Roundtable: GTR future of trade

GTR hosts a roundtable to celebrate the future leaders of trade finance and to hear their thoughts on the prospects for the industry.

Roundtable participants

• Ed Aldorino, associate director, financial institutions trade sales, Lloyds Bank Group
• Damian Austin, global head of trade finance syndications, Barclays (chair)
• Paul Coles, director, global trade risk distribution, EMEA, Bank of America Merrill Lynch
• Javier Espiago, structured trade and export finance, Deutsche Bank
• Suela Danksi, vice-president, corporates trade finance sales, JP Morgan
• Abhijit Prasad, regional head, supply chain finance, Citi
• Anthony Wadsworth-Hill, vice-president, global trade finance, ABC International Bank
• Richard Waite, director, export credit and global specialised finance, HSBC

Austin: How is the world of trade finance changing? Has anyone got any particular thoughts on this?

Prasad: We are seeing a few key themes, which is probably similar to what you are all seeing. Firstly regulation, in terms of how Basel III is going to turn out, liquidity ratios, leverage ratios, etc, which will determine how market pricing for trade finance could change, and secondly how the increasing focus on AML/KYC issues, especially in the business of supply chain finance, could affect scalability of this business.

Austin: Yes, I would agree with that. I think regulation and looming uncertainty on regulation and how it is ultimately going to affect the business is on everybody’s agenda at the moment.

Danksi: The irony on that front is that developed countries, in the aftermath of the financial crisis, are looking to increasingly tighten regulation, while emerging markets are trying to liberalise their regulatory position in an effort to rebalance their economies out of the crisis.

Austin: So, on that topic, has anyone here actually seen that, here and now, banks are turning down business because of changing regulation or is it still business as usual for most of you at the moment?

Prasad: I think we can expect to see some regulatory arbitrage, as I would call it, where different implementation of capital rules would drive different pricing thresholds and ability to do business.

Waite: I think it’s difficult to be specific in terms of whether it has stopped us concluding business, but for sure the due diligence processes are extremely rigorous and obviously can take more time in the current environment, particularly in higher risk jurisdictions. Away from the regulatory side, where we are seeing a different way in which the trade business is undertaken is that it has for a few years now been much more driven from the buyer side. So from our perspective, that is very much tied in with our unit’s business; you are approaching the banks directly, who are serving their own import clients, to generate the business, so what we are seeing is the classic supplier credit LCs are few and far between. I do not know of the exact numbers, but I am sure that the volumes are absolutely dominated from the buyer side of the business. So that affects how the business is targeted, rather than necessarily concentrating 100% on the export side.

Espiago: I agree with that, especially in terms of decision-making. We also see that the exporters are very proactive and regularly seek trade finance solutions for their clients in support of their sales process. Many of them have a dedicated customer finance team, looking at ECA and accounts receivables for example. Over the last few years some exporters had to catch up and find what ECA solutions are available to them. Sometimes, the dialogue with the exporter just provides the lead for a new deal opportunity to then be followed up with the importer, at whose discretion it is to award the mandate in the end.

Waite: Which obviously has its own effects on pricing as well. The banks are issuing the paper, so they have the direct control of the pricing, which creates a much more competitive landscape in terms of pricing. We are also seeing that the facilities are now much larger, so that puts more pressure on the distribution side. It is great to do this business, but you do have to have solutions and infrastructure for distribution and risk mitigation.

Austin: Yes, I think trade financing in the bank-to-bank space is probably one of the biggest movers of volume, both in primary and secondary, over the last seven to 10 years, and in the last three to four years in particular.

Aldorino: I would agree with that. The market remains extremely active. We have seen a number of new entrants as well as traditional participants looking to retain market share. One element is certainly low barriers to entry in the bank-to-bank space. Since the loan involves only a Swift request in some cases, a bank looking to increase its trade assets can enter this market easily. The product is relatively commoditised and the main differentiator is pricing. In the distribution space much of the day-to-day offers we receive are bank-to-bank transactions.

Austin: Has anybody seen a huge shift in strategy around what products you are selling in the trade space, or has that remained fairly consistent?

Waite: At HSBC, our unit, which is directly aligned with the export finance team, uses trade finance instruments, for example LCs, to provide 100% financing solutions to export finance clients – whether that’s to provide a bridge financing in lieu of an ECA take-out or to provide a parallel commercial facility for the portion of the contract ineligible for ECA cover. So it’s about using the flexibility of the trade instruments available to provide solutions.

