DAVOS-A week of tense bankers, recovery hopes, star gazers

* Davos can’t escape acrimony over banks

* Other businesses anxious about standoff with regulators

* More companies expressing cautious optimism

By Martin Howell

DAVOS, Switzerland, Jan 31 (BestGrowthStock) – The top executive was
on a roll — Barack Obama didn’t know what he was doing, he
didn’t understand business, he didn’t realize knee-jerk
pronouncements could destroy jobs.

It was a private, five-minute, expletive-filled tirade
against the U.S. president for this reporter’s benefit. Welcome
to one aspect of the World Economic Forum’s annual schmoozefest.

This unique event — a gathering of several thousand of the
members of the world’s business and political elites for debate,
dealmaking and a fair amount of partying in a ski resort in the
Alps — is in many ways an annual celebration for capitalists.

But this is a very dysfunctional family.

For the second successive year, the recriminations arising
from the financial crisis were a dominant theme.

Sure, the global economy looks better – people are no longer
talking about financial Armageddon, while some CEOs are talking
about investing more, buying companies and even hiring.

But many times when executives talked about a recovery, they
also used words like “fragile” and then mumbled about whether
the battle between bankers and politicians could upset it all.

The tone for this year’s WEF was partially set by Obama’s
proposal on Jan. 21 to ban financial institutions with
commercial banking operations from engaging in proprietary
trading operations for their own profit. Coming against the
backdrop of sky-high Wall Street compensation, only just over a
year after huge government bailouts, it meant bankers’ behaviour
was going to be a major focus.

The release of the annual Edelaman Trust Barometer at Davos
didn’t help. It showed that college-educated, so-called “opinion
leaders” around the world have lost a huge amount of trust in
banks. In the United States, for example, the trust level has
plummeted to just 29 percent of those surveyed from 68 percent
in 2007.


No wonder that Junichi Ujiie, the chairman of Japan’s
largest brokerage Nomura Holdings Inc, said he perceived bankers
were seen in the West as “public enemy No.1.”

“When I come to Davos I find a very big difference. Bankers
and investment bankers in Tokyo are still respected,” he said.

This year more top bankers turned up than last year, when it
was too dangerous to risk being seen near a ski slope supping
gluhwein and fondue just after being rescued with taxpayer cash.

Some of those who did come this time around kept a low
profile — Citigroup Inc CEO Vikram Pandit and Morgan Stanley
Chairman John Mack were rarely seen around the Davos Congress
Centre, though new Bank of America CEO Brian Moynihan was much
more prominent.

A meeting between the CEOs of top financial institutions
failed to find common ground over regulatory reform, according
to several who attended. A push by Wall Street banks and some
major European peers to battle back against politicians’
attempts to bring in tougher regulations didn’t get the support
of some European commercial banks who prefer a more conciliatory

By the Saturday, the bankers and regulators were reduced to
using post-it notes and white boards in a joint brainstorming
session that was inconclusive.


To executives in other sectors, this is concerning. If the
banks and political leaders continue to fight then markets and
bank lending might take a further hit, crimping the recovery.

Daniel Vasella, the chairman of Swiss drugmaker Novartis AG
, said lack of trust in the system remained his big worry and
made the risk of a double-dip slump “substantial”.

Even some bankers are fast losing patience.

“I think the industry had better wake up before they get the
wrath of God on them,” said Joseph Perella, a veteran dealmaker
and chairman of U.S. investment bank Perella Weinberg Partners.

Of course, there is always a possibility all this huffing
and puffing may be a lot less relevant than the evidence of more
than just green shoots in parts of the economy.

Luxury hotel chain Starwood Hotels & Resorts Worldwide Inc
said during the week it expects to open 80-100 hotels this year
and its CEO Frits van Paasschen said at Davos it was benefiting
from pent-up demand as companies who cancelled their offsite
sales meetings last year now reinstate them.

Even the paranoia among executives that they would get
accused of organizing junkets at a time of job losses and
government rescues has diminished, he said. “People are more
discreet but they are not scared,” he said.

The heads of top private equity firms, such as Blackstone
Group LP, Carlyle Group and Kohlberg Kravis Roberts & Co, also
said they were optimistic.

Vivek Ranadive, the CEO of business software firm Tibco
Software Inc, said it was time to “quit whining”.

But then again perhaps we should just consult the
astrologers, like Geneva-based banker and industrialist Prakash
Hinduja. When asked at the WEF about the investment climate he
had no hesitation in declaring 2012 will be a very bad year in
the U.S. and the years heading into it not much better: “The
astrology guides us on this,” he said.

Hinduja might want to do a little star-gazing for the
bankers and regulators too.

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(additional reporting by Ben Hirschler)

DAVOS-A week of tense bankers, recovery hopes, star gazers