After the crisis, it's party time again for bankers at Davos

By Christine Harper

As Wall St chief executives flock to the World Economic Forum, they will be breathing a sigh of relief along with the Swiss mountain air: there are no panels on compensation or redesigning financial regulation.

After spending much of last year's meeting defending the industry and debating proposed rules, bankers plan to focus on wooing clients and winning business, according to executives at three Wall St companies, who spoke anonymously because they were not authorised to comment publicly.

The bankers will be coming to Davos, Switzerland, with a renewed sense of confidence. JPMorgan Chase's profits last year were the highest in the bank's history, and Citigroup returned money to the US Treasury and reported its first full-year profit since 2007.

Governments have so far opted not to break up or levy extra taxes on banks deemed too big to fail, and the Basel Committee on Banking Supervision, which sets global financial-regulatory guidelines, is not requiring lenders to meet new capital standards until 2015.

"It will feel less acute," said Anne Finucane, Bank of America's chief strategy and marketing officer, who attended with chief executive Brian Moynihan for the first time last year and is returning this week. "The level of angst should have dissipated some, given that there is movement in the economy."

Two years ago, after the 2008 financial crisis, the chief executives of Bank of America, Citigroup and Morgan Stanley stayed away from the annual forum.

This year the only major Wall St banks not sending CEOs are Goldman Sachs and Morgan Stanley, instead represented by president Gary Cohn and chairman John Mack respectively.

That means banks will be spending on parties. JPMorgan upgraded its cocktail reception to the Kirchner Museum from last year's event at the Tonic Piano Bar at Hotel Europe Davos.

Bank of America's Moynihan and the firm's other top executives will meet clients for drinks on Friday at the Steigenberger Grandhotel Belvedere - the same night Morgan Stanley's Mack is hosting a private dinner at restaurant Gasthaus in den Islen.

Standard Chartered and Deutsche Bank are both hosting events at the Belvedere the following night.

Nomura Holdings is having a British journalist and a newspaper editor speak at a dinner for clients, the first such event the Tokyo-based bank has held in Davos, according to a person familiar with the planning.

Barclays will again hold its annual client dinner at the Hotel Schatzalp, and Credit Suisse Group is hosting two client lunches, one discussing financial regulation and the other focused on emerging markets.

As always, much of the action at Davos will happen at meetings and parties not on the official programme.

"The most useful thing for us is really just to spend time with key clients over there, even if it's just a cup of coffee for 20 minutes or so," said William Vereker, the London-based joint global head of Nomura's investment banking division.

For bankers like Vereker, in contrast with this year's Davos theme of "Shared Norms for a New Reality", the old reality is back.

"They're out there to make money for shareholders and trying to do that the best way they can under a system they helped design," said Simon Johnson, a professor at the Massachusetts Institute of Technology's Sloan School of Management and a Bloomberg News columnist. "We're just going through the same cycle again with pretty much the same incentives and power structures. Why would one expect anything different?"

One thing different this year is that none of the heads of big Western banks is among the event's six co-chairs.

Chanda Kochhar, the 49-year-old CEO of ICICI Bank, India's second- biggest lender, is replacing Deutsche Bank CEO Josef Ackermann and Standard Chartered chief Peter Sands, who represented the industry last year.

Kochhar's bank, unlike many of its Western counterparts, remained profitable throughout the financial crisis and this week reported a record profit.Her salary, bonus, expenses and pension contributions for the year ending last March 31 totalled 20.9 million rupees ($600,000), the Mumbai-based bank's annual report showed, less than half the US$1 million ($1.3 million) base salary paid to JPMorgan chief executive Jamie Dimon, who is returning to Davos after skipping last year.

Finucane and other senior bankers say the lessons learned from the financial crisis are not forgotten. They also say the reform process is not finished. Many of the rules required by the US's Dodd-Frank financial legislation have yet to be written, and Basel still has to craft rules for too-big-to-fail banks and capital requirements for trading units.

"The way that Dodd-Frank is implemented is still up for grabs," said Jane Gladstone, who leads the financial services corporate advisory practice at New York investment bank Evercore Partners. "There is a chance that we still have some important ... regulatory meetings at Davos."

This year the discussion at Davos would probably move to different topics such as economic stimulus, monetary policy and the role played by emerging markets, Finucane said.

Timothy Geithner is scheduled to be in Davos, the first time in more than a decade that a sitting US Treasury Secretary has flown to Switzerland for the conference. The leaders of France, Germany and Britain will also appear, as will seven members of the US Congress.

"Last year there were a lot of conversations about who to blame, how to blame them, and how to rejig the industry," said Yury Spektorov, a Moscow-based partner in Bain & Co's mergers and acquisitions practice. "It's not a hot topic any more. Some people probably learned their lessons, some probably didn't, but they will discuss how to move forward."

- BLOOMBERG

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