Clarissa Dann Morning and welcome to Trade Finance TV on location. I’m Clarissa Dann and I have with me today Sandra Hack. Now, Sandra, you’re the new global head of commodity trade finance at Deutsche Bank, and you’ve been in the job nearly two months. What is your impressions of this wonderful world of commodities, traders and all these things that are going on?
Sandra Hack Good morning, Clarissa. Yes, it’s indeed almost two months and it feels like its only been a day because it’s such a fast pace. On the other hand, I’ve seen so much, I met so many people and it’s really as a first impression, it’s great. I really like this new job with all its challenges. In the first days, it felt really like jumping into the open seat and not seeing any ground, but with the help of the great teams and with the colleagues, Mac(Namara) is really great in handing over very professionally and I really liked the first two months and look forward to the next many years, I hope.
Clarissa Dann It must be quite hard following a legend like that. We’ve had lots of publicity about all the years and since when he first started, it’s been almost four decades. So how do you feel following that?
Sandra Hack Everybody tells me it’s big shoes to fill.
Clarissa Dann Size 12, I think.
Sandra Hack Yes, but then I thought I heard once that it’s important that when you do something, you do it with your brain and with your heart, so the feet are not the most important. I know what they mean with that saying, of course, but I try to ignore it because I’m a separate person and I cannot copy Mac, that will not work. I want do my own style and and then see how it works.
Clarissa Dann Let’s hear a bit more about your impressions of this particular conference. We’re here at TXF. We’ve had a day already. We’re into our second day. What are the themes that you’ve been jumping on? That rung a few bells and that you’re going to take away and think about afterwards?
Sandra Hack What I notice more and more is that it’s a very competitive industry and so very much interest for many people. Everybody is looking for the same deals and it’s a very limited number of clients that we are looking at. And so we really need to define ourselves, position ourselves in the market so that we add value. It’s a people business. Yesterday, someone asked me how far I believe we are away from block chain technology in this industry, and I believe specifically in the midterm structured commodity, trade finance business that we are focusing on in Deutsche Bank, it’s very much a people business. So while the Internet and technology is becoming more and more important, and I heard that also on the panel, I feel for us it will remain a people business. And that’s my big takeaway from the conference. It’s all about talking to people, having a network and seeing what the developments could be.
Clarissa Dann So would it be fair to say that perhaps the flow of business technology can bring us more efficiencies, but with some of the more complex structuring, it’s always going to be a people business and you can never replace that?
Sandra Hack Absolutely, yes.
I believe that technology will also play a role there for portfolio management and even more when Basel IV comes, then we will need to really control the portfolio, but that’s all in the background. And the most important part of us is our clients; is that we front the clients and that we don’t bother them with our internal challenges, so they want us to solve their challenges and help them in financing deals.
Clarissa Dann Now, the other thing that came out, I noticed on your very own panel, one takeaway I heard was you said that the NPL rate is around one percent for Deutsche Bank, but with commodity trade finance, although it was slightly higher than that when you pull that stat out, the repayment is much faster. Do you want to elaborate further on that point?
Sandra Hack It’s not so much the repayment, but it is the recovery, so we see clients in this volatile industry went, fx it’s quite normal when the oil price comes down that we also see covenant breaches etc. And nowadays the covenant breaches for financial reasons, already results in the client being technically in default. So then it is relatively likely that we have defaulting clients, but then when the oil price recovers, then it’s also easier for the clients to recover with that.
So I expect when prices come down, some payment holidays etc., such as we have seen it during 2013 fx, those difficult years, but most clients have recovered. So as long as you don’t have fraud, which is always a big concern, always a big risk, and that you cannot manage properly, but for the normal restructurings occassions in the commodities industry, my experience is that clients, if they are really willing to overcome a difficult situation and the banks are supportive, then you can also do good business with them afterwards.
Clarissa Dann Sandra Hack, thank you very much for coming in to Trade Finance TV. To me, it sounds like you’ve already really got going with this new job. And best of luck.
Thank you very much, Clarissa.