Odd Advertisements – Yo Yo Ma and UBS?

Sometimes, I just don’t get it. When I first saw this advertisement, I thought, “What Nice Music”. Yo Yo Ma is, after all, a great cellist. The second and third time, I thought the same, “What Nice Music” and thought again, what fantastic musicians Yo Yo Ma and the pianist are.  It occurred to me after a hearing it a few times, that I couldn’t for the life of me remember what it was that was being advertised. I had to concentrate really hard the next time I saw it – and there it was – the very unobtrusive UBS logo right at the end.

After many times, I have to admit, I still don’t get the logic of this advertisement. Some may call me obtuse, some may say I don’t appreciate a really good quality advertisement. Well, maybe that is all true, but I’m still baffled. I still find the association of Yo Yo Ma (and any musician or artist, for that matter) with UBS (or any bank, for that matter) a rather unnatural one.

“Working together” is something we would like all banks to do with their customers, sure. There’s nothing wrong with that, although, as a statement, it’s not particularly memorable – wouldn’t we obviously want that for any service industry? “Creating together?” Well, that’s something else. In this age, one cannot help but be reminded of “creative accounting” and “creative banking products” that led to the systemic collapse of the financial services industry. “Creative” seems to have almost become a dirty word, when associated with Finance. Doesn’t the ‘Sage of Omaha’, Warren Buffet say, after all, he likes to keep things simple? If he cannot understand something, he will not invest in it, he has always told us.

I will emphasise, this is just my opinion, and an expression of the impact of this advertisement on me (i.e. nil, as far as banks as concerned). I will never (easily anyway, even after seeing the advertisement many times) associate musicians with banks, and Yo Yo Ma with UBS. Do you have a different take on this?

LIBOR Overhaul

Banks + Gangsters = Banksters

It has been announced that the LIBOR rate will undergo an overhaul. Some of the changes I picked up were:

• It will be administered independently, not by the BBA (British Bankers Association)
• The admistering body will fall under regulation of the FSA (Financial Services Authority); therefore, future rate fixing  could result in jail sentences for the offenders
• The rates will be audited, so banks will have to justify the rates put forward, based on actual transactions
• The number of banks submitting rates will be increased
• The number of currencies and interest rates involved will be drastically reduced so as to concentrate on the rates most used by investors and borrowers

The way in which the rate is determined, which had been thought may be changed will remain the same. It will be based on daily estimates by panels of banks, of the interbank borrowing rate. Although this method had been criticised earlier as not being objective, I guess the issue that was highlighted earlier is that in thin markets (e.g. in depressed economic conditions) too few or no trades take place, making it necessary to have an estimate.

This seems like a step in the right direction. I wonder if more reforms are to come to the banking industry. Many other questions are still worrisome. Are some banks too big to be properly managed? Do appropriate cultures of good governance exist within these organisations? Will the compensation structure be changed sufficiently to disincentivise ruthless risk taking? These concerns linger.