Wadsworth-Hill: At ABC we have seen some growth in products that involve us taking more corporate risk. We are trying to leverage our regional presence in Mena and in particular have looked to receivables financing facilities, to try and enable our corporate exporter clients to perhaps negotiate more competitive terms with their buyers.

Austin: I would concur with that. At Barclays, nearly half of our syndication and distribution volume this year has been in the corporate space. That is a huge number compared to last year where it was more FI risk-dominated. We are seeing a number of receivables and supply chain facilities that are too big for one bank to facilitate and therefore syndication is required.

Danksi: Another change worth noting is that the financial crisis not only shifted the appetite more towards corporate risk, it has also changed the composition of the industry in terms of which banks are dominating the market. In former times it used
to be dominated by the big European banks, primarily the French banks. Financial institutions with access to US dollar funding, like American banks or Japanese banks, which have the second-largest US dollar reserves, were in an advantageous position. However, European banks have now better access to US dollars via more reasonable cross-currency swap rates.

Espiago: Well, the ECA market feels a much more competitive place, even in the short period from before summer up until today. Clearly French banks are playing a major role as it certainly feels that way.

Danksi: Also, the market is expanding further, with new players like institutional investors aiming to provide more liquidity going forward, for example, by virtue of securitisation structures.

Austin: We are talking about the here and now and maybe looking slightly backwards, but where do we as a group think that trade is going to be in the next five to 10 years, and what is going to change.

Espiago: I think disintermediation is already a key point. There is a disconnect though, between the requirement of capital markets investors for their commitments to yield immediately and the utilisation profiles of trade finance products that are usually tailor-made to reflect the underlying contract. This is the challenge, but in any case, I agree with Suela that clearly the trend is looking into non-bank investors, as the main constraint for business growth comes from regulation on balance sheets.

Coles: Will the products need to change to make them easier to trade afterwards? I think that is also going to influence how banks react to industry pressure, and then maybe they will structure the products to make them more suitable for the investor market.

Austin: We have not done enough to harmonise products across the industry and make them understandable to non-traditional trade finance investors such as pension funds and institutional investors. If we want to tap that liquidity, as an industry, we need to do more to harmonise and standardise our product. As an example, supply chain finance is labelled in a number of ways by different banks. At the end of the day it is the same product but called something different, and we expect non-trade investors to understand the various nuances of our product. I think tapping new sources of liquidity is key to the industry.

Prasad: In my experience, institutional investors understand what a corporate bond is; they understand what CP is, but their understanding of trade assets is not as deep. We have made some progress on that education process with non-bank investors, but also structurally the way trade paper is sold can vary, and while there are some standard structures to sell, most structures are quite bespoke, and therefore it is very difficult for a pension fund or a hedge fund to spend time going through each structure. I think as an industry we need to work together to bring some sort of standardisation of structures which allows this industry to come in.

Austin: That leads in to one of the other topics around the general state of the secondary market. Has anybody got any views?

Coles: It is very much driven by the origination business at the moment, and so the sales and credit teams are the ones that often turn to risk distribution channels to make space for new or existing transactions. I feel that in the future more feedback from the secondary market will come into that equation, as the originators realise that more of their portfolio should be placed on a regular basis to meet the different hurdles. That will probably help the structuring and will make transactions slightly more commoditised.

Austin: Personally, I feel that at least the inter-bank secondary market is in a very healthy space at the moment, and I would even go as far to say demand outweighs supply, which has pushed pricing down in certain markets. There are certain markets where it is the reverse of that, but certainly from our side, we have seen a number of new entrants in to the market with banks either coming in to secondary for the first time, or banks re-entering after the financial crisis – and everyone seems to be a buyer of assets at the moment.

Waite: Yes, I think you see markets within the markets in the secondary space. You get a lot of the big global banks that are very dominant on the risk participation business, so are selling a large volume of unfunded risk participations. There are certainly more organisations coming back to the market over the last year to take funded participations, which is positive. The big banks are naturally always net sellers but if there could be a wider element of these larger banks that are active in the market buying some transactions on a funded and outright basis, this would provide a much deeper liquidity base, and an active and stimulated secondary market.

Austin: So, with disclosure to borrowers and underlying risk rather than participation agreements on an undisclosed basis?

