Blacktower’s new American Desk: US expats moving to Portugal has increased dramatically

BANKING & INVESTMENT PAN Finance Magazine Q3 2022

Blacktower introduces new American Desk

BLACKTOWER’S NEW AMERICAN DESK IS DESIGNED TO ASSIST AMERICAN NATIONALS MOVING TO PORTUGAL WITH ALL OF THEIR FINANCIAL REQUIREMENTS

In recent years, the number of American expats moving to Portugal has increased dramatically. The quality of life, relatively low cost of living and blend of both rural and city environments is resulting in a record-number of US nationals making the move overseas. The comparatively low property prices are also attracting a younger demographic than the traditional retirees who have relocated to Portugal in the past. These younger expats, who might be struggling to get on the property ladder back in the States due to rapidly increasing prices, are moving to make the most of Portugal’s more affordable housing, often finding they are able to buy far larger properties for much less than they would be sold for in America.

However, despite Portugal clearly having a lot to offer to those who relocate there, the process of moving your life from one continent to another can be, without doubt, a daunting one. Putting aside the logistical considerations of moving possessions, arranging accommodation and ensuring all documentation is in order, the prospect of transferring financial arrangements alone can be intimidating enough to put off some of those who might be considering making the move.

This is where we can help. The launch of Blacktower’s new American Desk was designed to assist American nationals moving to Portugal with all of their financial requirements, allowing our clients to focus on settling into their new home instead. With teams based in both the US and Portugal, we are equipped with the knowledge, expertise and regulatory footprint to ensure that your finances are taken care of, both at home, and abroad.

The presentation of the PAN Finance Most Trusted Wealth Management Advisory Services award to the Blacktower Group is a testament to our established reputation in the industry, which has been built on 36 years of experience.

A CONVENIENT SOLUTION TO A COMPLEX PROCESS

Communication is vital when giving or receiving financial advice and we believe that this is best conducted face-to-face where possible. This helps to establish a comfortable working relationship between adviser and client and ensures clarity when making decisions.

Here at Blacktower, our extensive regulatory footprint means that we have a physical presence in both the US (New York) and Portugal (Lisbon and the Algarve), meaning that our experienced advisers can assist you at every step of the process whilst continuing to offer that personal, face-to-face service we know is so important.

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Blacktower’s Group Managing Director, Gavin Pluck, asserts that ‘being regulated in both the US and Europe allows us to provide a seamless transition to those moving between the two. This unique offering of a comprehensive, intercontinental financial planning solution, is designed to alleviate the concerns of those looking to transfer their financial arrangements abroad’.

We offer a range of services tailored to the needs of expats, including everything from international mortgage solutions to currency exchange services, saving you time and money. Our American Desk is truly a holistic, convenient solution to what can be a complex process when navigating it alone, or without professional advice.

OFFERING YOU FLEXIBILITY

Often, when expats move abroad, they find that the decision can limit their options when it comes to their investments. This is particularly relevant to US nationals as most custodians will move your 401k into a close-only investment position once you update your address. This means that even though you retain the option to sell, doing so will mean that you can no longer purchase any more investments. However, we are a global institution who handle similar scenarios every day as we provide our services to clients in over 40 countries all over the world. Our presence in the US means that even after moving, you will still have access to all the investment privileges you would have if you were a US resident. This includes foreign markets, single stocks, and US ETFs.

Not only does this allow increased flexibility regarding how you decide to move forward with your investments, but it also means that you should be able to choose the option that will provide you with the best returns, helping to safeguard your financial future and get the most out of your assets and savings.

TRUST IN OUR EXPERTISE AND EXPERIENCE

Ensuring that your finances are in order is a fantastic way to put your mind at ease and reduce your work-load when moving. However, it is also essential if you want to avoid fines or the other costly consequences of foregoing adequate financial planning and being caught out by legal or governing bodies. Laws regarding taxation and other financial contributions can not only vary from country-to-country, but also from region-to-region, often making compliance to these rules confusing and particularly challenging to new residents.

Enlisting the help of a financial adviser who is familiar with local laws as well as national ones is imperative, and with 36 years’ of experience in our industry, you can trust in our award-winning service and focus on the things that really matter. Peace of mind is priceless.

We understand that it is a privilege to be trusted with our clients’ finances and futures, and we ensure to provide the same high level of professionalism and attention to every client, no matter what financial services they require or where they might be located.

