What did Debenhams do wrong?

If you live in the UK, you may have seen the Channel 4 television programme on 28th February this year (2013) entitled ‘Bank on Dave’. Burnley Savings and Loans to give it its other name, is a company (not a bank) which offers 5% ‘deposit’ rates to lenders and offers loans to those who cannot obtain funding from the high street banks. So how does Dave do this when the high street banks offer no interest at all or perhaps only ½ or 1%? In fact ‘Dave’ is one of a new breed of ‘brokers’ who simply introduce lenders and borrowers to each other. The key difference from banks is that banks have a balance sheet with a depositor contract on one side and a separate contract with its borrowers on the other whereas a peer to peer company has no such contracts and indeed is not even involved at all in borrowing or lending! This is because in P2P, lending contracts are directly between borrower and lenders and the P2P company does not take ‘deposits’ on to its own balance sheet or keep the loans its customers make on its balance sheet.

Congratulations to Kadi Huang, Chris Himpich, Alex Priest and Daniel Lim for reaching the final of the Universities Business Challenge! In Particular to ICMA Centre students Kadi Huang, 2nd year Finance and Investment Banking, and Daniel Lim, 1st year Finance & Investment Banking. The semi-final was held at the offices of P&G (Procter & Gamble) in Weybridge and required the ten semi-finalists to purchase, renovate and manage a hotel business in Thailand.Tasks included corporate social responsibility, media presentation, creative thinking and networking. The Henley team produced an outstanding performance to win with a profit of £151K (moderated by a stakeholder engagement score).They will join nine finalists from other top business schools at the London HQ of IBM UK in Southbank on Friday 22 March for the chance to win up to £1000. We wish them the best of luck!

A new research paper, “Institutional Investor Monitoring Motivation and the Marginal Value of Cash” by ICMA academics, Professor Charles Ward, Chao Yin, and Dr Yeqin Zeng, has recently been accepted by Journal of Corporate Finance.