A DAY IN THE LIFE OF: JOHN ARNESEN
Global Head, Agency Securities Lending, BNP Paribas Securities Services
September 26, 2017
Global Head, Agency Securities Lending
BNP Paribas Securities Services
Tell us about your current role. What does a typical day look like?
The day starts early. I live in the depths of beautiful Hampshire, so I’m up at 5:20 a.m. and on a train at 6:18 a.m. from Winchester. I love mornings—it’s probably a dad thing where it’s the only time when the house is quiet, and although my son no longer lives at home, the habit to get up before dawn is there.
Southwest trains have Wi-Fi, so I crack open the laptop and can clear, respond to and write emails for an hour. This makes a huge difference to my day as by the time I get into the office at 7:45, I know exactly what I either need or intend to do for the day. Invariably that plan lasts 10 minutes before an issue presents itself that needs immediate attention. I used to hate the deviation but have learnt that this is a fluid business with many moving parts, so I have to be flexible and prioritize at all times. None of us in the industry have the luxury of excess resources, so the juggling of issues with meetings and deadlines, not to mention regulatory initiatives that are ever present, is a constant challenge.
As head of the agency lending business I have three primary objectives each day: are we maximizing revenue, have we any outstanding queries from clients and are our IT projects related to greater scalability on track.
What is the biggest challenge you face in your position?
Time. There is never enough of it, and they are not making any more. We are heavy on governance and conduct in which I am totally invested, but these disciplines can take up a good amount of time. Remember the daily plan I had ambitions to pursue upon arrival? That is addressed on my journey home, which is a repeat of the morning. The only difference can be my jerking awake as we approach Winchester! I tend to crack open the laptop again when I get home to catch up or reply to dozens of emails. The exception is of course on a Monday if it is nearer to 9 p.m. That is reserved for the greatest television show ever produced!
How does BNP Paribas differentiate itself amongst agent lenders?
The bank, both Securities Services and the Group, are strong financial institutions with excellent results in 2016 and 2017. As a major part of the fabric of the settlement systems in Europe, we attract a lot of clients from all sectors of the market, both buy and sell side.
When those clients require an agency program we analyze carefully what the prospective client can expect in terms of revenue against their risk appetite. Managing client expectations is really important to us. There is nothing worse than surprising clients because communication has been lacking. Clients will forgive a change in market returns and revenue if you have kept them informed. They are not unreasonable, and they have internal expectations to manage too.
Our utilization of European Government debt is the second highest in the market. If the weighted average fee was published, I suspect we would have the highest return to lendable assets. Our central bank, sovereign wealth and insurance company clients are reaping the rewards of this activity, which we fully indemnify. That, I feel, is a strong differentiator.
You have been in the securities lending business for well over two decades now. How has the industry changed in that time?
Indeed, 27 years in December. It is almost unrecognizable from the early ‘90s when the idea of disclosure was a random event; we wrote paper tickets, including delivery instructions (not an SSI in sight), and wrote reinvested cash on an A4 sheet of paper to keep track of our positions. Sounds antiquated? A lot of money was being made despite this clunky process. The rise of alternative managers in the late ‘90s and 2000s was perfect timing for the agency business to grow as demand grew exponentially. The formation of EquiLend was a turning point, as was the rise of STP in securities lending transactions. [The period from] 2007-09 didn’t destroy the industry, but it has certainly changed the way liquidity and credit is viewed. The rise of data accessibility has developed in a meaningful way and positioned us closer to what I think is inevitable: a move from OTC to an exchange-based platform base. ESMA have made it a clear ambition for securities finance.
What is your proudest moment on the job? Off the job?
There have been many: Working our way through the U.S. business from London in the aftermath of 9/11 when a 16-hour day was typical with not one complaint from anyone. Playing an instrumental part in winning central bank clients in the face of fierce competition will swell your chest like nothing else. The birth of my children will always stay with me. My daughter recently graduated with a 2.1 hons in history and politics, and that news made me feel immensely proud of her.
What do you do in your spare time?
Put me on a beach, and I’m happy. Put me on a tropical beach, and I’m as happy as Larry. Bournemouth is a 40-minute drive from where I live, and this year I rented a beach hut, which is about the second best thing I’ve ever done. I spend both weekend days down there, and I ignore the looks I get from the teenagers when I’m body boarding in my wetsuit. There is something about the sea which instantly relaxes me, and I’ve traveled the world, much like the character in “The Beach” searching for the most perfect beach.
What is the best advice you’ve ever received?
This may sound trite, but I was a Cub but never pursued Scouts as we had a combined cadet force (CCF) program at school, which was a strong draw for me. The Cubs’ motto is “Be Prepared,” and I’ve applied that to almost every situation that warrants it. I will drive my colleagues crazy at times preparing and over-preparing for a client review or new business pitch. I never want to feel not enough was done—even if 80% of the work is not used, so be it.
My father is Norwegian, and they have a strong culture of openness and integrity. He always told me that one’s reputation is priceless and to never compromise it, ever. That has proved to be good advice time and time again. I sleep well at night, if only until