Waite: A certain amount. There will always be natural sensitivities in terms of certain transactions where banks are not going want to sell, or sell on a disclosed basis, but it’s just a case of widening the net, and not to have everything geared towards unfunded risk participations.

Aldorino: Would you expect to see funded risk participations under BAFT documentation because it then stays in a standardised document?

Waite: In some cases, yes, you would conclude the transaction under a funded MPRA/BAFT or whatever document is agreed between the two institutions, but it would be good to get back to a certain element of the market where there is full disclosure, and the paper is formally transferred.

Austin: At Barclays, nearly all of our asset sell-down is funded for cash, and at the short end of the maturity curve I think most people are still relatively comfortable on an undisclosed basis, especially in the FI world. But I agree, when you start pushing out tenors, disclosure is a must for a lot of participants. They want to be a lender of record, and I think you are right: that could stimulate more activity.

Espiago: That situation was caused by the lack of liquidity, with everyone looking for unfunded participations just to try and get the business done.

Waite: Yes agreed, but my point is as well that the secondary market, if you want to call it the secondary market, presently sees in nearly all cases an asset going from the originating bank to the end investor, rather than being traded more than once between secondary market participants.

Espiago: The question in my mind is how Basel III will finally be implemented and whether this is going to create a dual market in the sense that you have the systemic banks and the regional banks with different regulatory requirements. Systemic banks will face pressure on the size of their balance sheets and will need to de-risk; they will also need an active secondary market to place their assets on a cash basis and the question arises whether regional banks can provide that liquidity. Because at the moment, the price gap between the primary and secondary market, on a cash basis, means that it is difficult to sell down based on a purely secondary price without essentially encouraging loss.

Austin: We do not sell at a loss because syndication and an initial market read is at the forefront of our origination. So, for the bigger tickets and in terms of managing our balance sheet and portfolio, we make sure our book is liquid, and I think that touches on what Paul was saying, around what is probably going to become more ingrained in all originators and coverage RDs. It is going to be much more of, dare I say, an originate to distribute model with more input from syndication and portfolio management.

Coles: But I think with the low margins on a lot of trade finance risk nowadays, it is unusual to see what happened in the past where assets could be traded several times over in the secondary market. There is not enough margin for that nowadays.

Waite: A lot of the pricing at the moment has been driven by excess central bank liquidity, so once that stimulus starts coming back out – no one has got a crystal ball as to when this will be – but there could be a huge reality check for people in terms of pricing when it does, especially when balance sheet is required, which is likely to be increasingly under more scrutiny under the changing regulatory environment and potentially more expensive to use.

Prasad: What we are seeing in supply chain finance, which is a very specific and niche market, is a shift from banks driving the need for investors to clients themselves driving the need for investors. That is a shift from what we have seen two or three years ago, and therefore there is plenty of investor activity in the SCF market. Clients are increasingly keen on setting up syndicated SCF facilities.

Austin: You have corporates saying: ‘Actually we do not just want to just be in bed with one bank; we want four or five banks in the facility.’

Coles: At Bank of America Merrill Lynch for example, there is an important focus on client relationships, so if the client makes a request, then there will be a much bigger motivation compared to just looking at a transaction in isolation and deciding: ‘Well, yes, let us just do this because it is there.’ That client drive can push a lot of transactions through more easily nowadays, because the bank has to look at how it allocates its resources more efficiently.

Austin: I think regulation and banks needing to partner is a common theme; we hear this at Sibos, and we hear it at similar industry roundtables. I think that works in secondary as well, whether it is the traditional view of secondary or it is another form of primary syndication, I think sometimes the lines get blurred, but we certainly see banks either driven by the client or just sheer balance sheet constraints having to partner in various geographies.

Danksi: The secondary market’s recent shift towards funded participations reflects what every bank is looking to achieve in the primary market: true sale. We have seen more and more non-traditional investors buying into supply chain finance and ECA assets. Specifically on the ECA front, JP Morgan recently placed the first Coface-backed capital market take-out, a great example of the increasing interest from investors to fund trade and export finance transactions. One can notice a growing number of non-traditional players. Non-bank institutional investors, like insurance companies, asset managers, hedge funds, pension funds and sovereign wealth funds are likely to play a prominent role going forward, given balance sheet constraints.

