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Scotsman
18 hours ago
- Business
- Scotsman
How Edinburgh can bolster its position as a global asset management centre
PA Sign up to our Scotsman Money newsletter, covering all you need to know to help manage your money. Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... The return to private ownership of Royal Bank of Scotland owner NatWest last month was an important bookend in the soul-searching about Edinburgh as a financial centre. While it's true that Bank of Scotland owner Lloyds employs about as many people in Scotland as it does in London, banking is decidedly not the future. Advertisement Hide Ad Advertisement Hide Ad Yet the need for the UK's largest financial centre after London to come up with a compelling global story has not gone away as other regional centres attract a critical mass of financial players. In the latest Global Financial Centres Index, Edinburgh retained a respectable 29th position and Glasgow jumped five places to 32. Yet competition from nimbler hubs like Seoul (10th ), Luxembourg (16 th ) and Amsterdam (18th ) is intensifying. Now, Scottish Financial Enterprise (SFE), thinks it has an answer. The lobby group last month published a strategy for asset management, one of three 'global opportunities' for Scotland (the others being fintech, and green and sustainable finance). Advertisement Hide Ad Advertisement Hide Ad Asset management is obviously an Edinburgh strength. The city has long been the largest such centre outside London, led by Baillie Gifford, Aberdeen and Dutch-owned Aegon Asset Management. Yet its position has been slipping due to the rise of 'passive' investing, which relies on index tracking strategies rather than the expertise of 'active' stock-picking investors, an Edinburgh strength. Acquisitions have also played a part: Franklin Templeton bought Edinburgh Partners in 2018, Legg Mason acquired Martin Currie in 2014 and Walter Scott became part of Mellon Financial (now BNY) in 2006. The harsh reality is that AUM in Scotland has been in steady decline since at least 2015, slipping to £493bn in 2023 from £548bn nine years ago, according to the latest available data from Investment Association (IA). Scotland's share of total UK AUM halved in the same period to 5 per cent, having reached a post-financial crisis peak of 13 per cent in 2010. The IA believes this is not all down to shrinking AUM in Scotland and that portfolio management has become more concentrated in London, leaving 'business operations' – that is, the middle-office plumbing behind the people who make investment decisions - to Scotland. Advertisement Hide Ad Advertisement Hide Ad This explains why Edinburgh and Glasgow have become big centres for what's also referred to as 'asset servicing', with Wall Street driving the trend. BlackRock, the world's largest asset manager, last month moved its roughly 1,000 employees into a new office in Edinburgh that will in time be the firm's fourth largest globally. Its presence in the city dates back a quarter of a century and functions as a hub for an investment platform used by BlackRock's portfolio managers and those of its clients across Europe. Similarly, JP Morgan and Morgan Stanley have technology hubs in Glasgow employing a combined 5,000 people. Many are data analytics graduates from Scottish universities in jobs helping the banks to run front office functions around the world. JP Morgan's office hosts an 'asset management technology' team that's one of 10 the bank maintains globally. The SFE argues that Scotland can attract more asset servicing as firms look to escape cost pressures New York and London by relocating to cheaper regional centres, especially those with strong technology capabilities coming out of their universities, like Boston. Sandy Begbie is the chief executive of Scottish Financial Enterprise (SFE). Picture by Graham Flack | Contributed/Graham Flack The SFE's doggedly optimistic chief executive, Sandy Begbie, thinks there is also a chance of attracting more front office roles to Scotland, including from firms already in London. A 'wage benefit' of around 30 per cent compared to London, coupled with Scotland's much-touted lifestyle advantage, means there's 'a decent arbitrage to be had' in shifting personnel to Scotland, he says. Of course, there is still the awkward income tax differential that adds an offsetting 'Scotland weighting' to senior roles. Nonetheless, Edinburgh does have a good case to make in the intersection between technology and finance. A lot is happening between the University of Edinburgh and the private sector, producing examples of the 'digital ecosystems' that SFE thinks are important to growing the asset management pie. This mostly revolves around using AI, distributed ledger technology and tokenisation. Advertisement Hide Ad Advertisement Hide Ad Last year, Aberdeen and the university launched a Centre for Investing Innovations that's working on an AI-powered 'research companion' that would use large language models to synthesise the huge amount of data needed to make investment decisions. A firm called Level E, founded by former Mexican banker Sonia Schulenberg, has developed 'AI-driven autonomous investing'. Rushad Abadan, general counsel at Aberdeen, argues that productivity levels will continue to increase with better technology and that this will 'play into' where AUM gets managed. 'If you think about it like that then I think Scotland has a lot to offer in terms of where the research is being done,' he says. The SFE calls for 'a more clearly articulated government strategy' for growth and investment in the asset management sector and its importance to Scotland – as Singapore, Ireland and Luxembourg do. This needs to be joined up with 'other UK industrial and growth strategies'. Advertisement Hide Ad Advertisement Hide Ad Kate Forbes, deputy first minister, has developed a pitch-perfect narrative on inward investment that recognises the importance of making a globally competitive offer in core areas like offshore wind. At Panmure House in Edinburgh this week, she talked of her 'mission to make Scotland the most attractive destination for investment in the UK.'
