Central bankers from around the world seem to share the view that inflation is their biggest economic challenge. Bankers meeting in Switzerland concurred that booming food and energy costs are related to demand and might not be temporary. Once industrial countries have managed the financial turmoil of the past year, "the issue that is remaining and that is becoming more important is containing inflationary pressures," Chile central bank president José de Gregorio said.
Financial firms have survived the worst of the credit crisis, and markets should start to strengthen before year's end, the head of France's BNP Paribas said. "I still expect (markets) to stay volatile," CEO Baudouin Prot told Italy's La Repubblica newspaper in an interview published Sunday. Prot said he supports a pan-European committee to supervise markets and the banking industry but that unregulated sectors also need observation.
Signals by financial markets indicate the opinion that financial-services firms will continue to see their shares fall but will not default on debts. Stock prices for banks and brokerages are hitting new lows over doubts about their ability to generate profits. But credit-default swaps have held their value for many financial firms.
Citigroup CEO Vikram Pandit plans to remodel the bonus system for top managers to eliminate divisional rivalries. Like most banks, Citi issues bonuses based on the results of a manager's division and individual performance. Pandit wants to link bonuses of senior managers and junior employees to the company's overall performance.
Overseas expansion by Maybank is part of a strategy to enter markets with high populations and low banking usage. Malaysia's government-owned bank bought a 15% stake in Vietnam's An Binh Bank in March. Then Maybank bought a 56% stake in Bank Internasional Indonesia, the country's sixth largest. Critics say Maybank paid too much because it felt pressure from rivals Bumiputra-Commerce and Public Bank to expand abroad.