Espiago: Investors are looking into the ECA space, because they are attracted by the higher yields as they compare this asset to the yield on the ECA’s issuing government bond. Although the ECA asset is less liquid, investors are attracted to it because bond yields are at historical lows. There are a lot of opportunities on a refinancing basis, but as stated before, the challenge remains that on an ECA loan, excluding aircraft, typically there is a two or three-year disbursement period. To attract an institutional investor who wants the asset to start yielding from day one is a challenge.

Austin: Moving on, what are we likely to see in a decade’s time in terms of trade flows? What are the sectors and regions to watch in terms of doing trade business?

Danksi: I believe that in the medium term – let us say, in the next five to 10 years, there will be a challenge to the export-driven growth model of emerging markets. The developed countries are not dragging the emerging markets out of the crisis anymore, so most of those countries will have to, and are already, trying to substitute by providing cheap liquidity in an effort to stimulate greater domestic demand and help their economies grow.

Also, most of you will have probably read, the EU and US are aiming to reach an agreement in what will be the biggest trade deal in history, the Transatlantic trade and investment pact, which is expected to boost trade by US$280bn a year.
Significant growth is expected also in south-south trade between Latin America and Africa, as well as between Africa and Asia in the longer run. The global population is set to reach 11 billion by the end of the century, from the current figure of 7 billion. Most of that growth will be in Southeast Asia and Africa, and therefore these markets will become increasingly important. Population growth automatically means trade opportunities.

Africa is a continent full of natural resources and agricultural commodities – goods the Asian manufacturing countries are thirsty for. On the other hand, Africa’s growing and developing population renders it an attractive market for the Asian manufacturers to sell their finished goods: automotives, electronics, etc. So, initially we will see advanced economies playing an important role on how the trade flows are shaped, but then emerging markets will return to the driver’s seat.

Austin: Who thinks that liquidity in markets at the moment and pricing compression is a result of quantitative easing, and what do we think is the effect? At some point it is going to have to stop. Central banks will stop pumping cheap money in to the system.

Waite: Well, we have seen it earlier this year with the emerging markets and the US. The Fed chairman didn’t even really actually say anything but just hinted that the US was going to potentially start tapering, which triggered a sell-off in the emerging markets. Many of the emerging economies where we are active and to whom we are marketing are commodity producing nations, and as soon as there is a small hint of any slowdown in China it has a direct knock-on effect for commodity prices. Therefore it can have an almost immediate impact, particularly for the oil producing economies, some of which are budgeting on high oil prices.

Danksi: Now that you mentioned the oil prices, one cannot fail to notice the US energy boom. A few years ago not many would have expected that the US would become a self-sufficient energy region, and actually it may even be able to export if the ban in export-related regulation for crude oil is lifted. This has an impact on pricing and really changes the dynamics globally.

Austin: I think in the long term, looking ahead, with the cost of regulation and quantitative easing coming to an end, we could see an increase in pricing.

Aldorino: In the bank-to-bank space I do expect pricing to reset itself. The economic fundamentals right now for some of the major emerging markets do not support current pricing levels. Excess liquidity and new market entrants have played a major role in bringing pricing down to current levels, levels which do not seem sustainable in light of Basel III and the cost of ensuring our businesses are fully compliant.

For bank-to-bank trade, originating banks remain able to enhance returns through distribution which will become even more important going forward. In addition, cross-sell remains a major justification for the provision of trade lending as opposed to being viewed as the cross-sell. I think in the current environment many sales teams are under pressure to grow top-line revenue and asset books whilst maintaining RoE and RoRWA hurdles and we have to keep convincing our credit people: ‘Look, we have to stay in the market, because if we stop now and we want to restart in two years’ time when we find the pricing more attractive, we are going to be at the very bottom of the pile.’

Prasad: I think it an interesting point. As you said, the mix of these two – regulation and what is happening with quantitative easing and Basel III – I think is going to be some sort of consolidation of the market. I do not think banks that were marginal in the trade business will continue. I think there are going to be some banks who will really take a hard look at this and say: ‘Does this make sense for us to stick out the next two or three years?’ and some banks are going to pull out of there and the other banks who consider trade to be their core business are going to continue.

Austin: I think that ties in again to the partnership theme. Being a truly global trade bank in all jurisdictions will become increasingly more expensive and difficult for all but the very few, and banks will be focused on home markets and where they can deliver for their clients, and in teaming up with banks to deliver for their clients into jurisdictions where perhaps they are not present. I see that as a big change in the next 10 years.

