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BIPR | Johns Hopkins SAIS Global Risk Conference - Lessons from the Last Crisis for the Crisis We Face Today
Johns Hopkins SAIS Global Risk Conference - Lessons from the Last Crisis for the Crisis We Face Today

February 18, 2021 - 18:30

John Cummins, Legal & General Capital, UK

Event Recap

The event started with an introduction of John Cummins by Professor Jones that emphasized his role as a Group Treasurer of the Royal Bank of Scotland (RBS) during the Global Financial Crisis. The conversation then was organized as a back and forth between Professor Jones and Mr. Cummins. To open, Prof. Jones asked John Cummins on his background and arrival at RBS. The guest mentioned his background as a historian graduated from Oxford, always focusing on economic history. He arrived at RBS in 2007, after several years of experience in the financial sector. During the crises, Cummins stated, most of the banks that went under and those that did not, were overleveraged and undercapitalized. After the fall of Lehman Brothers, the entire system was overwhelmed by mistrust that prolonged the crisis. This fact is important to remember because, as Mr. Cummins mentioned, financial crises take a considerable toll at the humanitarian level of societies as well, and it is much more harmful than that of a regular economic downturn or recession.

Professor Jones then asked about the policy response to the crisis. To that, Mr. Cummins emphasized the role of nationalism in the crisis response, and how it complicated the solution for larger banks with several subsidiaries worldwide. The failure was in the lack of coordination of policy responses across the board to a global phenomenon, and the ripple effect it could have had to let just one subsidiary go under. To follow up, Professor Jones asked how long it took Mr. Cummins and his team to stabilize the bank's balance sheet. The guest explained that after the two trenches of government support reaching 45 billion sterling pounds, plus about 6-7 billion more of equity through recapitalization, RBS reached a stable financial situation in 2010—just in time for the euro crisis. To that statement, Professor Jones replied by asking how much has having its own currency helped the United Kingdom and its banking system. Johns Cummins believes is helped substantially. Having an independent fiscal and monetary policy helped enormously, he said, because in a situation of the sort there is a need of quantitative easing being seriously aggressive.

The topic of the talk reached its center argument when Professor Jones asked how much has the previous crisis helped us to prepare for the current one? A lot, according to Mr. Cummins, the banks today are much more liquid than a decade ago. To add to that, the loan to deposit ratio is much lower in the British banking system—that is, there are more deposits than loans in the banks, plus the now added 1.2 bn. Sterling pounds saved during the pandemic in the UK's economy. A Q&A followed with the larger sentiment of understanding how to tackle the challenges ahead. The key is to partner with stable institutions, says Mr. Cummins, and to learn to be flexible and resilient. He closed with his outlook on things that are not going away any time soon, i.e., digital, renewables, AI.

Full Audio:

Johns Hopkins SAIS Global Risk Conference - Lessons from the Last Crisis for the Crisis We Face Today
Johns Hopkins SAIS Global Risk Conference

hosted by Professor Erik Jones

John Cummins
Legal & General Capital, UK

The conference has been made possible with the generous support of Mr. James K. Anderson, SAIS Europe Alumnus and Advisory Council member, and Johns Hopkins University Trustee.

John Cummins is the Managing Director of Future Cities at Legal & General Capital in London.

Cummins is in charge of the business growth for Future Cities including, Urban Regeneration and Clean Energy. These two strategic sectors provide solutions to social and economic issues as well as delivering significant shareholder returns.

Cummins was previously Group Treasurer of RBS from 2007 to the end of 2016, where his main responsibilities included liquidity, balance sheet management, capital planning, long and short term funding, as well as interest rate and foreign exchange rate risk. During this period he oversaw a reduction in all wholesale funding from £450bn to £70bn and was heavily involved in restructuring RBS' group balance sheet as well as building its liquidity portfolios to around £150bn. In addition he ran various group wide programmes including preparations for ring fencing, the Scottish referendum, BREXIT and Libor remediation. Prior to joining RBS he was Group Treasurer at Standard Life, where he spent over ten years. John served as Director of IFFIm (International Finance Facility for Immunisation) from 2005-2012 and raised over $4bn for vaccines in the developing world. Cummins has an MA in Modern History from Oxford University and an MBA from Bradford University.
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