WEBVTT - HSBC CEO Michael Roberts Talks H-1B Visa Applications

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<v Speaker 1>Is the easy stuff done? The stock's had a great run,

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<v Speaker 1>You've reorganized the business into four divisions. The market broadly

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<v Speaker 1>has been on board so far. But does the tough

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<v Speaker 1>bit now come. You've got to deal with the expenses,

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<v Speaker 1>You've got to figure out exactly what the wealth's division

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<v Speaker 1>and how it's going to function to become this kind

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<v Speaker 1>of global leader.

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<v Speaker 2>Yeah. No, it's a great question. A lot has been done.

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<v Speaker 3>In fact, I think we're very proud about the speed,

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<v Speaker 3>about the scope of what we've been able to achieve,

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<v Speaker 3>and really a very short time. It's been less than

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<v Speaker 3>a year, and I think no one would argue that

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<v Speaker 3>we probably have done more transformation, more change at ithes

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<v Speaker 3>we see potentially in his history, and so we're very

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<v Speaker 3>very proud of what we've achieved. I would love to

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<v Speaker 3>say the easy things have always been done. There's always

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<v Speaker 3>tougher things to do, and particular in an ever changing environment,

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<v Speaker 3>but we have done it quite a lot, in particular

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<v Speaker 3>around the organizational aspects of the change.

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<v Speaker 1>So what does year two bring?

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<v Speaker 3>Year two, I think, in particular for my business, brings

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<v Speaker 3>much more focus on simplification, much more focus on really

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<v Speaker 3>just efficiencies, and that by meaning not just cost efficiencies,

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<v Speaker 3>but just being a better bank, able to respond quicker,

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<v Speaker 3>to be more agile, all the things that really takes

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<v Speaker 3>a long time.

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<v Speaker 1>Do you think some of that's already in the price

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<v Speaker 1>in terms of the share price performance thus.

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<v Speaker 3>Well, I don't know. I mean I think a lot

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<v Speaker 3>of it is certainly in there. I think you mentioned

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<v Speaker 3>the cost You know, as George has said many times,

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<v Speaker 3>we will achieve the cost savings that we have set

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<v Speaker 3>out to achieve. We're very confidence and manager team will

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<v Speaker 3>do that, and so that's fully in training right now.

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<v Speaker 3>But clearly, you know, we have to respond to the environment, clearly,

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<v Speaker 3>to respond to all of the policy changes that are

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<v Speaker 3>coming out from various places. So yes, I think we

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<v Speaker 3>have done a lot. I think we will do more

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<v Speaker 3>to do. I think it will be focused on really

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<v Speaker 3>making the bank taste better, bank operating more efficiently. I

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<v Speaker 3>think probably the stock market understands it.

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<v Speaker 2>In fact, it's a twenty two year high, is what

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<v Speaker 2>it is. So it's an.

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<v Speaker 3>Extraordinary I think positive response for the market.

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<v Speaker 2>But we clearly will always have more to do.

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<v Speaker 4>HSBC has exit a series of businesses lately to focus

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<v Speaker 4>in on that kind of restructuring that you've just outlined

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<v Speaker 4>and the cost efficiency. As the youth would say, there

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<v Speaker 4>might be a little bit of folmo there. Do you

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<v Speaker 4>think you're missing out on this big moment for Europe,

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<v Speaker 4>this big moment for the UK as people look to

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<v Speaker 4>diversify away from the States.

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<v Speaker 3>No, and I think you're referring to what the investment bank.

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<v Speaker 3>The change is there because we have actually had a

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<v Speaker 3>lot more disposals of various types.

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<v Speaker 2>Not really.

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<v Speaker 3>No, And I think the reason being is that we

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<v Speaker 3>were never a bultch back in investment bank, and that

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<v Speaker 3>is something to everybody understand. We were a good investment

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<v Speaker 3>bank in particular where we have scale and relevance, Asia

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<v Speaker 3>in the Middle East being those regions. And if you

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<v Speaker 3>look at how we really perform and what our value added,

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<v Speaker 3>it is really the cross border nature of our business

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<v Speaker 3>and it is really in regions which we have an

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<v Speaker 3>undeniable leadership position, Asia in the Middle East being those

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<v Speaker 3>two regions.