Chicago Tribune
09-05-2025
- Business
- Chicago Tribune
John Rau, led two venerable Chicago financial institutions, dies at 76
John Rau led two venerable Chicago financial institutions, Exchange National Bank and Chicago Title & Trust, before overseeing each firm's sale, and also was the dean of Indiana University's business school and CEO of Chicago-based Miami Corporation Management. 'He took great pride in helping institutions — but really, the people in those organizations — reach their full potential,' said Robert Venable, who succeeded Rau as CEO of Miami Corporation Management. 'He understood how important that was to the continuity of the organizations he'd been involved with.' Rau, 76, died of a heart attack April 8 at a hotel in Bloomington, Indiana, while visiting Indiana University's business school as an executive in residence, said his stepson, Will Johnson. Rau had homes in Lake Forest, Chenequa, Wisconsin and Naples, Florida. Born and raised in Milwaukee, Rau attended Marquette University High School and received a bachelor's degree in math and economics from Boston College in 1970. He picked up an MBA from Harvard University in 1972. Rau began his career with the First National Bank of Chicago, where he developed an expertise in computer applications in banking and rose to become a vice president and general manager of trade finance and international banking. In 1979, he was hired to be the executive vice president and chief administrative officer at Chicago's Exchange National Bank, which was a second-tier bank among Chicago's financial institutions. Exchange National doubled in size in 1982 with the acquisition of Central National Bank. In 1981, Norman Bobins joined Exchange National after 15 years with American National Bank and Trust. Beginning in 1983, Rau and Bobins shared the No. 2 role at Exchange National Bank, with Rau serving as the bank's president and chief operating officer and Bobins as president of the bank's holding company. Both worked for the bank's chairman and CEO, Ira J. Kaufman. 'We were very complementary in our skills and it was a lot of fun,' Bobins said. Over the 10 years that Rau helped run Exchange, assets grew almost tenfold. In 1989, Rau and Bobins led the surprise $420 million sale of Exchange National to Dutch-owned LaSalle National Bank of Chicago. Rau stayed on as president and CEO of the combined $6 billion bank, which took on the name LaSalle National Bank. Upon the deal's announcement, Rau, then 41, reflected to the Tribune that he was 'not much of a career planner,' and conceded that early on, he had 'looked on banking as a boring profession where you couldn't make any money and had to be 50 before you could achieve anything.' Rau left LaSalle in 1991 for an academic post at Northwestern University's Center for Banking Research, where he was advisory committee chairman. He also was chairman of the Illinois Economic Development Commission and was an adviser to then-Gov. Jim Edgar. In 1993, Rau was named the dean of the Indiana University School of Business — now known as the Kelley School of Business. 'It was a case of serendipity,' he told the Tribune in 1993. 'I had been thinking, after two years of taking it easy, about trying to run something again. I thought it would be interesting to run a school of business.' During his time at Indiana, Rau launched a major capital-raising campaign and received approval from the state Higher Education Commission to fund the construction of a new graduate and corporate facility. Rau was 'a real-world corporate outsider, (and) many faculty bristled at his pragmatic and nontraditional approach to business education,' Kelley School of Business Dean Patrick Hopkins said. 'However, with the benefit of hindsight, even my most-reluctant colleagues can recognize and appreciate his profound influence on Kelley today.' Rau left Indiana in 1996 to become CEO and president of Chicago Title and Trust Co. What appealed to Rau about joining Chicago Title — then a 150-year-old business and the city's guardian of property records — was managing the Chicago-based firm through the kinds of changes in the real estate title insurance industry that were similar to those that previously had altered the banking industry. 'Customers are getting bigger and more national and demanding more sophisticated services and full-service national penetration,' he told the Tribune in 1996. 'The big companies are increasingly wanting one-stop shopping, not just for the title, but for all the pieces needed to close the transaction fast. Real estate has become a big part of the financial market now that it's more liquid and national, and it's a big challenge to figure out what that means for Chicago Title.' In 1997, Rau predicted that technology would change work radically and help make the idea of workplace location meaningless. The Tribune reported that Rau had written that he anticipated that future title company customers — the teenagers of the 1990s — one day would be so used to the internet and other electronic transactions that they 'won't want to pay for huge buildings, offices, plants, warehouses, branch offices, substations, corporate headquarters and stores.' In 1997, Chicago Title announced that it would be spun off as a stand-alone public company from New York-based Alleghany Corp. 'What we need to do strategically is to get everybody feeling and thinking like owners, and more focused on thinking about the company as a whole,' Rau told the Tribune in 1997. In 1999, Rau oversaw the sale of Chicago Title to Fidelity National Financial. He had quadrupled the firm's value in less than three years. 'For me, there are mixed feelings. I liked this; we had a team here,' Rau told the Tribune in 1999. 'But sometimes your goal is to block, and you don't get to cross the goal line, but they don't get there without you throwing the block.' Rau left Chicago Title after the company was sold, but he took on the role of chairman of the Chicago Title and Trust Co. Foundation. In 2001, Rau became chairman of the Chicagoland Chamber of Commerce. In 2002, Rau was hired as CEO of the Miami Corp. — now Miami Corporation Management — which is a single-family office that manages the affairs of industrialist and philanthropist William Deering's descendants. Rau retired from that role in 2023. 'Strategically, John was really exceptional,' Venable said. 'The combination of developing the team but also having a really keen strategic insight in being able to focus on the big picture and the organization well was something he excelled at.' Rau published a business book, 'Secrets from the Search Firm Files: What It Really Takes to Get Ahead in the Corporate Jungle,' in 1997. Rau also served on various corporate boards, including Southern Co., BMO Financial and First Industrial Realty Trust. In addition to his stepson, Rau is survived by his wife, Colette Evans Rau; a son, Michael; two daughters, Caroline Kingsley and Rebecca Rau; a stepdaughter, Olivia Johnson; three sisters, Mary, Nancy Rau Heckman and Catherine; two brothers, Jerry and Jamie; and six grandchildren. Services were held.