If you would like assistance in your move to Portugal, you can find out more on our website or arrange a complimentary review of your finances by contacting us using the details:

Info@blacktowerfm.com

BANKING & INVESTMENT PAN Finance Magazine Q3 2022

Australia has one of the world’s most concentrated banking sectors, with its four biggest banks – Commonwealth Bank, National Australia Bank, Westpac and ANZ – holding more than about three-quarters of the market.

It will become even more concentrated if ANZ – the “minnow” of the big four – completes its plan to buy the banking division of Queensland-based Suncorp for A$4.9 billion.

Suncorp, which also has a large insurance division, is the second largest of Australia’s four major regional banks. It is a significant brand in Queensland, and known to the rest of Australia through the name of Brisbane’s rugby stadium.

This will be the largest consolidation in Australian banking since 2008, when Commonwealth Bank took over Perth-based Bankwest and Westpac acquired Sydney-based St George Bank. It will push ANZ from fourth to third place by loan value.

First though, it needs two regulatory approvals – from the Australian Competition and Consumer Commission, which can block any merger that “substantially lessens” competition in any market; and the federal treasurer, who has specific powers over the financial sector.

Approval is by no means guaranteed.

ANZ’s chief executive Shayne Elliott has argued the deal will “improve competition”. But that’s probably true only for ANZ.

Every smaller competitor, and consumers, have good grounds to argue the competition watchdog, or federal treasurer Jim Chalmers, should be vetoing the deal.

Angel Zhong

Associate Professor of Finance, RMIT University

ANZ’s takeover of Suncorp will reduce bank competition – but will that be enough to block it?

THIS ISN’T 2008

When the competition watchdog and then federal treasurer Wayne Swan approved the acquisitions of Bankwest and St George in 2008, it was feared the alternative was these banks collapsing in the wake of the global financial crisis.

Bankwest’s owner, the Bank of Scotland, was in dire financial straits (and in 2009 would itself be taken over, by Lloyds Bank).

St George was in trouble, having had to raise its interest rates more than its rivals because it had borrowed so much money to expand its loans business.

ANZ’S COMPETITION ARGUMENT

Suncorp is under no such existential threat. The ANZ chief executive’s argument about

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why the merger is good for competition has instead been based overwhelmingly on what it means to ANZ:

As the smallest of the major banks, we believe a stronger ANZ will be able to compete more effectively in Queensland offering better outcomes for customers.

He told the Australian Financial Review: “Just as Suncorp probably feels dwarfed by ANZ, we feel dwarfed by CBA.”

Absorbing Suncorp’s $45 billion of deposits and $58 billion in commercial and home loans to its books will push up ANZ’s share of the home-lending market to about 15.4%, compared with Commonwealth Bank’s 25.9%, Westpac’s 21.5% and NAB’s 14.9%.

But for everyone else, including consumers, other banks and regulators, the deal will likely hinder competition.

CONCENTRATION AND COMPETITION

High market concentration does not necessarily mean competition is weak or that community outcomes will be poor, as the Productivity Commission concluded following its 2018 inquiry into the state of competition in Australian financial services.

Rather, it is the way market participants gain, maintain and use their market power that may lead to poor consumer outcomes.

However, the Productivity Commission also concluded Australia’s major banks had charged prices above competitive levels, offered inferior quality products, and had acted to inhibit the expansion of smaller competitors.

All are indicators of the use of market power to the detriment of consumers.

Bucketloads more evidence has come from the banking royal commission, which found evidence that all four big banks (and many other financial services companies) had committed illegal or unethical acts to maximise profits at their customers’ expense.

TACKLING THE ‘COSY OLIPOLY’

Following the publication of the royal commission’s final report in February 2019, the Australian Competition and Consumer Commission’s head, Rod Sims, said

A cosy banking oligopoly is surely at the heart of recent problems, so we must and will find ways to get more effective competition in banking.

This mission is a work in progress. Some hopeful experiments, such as the “neobanks” (pure digital banks) are failing. Australia’s first neobank, Volt, which was granted its license to operate as a authorised deposit-taking institution in 2019, collapsed last month. The second neobank, Xinja, quit the banking business back December 2020.

Given this, it’s hard to argue that further concentration is good for competition.

For the competition watchdog to block the deal, however, it must be convinced of a “substantial” lessening of competition. That means ANZ gaining market power to “significantly and sustainably” increase its prices or profit margins.

By my reading this deal will certainly lessen competition – but it’s uncertain if it will do so according to the “substantial” test.

Either way, this will prove a major test for the new chair of the Competition and Consumer Commission Gina Cass-Gottlieb and new treasurer Jim Chalmers.