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<v Speaker 2>And thirdly, those are the reasons for the future. Those

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<v Speaker 2>are the regions that will grow.

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<v Speaker 3>Think about ten years from now, it's not going to

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<v Speaker 3>be the same. And you know, I grew up investment

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<v Speaker 3>bank and I understand exactly what everybody's talking about sixty

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<v Speaker 3>percent of the fees are in the United States. How

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<v Speaker 3>we are in the United States in our debt business.

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<v Speaker 3>By the way, we've just reduced our m and a

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<v Speaker 3>inequity business there, so we can still utilize the value

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<v Speaker 3>of the capital markets, which are the largest capital markets

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<v Speaker 3>in the world. Obviously very important to be there. So

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<v Speaker 3>we have a lot of deals that go to the

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<v Speaker 3>US capital markets. That's great, but the future is really

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<v Speaker 3>Asia in the Middle East.

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<v Speaker 4>So critics of that argument would suggest that the experience

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<v Speaker 4>of five years ago during COVID, when Asian markets are

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<v Speaker 4>largely closed and a lot of the investors that were

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<v Speaker 4>very bullish on Asia kind of learned their lesson and

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<v Speaker 4>really pulled out from that kind of exposure. It's taken

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<v Speaker 4>a while to even dip a toe back in. Why

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<v Speaker 4>not necessarily in COVID, but in another circumstance, should people

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<v Speaker 4>increase their exposure to a region that is historically not.

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<v Speaker 3>Always been the most sure bet Because I think that's

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<v Speaker 3>an enormous amount of wealth creation occurring right now in Asia,

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<v Speaker 3>whether it be India or China.

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<v Speaker 2>I think Hong Kong will become even.

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<v Speaker 3>More important capital markets or center for capital markets around

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<v Speaker 3>the world. I think that you see a huge amount

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<v Speaker 3>of capital and trade flows going between the Middle East

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<v Speaker 3>and Asia.

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<v Speaker 2>You have two regions that have.

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<v Speaker 3>An enormous amount of capital and they're exchanging capital back

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<v Speaker 3>and forth.

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<v Speaker 4>But as any of it coming from the States or

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<v Speaker 4>from Europe in much.

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<v Speaker 2>Wester well still there will always be Yeah.

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<v Speaker 3>I mean, if you look at where American companies are expanding,

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<v Speaker 3>they're expanding those two regions. If you look at were

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<v Speaker 3>European companies are expanding, they're not expanding in Europe. I

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<v Speaker 3>think the US is largely done. They're expanding in those

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<v Speaker 3>two regions. The interesting thing, however, is the amount of

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<v Speaker 3>money going from the Middle East into Asia and vice versa.

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<v Speaker 3>I think we have underestimated that is a significant and

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<v Speaker 3>I think permanent trend. And that's where we're there is

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<v Speaker 3>to capture those flows as you have a reordering of

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<v Speaker 3>the world's capital flows.

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<v Speaker 5>Michael, I want to talk about staffing. You talked about

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<v Speaker 5>some of the headwinds floating around the world diplomatically, put

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<v Speaker 5>many of them come from the White House. We've got

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<v Speaker 5>this change on the H one B visa. How much

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<v Speaker 5>does that affect you because we know, it affects tech

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<v Speaker 5>heavily able, so affects finance, it does.

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<v Speaker 3>You know, our operations in the United States are about

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<v Speaker 3>six thousand people, so relatively, it's much less than if

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<v Speaker 3>you're Microsoft or Google or some of the big tech

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<v Speaker 3>companies or some of our American competitors. We had a

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<v Speaker 3>flurry of activity this weekend like everyone else. I think

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<v Speaker 3>it was unfortunate because the initial policy was unclear as

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<v Speaker 3>to whether it was retroactive or perspective. They've now clarified

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<v Speaker 3>that it is perspective, so that makes it much easier.

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<v Speaker 3>I think it was going to be very disconcerting for

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<v Speaker 3>a lot of people, in particular those holders of those

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<v Speaker 3>visas who were traveling abroad.

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<v Speaker 5>But are you having are you instructing staff to stay put?