Aldorino: From a Lloyds Bank Group (LBG) point of view the partnership approach is very important. As a UK-centric institution that can deliver international trade solutions to its client base we look to partner with both similar institutions, as in those with a strong regional focus, and also global banks depending on which option delivers the best solution to our client.

Austin: That leads very nicely to the next question: What cross-sell opportunities do we see in trade finance?

Danksi: Trade is where it all starts. No matter the size of a corporate, or its geographic scope, it will need to trade, nationally or internationally. Trade finance can be a very good introduction to the corporate banking relationship, and this can mark the beginning of a rapport with potential to extend to different businesses of the bank, including cash management, liquidity, escrow, clean commercial lending, syndicated facilities and may even develop into an equity market opportunity, like for example an IPO. Other businesses where cross-sell opportunities could arise would be with the derivatives desk, either on the interest rate or the FX side. If someone is paid in local currency, they would want to make sure they convert this in hard currency. The derivatives desk can also assist in swapping fixed rates to floating ones or vice-versa on the ECA-backed loans.

Coles: But can it actually drive the cross-sell, or is it just part of the process of being in front of the client and saying: ‘Whilst we are there, yes, let us look at what else we can do?’

Austin: Is trade the cross-sell, or the lever to cross-sell?

Espiago: Typically in the ECA business, we look at projects from an early stage in order to identify the pieces we want to cover. Trade finance can actually serve as the driver of the cross-selling process.

Aldorino: On the FI side, trade is often the starting point for the relationship, since it’s more palatable from a credit perspective to put one-year trade finance limits in place than it is to, say, go for a participation in a syndicated loan. Trade limits are generally very valuable to emerging market banks provided you have the right product suite which invariably will mean the provision of funding for trade purposes. I would typically expect to see, within six months of starting a meaningful trade relationship, RMs and product specialists talking to the client about their clearing arrangements, syndicated or bilateral lending or DCM, and that all comes from the provision of trade finance.

Austin: Yes, extending your balance sheet through trade financing can lead to cash, DCM and other mandates. In international trade there is normally a hedging and FX cross-sell opportunity. These are all relevant cross sell strategies for the overall business model of a bank whilst providing trade and working capital solutions to our clients.

Prasad: I think the primary difference of where we are today to where we were three or four years ago is that there is true evidence to show how successful supply chain finance can be, and it is a function of the corporates who have been very, very successful at driving economic value from these programmes. In the past three or four years I have seen a snowball effect of the number of corporates that want to run supply chain finance programmes. SCF has been a product for a very long time, it is a very simple product and it works very well, but the real success story has been in the past few years, when it has really taken off. So if one company in a sector has their own programme the primary competition would not want to be left out and hence they also put their own programme in place and that feeds into that industry. So we have seen it percolate into industries.

Danksi: Supply chain finance is not a new addition to the trade finance product range. JP Morgan for example has been offering supplier financing for almost 20 years. There has been a gradual growth through the years, however the financial crisis triggered a significant rise in its demand, as corporates became more and more concerned about the health and the stability of their supply chains. Now corporates view their suppliers more as their partners, as they have realised the strategic dependency on their suppliers. The prime drive seems to be ensuring that the supply chain is secured and then working capital optimisation.

Aldorino: From the UK point of view specifically, the government has actively encouraged their tier-one suppliers to bring on new supply finance programmes, which pushes liquidity down the supply chain to SMEs. Supplier finance can be a valuable source of funding for SME suppliers who, in some cases, are too reliant on the traditional bank loan to fund their trade activity, limiting the amount of business they can undertake.

Danksi: I believe the government endorsement is widespread. Apart from the well-known UK government initiative, the IFC and US Exim, for example are already supporting supply chain finance programmes, while the ADB is currently exploring it.

All this government support helps to promote supply chain finance even more, and highlights the benefits to buyers and suppliers that were potentially a bit sceptical initially about this ‘too good to be true’ win-win solution.

Austin: Moving on to technology, what would we want to see around this table in terms of innovation and driving our market going forward?

Coles: Trade finance can mean different things to different people, so bringing it back to basics to make it easier to access has been a priority. Much work has already been done in the industry to harmonise our approach, but we still have to find a common language before we can share a platform. That requires a lot of investment, and for the different banks to agree with each other on which approach to take, and so far I think it’s fair to say that most of the key players in the market would want to put their own ‘stamp’ on whichever way it ends up going.

