occur. Brokers and dealers would have to change their business models dramatically and there would be a move back to traditional investment banking models, he said. These would employ modest degrees of leverage in terms of assets held. He said deleveraging would take place over the next few months and quarters. "A tremendous amount of deleveraging has already occurred, but when you look around the world, it's clear that there's still a ways to go," he said.
Mr Hassell said his bank was preserving capital, despite expectations it may acquire pieces of businesses in the present market environment. The bank was maintaining enormous liquidity to support clients and to "make sure nothing bad happens to us". Two weeks ago, the Bank of New York Mellon was appointed by the US Department of Treasury to provide a broad range of services to support the government's Troubled Asset Relief Program authorised under the Emergency Economic Stabilization Act. The Treasury has hired the company to provide the accounting of record for the portfolio, hold all cash and assets in the portfolio, provide for pricing and asset valuation services and assist with other related services.
The bank has a strong international presence, including operations in 34 countries. It has had a presence in the Middle East since the 1990s and began operations in Dubai in 2003. shamdan@thenational.ae