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<v Speaker 5>Do you think in the longer term you'll have more

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<v Speaker 5>staff based, say in Asia or in Europe.

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<v Speaker 3>You know, again, we don't have a huge amount of

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<v Speaker 3>the h one visa holders. Yes, I think for all companies,

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<v Speaker 3>you know, to pay an extra one hundred thousand dollars

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<v Speaker 3>on top of everything else, it is going to change

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<v Speaker 3>the way we look at staffing.

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<v Speaker 2>I think it for us, it's manageable.

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<v Speaker 3>I think for maybe other financial services companies. Similarly, I

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<v Speaker 3>think for tech companies that is a much bigger issue.

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<v Speaker 1>Can I just come back to this, this question of

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<v Speaker 1>the relationship between the Middle East and Asia and the

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<v Speaker 1>changing kind of nature of global trade. Crety was critic

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<v Speaker 1>just spent three weeks in DC talks about dedollarization, this

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<v Speaker 1>kind of process that is unfolding, this concern that there

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<v Speaker 1>exists in the United States about that. Do you think

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<v Speaker 1>that Do you think that relationship is is enduring? Do

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<v Speaker 1>you think it's been created to a certain extent by

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<v Speaker 1>the Trump administration. Do you are we seeing a reordering

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<v Speaker 1>in bigger, in bigger in sort of in the sort

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<v Speaker 1>of tectonic plates of the world as a result of

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<v Speaker 1>what is happening out of DC and forcing other people together.

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<v Speaker 2>Yeah, we look. It's a very good question.

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<v Speaker 3>The answer is, I don't know, because I think the

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<v Speaker 3>policy changes quite a lot.

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<v Speaker 2>I think clearly, if.

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<v Speaker 3>You're not going to have the dollar as the reserve

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<v Speaker 3>currency that forces a major reordering of the world's economic

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<v Speaker 3>structure as we know today, I think there is concerned.

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<v Speaker 3>I've talked to many investors, those in Asia and elsewhere

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<v Speaker 3>who are quite concerned as to what this means there

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<v Speaker 3>is no alternative.

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<v Speaker 2>That is the reality.

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<v Speaker 3>There will not be an alternative for many, many years,

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<v Speaker 3>and so tomorrow. If the US dollar is not the

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<v Speaker 3>reserve currency, what is. It's not the Romenbee, it's not

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<v Speaker 3>the euro. I mean the actual relative change between currencies

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<v Speaker 3>reserve currencies has not changed for the last twenty or

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<v Speaker 3>thirty years. In order to have a significant change, I

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<v Speaker 3>think it takes a long time to do so. If, however,

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<v Speaker 3>there is a major policy change. There is, for instance,

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<v Speaker 3>some discussion of taxing holder foreign holders of US treasuries

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<v Speaker 3>as an example, that would send a signal that yes,

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<v Speaker 3>I think you'll have an evolutionary change. Just because of

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<v Speaker 3>practical reality, you can't do it quickly. But that would

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<v Speaker 3>introduce a significant amount of uncertainty in the world's economic report.

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<v Speaker 4>You talk about Asia and the Middle East becoming to

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<v Speaker 4>follow on, guys question, this kind of new sphere of growth,

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<v Speaker 4>can it still hold the level of innovation, financial innovation

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<v Speaker 4>that you still see from the States. I'll give you

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<v Speaker 4>an example. In the private markets for example, Yes they're expanding,

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<v Speaker 4>but the driver of that financial market innovation things like democratizing.

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<v Speaker 4>For one k's in terms of getting access to private markets,

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<v Speaker 4>in terms of the IPOs, in terms of some of

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<v Speaker 4>the structured products that are out there, it's still driven

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<v Speaker 4>by the large scale American players. Are you still seeing

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<v Speaker 4>some of that innovation being done more organically from the

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<v Speaker 4>Middle East or Asia? Or is this about adopting what

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<v Speaker 4>starts in the States.

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<v Speaker 2>Yeah.

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<v Speaker 3>Look, I think clearly from the financial perspective, the US

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<v Speaker 3>capital market is still the dominant capital market. It's a

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<v Speaker 3>lot of the financial innovation comes from the US. Having

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<v Speaker 3>been there for most of my career so very well

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<v Speaker 3>aware of that. However, I think you'll see one of

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<v Speaker 3>a very quick adoption of many of those type of

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<v Speaker 3>changes into both the Middle East and particular in Asia.