BANKING & INVESTMENT PAN Finance Magazine Q3 2022

Lilac Nachum

Professor of International Business, City University New York; Fulbright scholar to Africa, Visiting Professor at Strathmore Business School, City University of New York

Chris Ogbechie

Professor of Strategic Management, Pan Atlantic University

Foreign banks are absent in Nigeria. We tracked down why

Privately owned Nigerian banks hold 94% of Nigerian banking assets. Only one other country in the world – Israel – has a higher share of ownership by local banks. The share of banking assets is the most reliable way to measure market power and competitive position.

Some of the world’s largest banks are active in other parts of Africa. But they are either not present in Nigeria or have minimal activity in the country.

This competitive dynamic is unlike other countries’ banking industries. It’s also unlike other industries in Nigeria, which are dominated by foreign firms.

One theory about the reason is that foreign firms experience challenges outside their own countries simply because they are foreign. Another is that local banks have an easier time since they’re rooted in the country.

But these theories don’t hold water in Nigeria. It is Africa’s largest and most populous country. It has the second largest financial sector in sub-Saharan Africa. And with annual average GDP growth since independence above 4%, Nigeria is on par with the fastest growing African economies. Its per capita GDP growth has been ahead of all except Egypt. Overall, Nigeria offers attractive opportunities for foreign banks.

For decades, the country has been among Africa’s major recipients of foreign direct investment in other industries.

But, in contrast to the market position and competitive prowess of foreign banks in most other African countries, their activity in Nigeria is tiny. They focus on serving the cross border transactions of large foreign multinationals investing in Nigeria. Vast opportunities in this market are left untapped.

Our in-depth study of the Nigerian banking industry, published in 2019, offers some clues as to why.

THE DRIVERS

The paper was based on interviews with industry experts and practitioners. We also reviewed published and unpublished documents on the industry and its historical development.

Common explanations for the superior performance of local firms focus on government’s support via subsidies, taxes and the like. Less attention has been paid to government policies in shaping market structure and creating a competitive environment that is conducive to developing competitive strength. This study demonstrates how such regulation enables Nigerian banks to dominate the market and arrest the growth of foreign banks.

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Policy makers in other countries may want to emulate this approach to upgrade their local banking industry based on indigenous capabilities.

WHAT IS DIFFERENT ABOUT NIGERIA’S BANKING INDUSTRY?

Nigeria’s regulatory approach towards both foreign and indigenous banks has been a unique one since independence. It created a balanced market structure which allows banks to innovate and upgrade their capabilities.

A liberal approach towards foreign entry, combined with firm regulation of local banks, spurred healthy competition and created constant pressure for improvement.

This regulatory approach encouraged the emergence of banks large enough to develop competitive strength and to invest in capability development.

The three largest banks in Nigeria account for about 40% of total banking assets in the country. This is half that of South Africa and the average for sub-Saharan Africa. It is also considerably lower than the averages of all other emerging regions. This suggests the industry has been sufficiently fragmented to prevent strong market players from reducing incentives for capacity development. This fragmentation created competitive pressure that forced the banks to upgrade capability in order to survive and succeed.

By the end of the 2010s, there were over 20 banks in Nigeria licensed to provide banking services. The number had been declining continually since independence in a consolidation process imposed by a series of regulatory interventions. These raised the minimum capital requirements for entry to the industry and for continuous operation in order to ensure adequate capitalisation.

A strict governance code imposed corporate governance standards that conform to international best practices, with high levels of transparency and accountability. A revised capital-base requirement introduced in response to the 2008 financial crisis set the capital base level at 15% of common equity, far above the 4.5% required by international standards.

These moves aimed to secure the strength of local banks and the stability of the industry. Our study demonstrates that an open and liberal environment that does not shield local firms from foreign competition can lead to positive outcomes.

AN EXAMPLE FOR ALL

Government policies have long been recognised as a decisive factor for the competitive strength of national firms in a global world. Most times, however, the focus has been on governments prohibiting foreign entry and setting up the terms of foreign firms’ local activity.

Our study offers important lessons for policy makers: it draws attention to market structure as a determinant of indigenous capability development. Policy makers in other African countries and elsewhere should consider this as they design banking industry policies.

The balance between firms’ size (which provides the means for capability development) and competitive intensity (which offers incentives to do so) is the critical aspect of market structure that requires regulatory attention. Policy makers should shape this balance in a manner that maximises capability development.