Yahoo
24-03-2025
- Business
- Yahoo
Foreign flower firms flee Ethiopia as Amhara conflict intensifies
International flower companies are fleeing Ethiopia due to increasing conflict in the northwestern Amhara region, a major flower-growing hub, dealing a blow to one of the country's top performing exports. Earlier this month Germany's Selecta One said it would move production from its Kunzila site in Amhara to neighboring Kenya and Uganda, saying 'the unstable political situation and the uncertain military environment were the main reasons for this decision.' The company, which began operations in Ethiopia in 2021, is also laying off more than 1,000 local employees due to the two-year war between the Ethiopian government and Fano, a loose collection of militias. The fighting comes amid fears of a wider regional war as tensions rise in the nearby northern region of Tigray: Fano earlier fought alongside the Ethiopian army and Eritrean forces, against the Tigray People's Liberation Front, during Tigray's 2020-2022 civil war. The firm is following in the footsteps of other horticultural companies including two Dutch-owned firms, Tal Flower Farms and Tana Flora, that left Amhara last year following incidents of looting and arson. 'There are many companies that have suspended their operation in Amhara,' Tewodros Zewdie, executive director of the Ethiopian Horticulture Producer Exporters Association (EHPEA), told Semafor, pointing to three other Dutch-owned firms — Abyssinia Flowers, Dutch Flower Group, and Alpha Flora — that suspended production in 2024. Ethiopia's cut-flower industry, which generated more than $500 million last year, is the country's second-biggest export after the top-earning $900 million coffee sector, according to central bank figures. It has made strong inroads into the global flower trade in recent years, securing a 5.5% stake of market share, while still behind Kenya's roughly 16% stake. The Ethiopian Investment Commission, which oversees foreign investment, did not respond to a request for comment. Zewdie said the EHPEA has called for the Ethiopian government to pay out compensation to the companies suffering losses due to the conflict, trying to incentivize them to stay. But with few improvements in the security situation, he fears more will leave. Many companies have reported hijackings of staff truck drivers for ransom. 'We are in discussion with them on their options,' Zewdie told Semafor. This is not the first time conflict has hit flower growers in the volatile Amhara region. In 2016, several flower farms belonging to multinational companies were razed to the ground by armed militias. Many also saw attacks on their employees. Writing on LinkedIn earlier this month, Selecta One's CEO Per Ansgar Klemm, described the decision to leave Ethiopia as 'a bitter pill to swallow,' saying the company was 'forced to leave' despite its 'best efforts' after enduring various difficulties in the last two years.' The horticultural industry exodus comes as other international investors are suspending their operations in Ethiopia. In June, French fund manager Meridiam's $2 billion geothermal project in the neighboring Oromia region, hit by a separate conflict, was suspended due to security threats a year before completion. Concerns over kidnapping have also deterred tourists, another important source of revenue for the government. The damage to Ethiopia's horticultural industry comes at a time when the country is struggling with sluggish economic growth. Flower exports provide an important source of foreign currency that Ethiopia relies on to import essential goods, including fuel. The government has also been unable to attract foreign investors in its telecommunication, construction, and real-estate sectors despite changing laws allowing foreign players to operate within the country. Other spiralling conflicts and potential conflagrations — including growing fears of renewed fighting in Tigray — also threaten the country's economy. Selecta One's Klemm told me that he thinks other investors will likely leave Ethiopia too, hurting an economy that has earned more foreign currency from horticulture than any other commodity except coffee. 'I would assume that our action and reasoning — [the] safety of our employees — will increase pressure for others,' Klemm said. Samson Berhane, an economic analyst based in Addis Ababa, said that Ethiopia still has unique qualities that will make it a viable destination for foreign investors. 'The recent foreign exchange liberalization that has made profit repatriation easier will enhance Ethiopia's appeal to foreign investors,' he told Semafor, as well as its 'low production costs driven by affordable electricity and cheap labor costs.' Berhane pointed to the recent decision by Nigerian industrialist Aliko Dangote, Africa's richest man, to double the capacity of his cement operations in Ethiopia. Chinese investors are leaving Ethiopia in search of more stable conditions in neighboring countries, Capital Newspaper reported.
