Phil Brown

Having an international career is what drove Phil Brown, co-CEO of Clearstream Banking, to the custody industry. Today, he continues to draw on his international experiences to help move the industry forward.
Inducted: 2018

GC: How did you begin your career in securities services?

Phil Brown : I graduated in 1989 after completing a degree in banking and finance and, after a year travelling around the world, then joined Barclays on their graduate programme – the Management Development Programme. After completion of the programme, which included two years spent working for Barclays in Madrid, I had three job options within the bank, one was for venture capital, another for corporate banking, and the other was at Barclays’ global securities services. I chose the latter and the rest, as they say, is history. The reason I joined that business is because I felt it was the one that best fit my desire to pursue an international career. I started out in a sales and relationship management job, and that has been much of my career so far – close to clients. At the time, custody was still a young business, so I had the advantage of gaining early responsibility, making mistakes and learning from them. That “building as we went along” is actually what allowed us to shape this business into what it is today.

GC: What were some of your career highlights?

PB: I suppose my first career highlight in this business was the first bit of business I won at Barclays back in 1995. We won the Japanese equity portfolio of the Dutch Shell pension fund. That was an important win for us because it was the first time that Barclays’ custody business had successfully stepped outside of the UK and won international clients. We had a lot of fun building that business back in the mid-90s, with some real industry legends like Martin Brennan and Alistair Reid. Then, a year later, Barclays sold the business to Morgan Stanley. I moved with the business – it was such a wonderful opportunity to experience working for one of the world’s premier investment banks. That role also gave me my first trip to New York – according to my BA App, I’ve since been there over 50 times, proving that this really has been an international career so far.

A further highlight came when I was already with Clearstream – and I was asked to join the Deutsche Boerse group management committee. It was an enormous privilege, and a rarity, to be running a custody business but also to be involved in the management process of the parent public company. This definitely gave me a broader view of the group business, not least providing me deep insights into the derivatives, FX and market data businesses, and this helped further my understanding of the whole financial ecosystem inside which we operate.

This year, for the first time, I also attended the World Economic Forum in Davos. It isn’t really a custodian event, but I found the quality and seniority of engagement with our clients and business partners to be extremely valuable, insightful and enriching. Together with the World Bank/IMF conference in the autumn, it gives us incredible insight into our clients and their business challenges. It underlines how important asset custody is on a global level and that we are involved in this debate.

GC: What have been some of the big changes you have seen in the industry?

PB: When I first joined the post-trade, settlement and custody business, there were not a lot of bankers in the business – the business was largely staffed with operations experts. It was actually a little intimidating to those of us who came from a risk and credit background! Now, our industry is hiring more and more bankers. I think the reason is the realisation that this is a risk business, and having a banking background is increasingly essential to lead these companies. September 15, 2008 was an important date in this respect, because it was the day many in our industry recognised that they were exposed to significant risk through the settlement cycle, the securities lending market and through the extension of intraday credit. Many of us will remember being at Sibos in Vienna when Lehman collapsed. The conference had a strange atmosphere – many attendees left because they had to deal with the fallout, and the place was bifurcated between these with Lehman exposure, and those without. This event changed our industry significantly – it has resulted in the broad regulatory agenda we’re facing today and which has shaped all of us for the past ten years

GC: How has your international perspective influenced your industry outlook?

PB: Clearly, one of the reasons I joined the industry was because I wanted to pursue an international career. Clearstream has been a wonderful place to experience that. When considering Clearstream, most people assumed that all we do is operate the German CSD and provide services for Eurobonds. But in fact, we are a very large global custodian, with assets in over 50 markets – so the firm’s international profile really appealed to me. And the nature of the global custody business in itself is appealing – I really enjoy the fact that this industry is highly networked. We have to manage third-party suppliers in a very structured and mature way, as they are frequently supplier, client and competitor at the same time. I found this complexity really intriguing, and these multi-faceted relationships make it an interesting place to work. In fact, this need to be a “mediator” across borders continues to excite me each day, coupled of course with the fact that the custody business is all about engineering and process optimisation. I’m actually an engineer at heart. I think this is the closest in financial services that you get to the experience of working in the real economy.

GC: What are the kinds of things that make for a great day at work?

PB: For the whole of my career, I have been on the relationship-side of the business. So a good day for me is one where I am spending time with our clients. I really enjoy going out to meet clients and I genuinely learn something new from each of them every day – that’s why the number one attribute that I look for in my staff is curiosity. We need our people to keep searching for what is coming tomorrow. And, it is an enormous privilege to personally interact with the quality of individuals that touch our business – among them governors of central banks, ministers of finance, CEOs of banks and stock exchanges, politicians and diplomats. While we are sometimes considered part of the rather boring end of the banking business, the quality of the people who give us their time and attention shows how essential our role actually is to the mechanics of financial markets.

I also really enjoy hiring and promoting new talent. It is a fabulous feeling to give someone their first step on the career ladder, and see them develop to become young professionals. I get quite cross when I hear people in my generation speak about the next generation in a negative way from a professional standpoint, because it is just not true. The quality of talent we see coming through is really, really high – in fact, higher than in my day. The challenge we do have, though, is that when I first joined the business, the industry was growing and providing lots of space for advancement. Now, it has slowed down and it is therefore much harder for talent to progress. So we have to work much harder to nurture and motivate that talent.

GC: What are your expectations for the industry going forward?

PB: In a word – digitisation. One of the big changes I saw over the first 10 years of my custody career was the huge increase in automation along the value-chain. We went from paper based, low efficiency to high rates of STP. Then after that, for the next 10 years, there was little efficiency improvement – it just became a game of scale. The industry concentrated on credit management and regulatory compliance, and not so much on automation or efficiencies – I feel this changing rather quickly. This industry has enormous benefits to gain from AI, machine learning and robotics, and can bring massive value to clients by bringing insights on their businesses based on the data we process for them every day. New technologies are providing so many opportunities – and will change a lot about what we do and how we do it. We are on the cusp of quite a significant change, I feel.

GC: And finally, what is your desert island disc?

PB: There are so many but, to get me off my towel and up and active, I would probably have to take ‘Signed, Sealed, Delivered’ by Stevie Wonder.