A well-known figure in private offshore banking shares his views with us on the potential impact of COVID-19 on the global banking system as well as current investor sentiment. Luigi Wewege, Senior Vice President and Head of Private Banking at Caye International Bank in Belize discussed the situation with reference to several scenarios that investors could and should anticipate.
Regarding liquidity and stress tests, Wewege says that “Overall, United States and European based banks have showed reasonable improvement since the last financial crisis around 2008 however Europeans in particular do remember what happened with bail-ins and bailouts so you do see a lot of investor concern with what the European Central Bank might do next.”
When asked about some of the biggest concerns facing investors, Luigi noted that “There has been huge inflows of capital into the USA during the Trump administration. But now, people are a bit concerned about how far FEMA measures will go. People who have put large portfolios in either the USA or Europe are rethinking whether their safe-haven decision was the correct one. The Fitch Ratings agency already warned that the Italian banking system may struggle to cope with the fallout of the Coronavirus – and yes, it was not in a particularly good shape even prior to this. You also have countries like Greece that risks sliding straight back into a deep recession. So overall, investors do feel uneasy about the EU and US right now.” He went on to explain the various indicators that were taken into consideration during February plus March 2020 and said “Bank shares in Europe and the United States saw a very sharp repricing and decline. Government bond yields are falling, with US corporate high yields shooting up. This all shows that investor confidence in the global financial system has been shaken.”
Elaborating more on the scenario in Europe, Wewege believes “With such a substantial socio-economic shock unfolding in front of us, the brightest of financial analysts find it hard to see how Banks in the most affected European countries can maintain good assets and earnings. If repayment of loans ceases in the case of many European families – toxic assets becomes a big risk to them very quickly.”
About IMF policies during these challenging times, Luigi says “In fairness, the International Monetary Fund acted quickly to help countries during the time of Ebola, but that was a much smaller issue than what we face today. We know that given the huge spike in uncertainty that some in the IMF are proposing that there is a consensus worldwide to have a common monetary policy – and that will hopefully prevent a scenario where some currencies end up being the losers in Black Swan events. Yet all these instruments have their limits and at some point, it will come right back to the question of liquidity. That’s precisely why so many middle income to HNWI’s have allocated a decent portion of their portfolios to offshore banks that do not face the same exposure and risk that European and USA based banks do.”
Wewege went on to explain common risks that each individual country may face in the immediate future and aftermath of COVID-19: “A reduction in revenue and productivity may affect many countries – it is already doing so with disrupted supply chains and right now more borders are shutting. Then we have crippled public health systems in Europe who will need to consume a lot of public funds/stimulus in order to continue. Then off course there is one word that scares just about every European country and US state: Tourism. It is an important sector that is showing early signs of major strain that will likely continue for many more months. All these risks add up and will cause great strain on the global economy for the duration of 2020 and possibly even into 2021.”
On the ongoing appeal for offshore banking, Luigi says “Investors from all over the world gained a lot of respect for jurisdictions, like ours in Belize, where our banks were largely untouched by the 2008 financial recession. And yes – they certainly remember what happened to some large banks in Europe and the USA at the time and thus feel the writing is on the wall, whether it is indeed the case or not. Although we cannot predict accurately what the state of the global banking system will hold especially in Western countries, we can see a clear shift towards diversification and the start of more deposit inflow at offshore financial institutions like ours in Belize.”
Some may argue that the Dodd-Frank law that was passed in 2010 rendered the United States a less of a risk today than it was around 2008 and doomsayers who closely watch the Italian, French and Greek economies may have a point that the worst is still to come. Ultimately, these are very challenging times and to some extent, unchartered territory for the global financial system dealing with the Coronavirus pandemic.
How Music Exec Jason Swartz Turned Social Media Entrepreneur with the Upcoming Launch of Social Media Platform So Close
Following a long-standing career in the music industry, Jason Swartz now continues to evolve professionally, bringing his knowledge and expertise to new areas of business. Most recently, Swartz has found success as a social media and tech entrepreneur with the anticipation of the debut of his new social media platform called So Close. Fusing both his experience in the music business with social media, Swartz looks forward to launching the platform, as it will provide music artists, celebrities, athletes and influencers with a way to make passive income through social media interaction and engagement.
Despite So Close being a new addition to his repertoire, Swartz has a long history of success in social media monetization. For over six years, he’s actively found uniquely creative ways to make passive income for music artists and talent without the use of brands or endorsements. From working with celebrities and artists like Snoop Dogg, Akon, George Lopez, Ludacris, and more, for Swartz, developing a concept like So Close was inevitable.
With a subscription-based structure, fans and followers alike will have access to exclusive content from their favorite artists and celebrities. Subscription rates start at just $1.99 per month and vary depending on the access each user desires. And for the artists and celebrities, they simply use So Close as they would any other social media platform, organically posting and sharing content that is exclusively made for subscribers. As a turn-key platform for artists and celebrities, So Close is the ideal medium of social media as it acts and functions like every other platform, but with every piece of content created and shared, they receive passive income. Furthermore, it helps them aggregate and target their audiences for specific types of content
Thanks to a proven business model, Swartz has already seen a large number of investors interested in So Close that is also in part due to his previous track record and success with celebrity and musical clients. Even so, with interest from executives of top tier entertainment and tech companies, Swartz remains very selective about who will join him as strategic partners at So Close. In fact, the company’s valuation has already established itself with high profit margin and monthly income even as So Close is still in a beta stage. Until it’s official launch later this year, So Close is invite only for celebrities and artists. And while Jason enjoys helping artists tap into new opportunities via social media monetization, he looks forward to developing new ways to help the music business and social media business continue to evolve.
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