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<v Speaker 3>I think it's not only by the way financial innovation.

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<v Speaker 3>I think it's also industrial innovation technology, which is coming

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<v Speaker 3>out of places like China.

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<v Speaker 2>Fast and furious.

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<v Speaker 3>I mean, I was also in Silicon Valley the week

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<v Speaker 3>before last, I was in Israel last week. I will

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<v Speaker 3>go to China and just to see all of that

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<v Speaker 3>innovation is pretty extraordinary that's going on, and it's just

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<v Speaker 3>not American innovation anymore. So I think that's one thing

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<v Speaker 3>everyone should understand Financially yes, you certainly benefit in the

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<v Speaker 3>United States by having the largest, most liquid financial markets,

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<v Speaker 3>and you have some middle largest banks in the world,

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<v Speaker 3>so that's very helpful as well. But I don't think

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<v Speaker 3>that we'll be confined to the US, and I think

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<v Speaker 3>more and more you'll see US players focusing on places

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<v Speaker 3>like Asia. We see a huge amount of that the

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<v Speaker 3>enflow of US capital into Asia. They will bring technology

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<v Speaker 3>with their Capitalisma what's.

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<v Speaker 4>The PC doing in the private markets? Are you growing

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<v Speaker 4>as fast as maybe some of your peers states look like.

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<v Speaker 3>Part of our restructing is to put all of our

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<v Speaker 3>private credit activities in one place.

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<v Speaker 2>Is not in one place before.

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<v Speaker 3>So we're doing that as we speak, and that gets

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<v Speaker 3>to your question about what are the things we're going

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<v Speaker 3>to be doing going forward.

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<v Speaker 2>It's what I call deep bottlenecking. A lot of those

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<v Speaker 2>issues every bank has.

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<v Speaker 3>This is a problem, by the way, is how do

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<v Speaker 3>you respond to private credit, which is a new type

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<v Speaker 3>of financing, which it doesn't really necessarily fit with the

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<v Speaker 3>conventional wave banks have instructuring.

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<v Speaker 4>Is there systemic risk in private credit?

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<v Speaker 2>We looked at it very closely.

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<v Speaker 3>In fact, we've had lots of discussion internally and even

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<v Speaker 3>on our board. You know, there will clearly be always

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<v Speaker 3>systemic risk. The question is how much leverage there is.

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<v Speaker 3>You know, what would be the trigger for that systemic

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<v Speaker 3>risk is something that we look at very quickly.

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<v Speaker 2>Or very closely.

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<v Speaker 5>Michael Guy started by asking about the restructuring. Ran I

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<v Speaker 5>feared he would h's morale. Look, moral's fine, I mean,

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<v Speaker 5>and no one likes.

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<v Speaker 2>To go through restructuring.

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<v Speaker 3>And the reason we've moved as quickly as we have,

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<v Speaker 3>which I must say again is as quick as we

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<v Speaker 3>could possibly do it is very very sensitive to moral issues,

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<v Speaker 3>very sensitive to being distracted.

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<v Speaker 2>That is very distracting.

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<v Speaker 3>I think we're in a position now to say that

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<v Speaker 3>first phase, that organizational change phase, is coming to an end,

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<v Speaker 3>and that's probably the most important things. Not that we

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<v Speaker 3>don't have more to do, is I asked before we

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<v Speaker 3>will continue to. I think improve the place, make it

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<v Speaker 3>easier for our bankers and our traders and our salespeople.

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<v Speaker 2>That's what we're going to focus on going for.

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<v Speaker 3>That's rewiring and replumbing that by its very nature is

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<v Speaker 3>not quick. And I just told the group the other day,

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<v Speaker 3>bear with us. We know what we're doing, but it

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<v Speaker 3>will take a while. But we're doing, I think some

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<v Speaker 3>very interesting things around AI doing it very interesting them

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<v Speaker 3>digitization that will make their jobs easier, but also plays

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<v Speaker 3>through right to the clients. That is really where we

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<v Speaker 3>see a lot of the value going for