THE DISTILLERY: Macquarie's chief moves

Jotters speculate on why Macquarie shifted over $4 billion, and home in on Elmer Funke Kupper's regulatory stance.

If Macquarie Group shifts a few billion from one division to another, it ain’t a big deal right? The investment bank did just that a few days ago and no one thought much of it. One business commentator has decided to dig beneath the surface of what appears to be a routine move and finds a lead on who might be the bank’s next chief executive. It pays to remember that a billion dollars is still a lot of money.

Also this morning, two writers ponder the position that ASX chief executive Elmer Funke Kupper has in the financial regulatory debate, along with the one he’s crafting for himself.

But first, Fairfax’s Michael West points out that when Macquarie Group moved $4.74 billion from one division to another, it was hardly reported on. Certainly, no one in the media really pondered the significance of it.

However, insiders at the bank saw the move as further evidence that Shemara Wikramanayake is firming as a successor to chief executive Nicholas Moore. The 51-year-old Wikramanayake runs Macquarie Funds Group, and that's where the money was headed, along with another 20 staff. ‘MFG contributes upwards of 30 per cent of [Macquarie's] earnings and the head of MFG is one of those tipped to succeed [Nicholas Moore],’ one source told BusinessDay. ‘Although being female, subcontinental, non-white and human, [it] would be a complete cultural overhaul and [is] unlikely to happen,’ the source quipped. Others believe Wikramanayake is the logical choice for the top job. ‘She's trusted by Nick Moore. Shemara is the only one [of the bank's top executives] who came through the GFC unscathed. No transactions which went pear-shaped. ‘She's calmly spoken, has experience in Asia and in corporate finance, and she's super-smart,’ says another.”

The Australian Financial Review’s Jennifer Hewett writes how Funke Kupper’s clear preference to actively define the reform agenda rather than just accept the wisdom of industry regulators inevitably creates suspicions of a conflict of interest.

"The articulate Funke Kupper is also selling the ASX as a potential "national interest champion’’ as well as a commercial company interested in making a buck wherever it can. That’s obviously a tricky conflict of interest to manage although he insists the stock exchange is in a unique position to play a "leadership role in promoting policies to support investment’’. Not to mention blocking those policies that don’t – according to the ASX view of the world. It’s why his forthright rejection of any move to introduce competition in clearing (see Wednesday’s The Australian Financial Review) is part of a broader warning about what he sees as the current overly technical and narrow approach of the regulators and thus of the politicians they advise.

Business Spectator’s Stephen Bartholomeusz digs down into the regulatory history that informs Funke Kupper’s growing prominence in the debate.

"He has opened up a new front in the fight to preserve the ASX’s centrality within securities markets by arguing against the mooted introduction of competition within the clearing and settlement systems, where ASX retains a monopoly. There has been a review, commissioned by Wayne Swan, by the Council of Financial Regulators into this issue and ASX fears that it will face competition in another key part of its business, albeit one where the earnings to be contested are only around $45 million. It is worth noting that, in rejecting the proposed merger of ASX and Singapore’s SGX last year a key reason cited by Swan was the implications of the merger for clearing and settlement and the orderly and stable operations of Australian capital markets.”

Bartholomeusz’s piece, as usual, is far more complex than these few sentences might suggest. Read it.

Elsewhere, Fairfax’s Malcolm Maiden has a great line from Morgan Stanley strategist Gerard Minack about the all-important concept in business – the trend. Specifically, this quote related to the observation that commodity prices remain at historically high levels, despite recent falls.

Such an observation is irrelevant, says Minack. "Almost nothing that matters to policymakers or investors depends on levels,” says the strategist. "What matters are changes.”

Maiden’s quote needn’t relate to anything in particular; in fact he ends up briefly discussing the troubles at Nine Entertainment. It’s simply another succinct point from Minack, the kind that cuts through a lot of commentary fluff that we really appreciate at The Distillery.

Given some of the stories we’ve got above, this morning’s edition is all about personalities.

The Australian Financial Review’s Chanticleer columnist Michael Smith speculates on the implications of Don Voelte’s decision to take up the chairmanship of Nexus Energy, given his commitments as Seven West Media chief executive.

Fairfax’s Elizabeth Knight has received word that Echo Entertainment director Brett Paton got into a blue with chairman John Story, who he proved to be instrumental in installing.

And The Australian Financial Review’s Matthew Stevens reports that there does appear to be some indication that Nathan Tinkler is contemplating some kind of proxy battle for control of Whitehaven Coal.

Elsewhere, The Australian’s Asia-Pacific editor Rowan Callick continues his push to get readers thinking about Australia’s greatest untapped economic opportunity, frequently seen as a social problem – Indonesia.

And The Australian’s John Durie says consumer watchdog boss Rod Sims is waiting for another showdown with supermarket giant Woolworths.

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