Austin: I think the biggest thing with trade is it is still very documentary intensive, and therefore a cash proposition or a payments business lends itself far easier to innovative technology than perhaps trade, but my personal view is that with new generation of trade financiers and CFOs and treasurers, it is going to have to happen in five years because otherwise the business will stagnate and, dare I say, perhaps technology companies will start doing what banks are doing, albeit with the same regulation and everything else that comes with the business.

Danksi: I wanted to take this question a step forward because it is not only multi-bank platforms that we should be focusing on, but also standardised documentation. Sometimes negotiations over a trade indemnity can be quite a lengthy process. It is much easier when you have a market standard document, like is the case for OTC derivatives transactions with the ISDA master agreement.

Close co-operation in industry workshops and associations towards standardisation of technology as well as documentation formats would be very welcome by the banking and corporate community.

At the moment on the technology space, the TSU is probably a good example that we could try to replicate for other products. In supply chain finance, e-invoicing would allow a more generalised use of the solution.

Wadsworth-Hill: I suppose the challenge is that this is not just about us banks and FIs trying to form a general consensus on the standardisation to make technology innovation possible, there is also the corporate aspect to deal with. Considering that there are underlying commercial contracts involved in trade, how can we dictate to the corporates that they cannot make their commercial contract too bespoke because it does not fit in the banking systems.

Austin: In relation to the demographic reality of the trade finance industry: are we doing enough as an industry to ensure there is a good pipeline of future staff in 10 to 15 years?

Espiago: Well, during the last few years, trade finance has become an even more appealing place to work, especially after the global credit crisis. Before that, perhaps it was not a top choice for some people, but nowadays we see colleagues from other departments come into trade finance. Separately, there is also an element of in-house training being offered across many banks to develop the trade finance workforce of the future. Certainly at Deutsche Bank, we are promoting people internally from within trade finance and also cash management. Trade finance appeals to people – I certainly get a number of requests from graduates and interns when they join the bank, and they are keen to understand my role and what the export credit business is all about. It is a stable business, which is particularly attractive given volatile market conditions and most importantly has our senior management’s attention. So the prospects are good.

Prasad: I agree with you that I have seen a shift in the last three or four years where we have seen people moving across within the bank and also from outside banks. Looking at the kind of CVs that we get, I think there has been an ‘up-tiering’ of the quality of talent that is coming in. We have been seeing across the board the quality of people really improve. That naturally feeds in to how the business does, and how the business is viewed within the bank and from people who were looking to apply. So I actually think we are probably in good shape in terms of talent.

Aldorino: I would agree. In the last four years or so, trade has got a lot more attention than it ever did before. Before this I am not sure trade did enough to promote itself within the organisation. Now it does not have a choice; it has been thrown in to the forefront. Senior leaders want to know what we are doing in trade. LBG encourages graduates to learn the trade business through placements and many stay in the business. It’s a growth area and offers development opportunities. For me actually, I would say the back office is more of a challenge. As someone who started their trade career in operations I would suggest trade is one of the most challenging operational processing roles you can have. Each LC is different. Every set of documents is different. I would suggest that institutions highly value the technical expertise they have in the trade ops space but new joiners in this area are seldom expected to stay in operations and become senior technical experts themselves.
With normal attrition rates we need to consider that banks will lose senior back-office staff and find these difficult to replace.

Wadsworth-Hill: Trade finance is a much more appealing industry to get into now. It is right at the forefront. People are looking to get in to real, tangible business areas. Although what is quite interesting about the future is that current senior leaders and senior management might have come through by working up the ranks of operational departments in to business generation departments. However, now perhaps for operational efficiency, costs, etc, there is a lot of outsourcing of back office functions. What effect will this have for the future leaders coming through in terms of their skill-sets and feel for all aspects of the business?

Austin: I would add just two things. One, in international banks’ graduate recruitment, trade at the moment seems to be in vogue. Everybody wants to get in to trade, which is good for the business and for the industry. The second point and related to the same is, I do not think we have a problem with attracting new entrants who are generally of a very high calibre and showing great potential, however I think we have got a whole industry of people with 20-plus years’ experience, and it is that middle ground in between where for years trade was under-invested. People are now realising that as the old guard retire, there are not that many people to fill that void in between the new young talent and the older generation with 20 plus years’ experience.