Shaun Drummond

Gareth Evans, Qantas CFO, says the Australian economy is relatively buoyant, despite the gloomy outlook of CFOs over the past two years. Photo: Quentin Jones

The confidence of chief financial ­officers in Australia and the UK is approaching its highest level in three years, with a massive turnaround after the federal election. But many are still waiting to see a real impact from the lift in sentiment.

In June, a net minus 11 per cent of Australian CFOs were optimistic about the financial prospects of their company – the lowest since mid 2009.

Following the federal election, confidence jumped to positive 41 per cent, the highest since the end of 2010, before the European sovereign debt crisis hit, according to the latest quarterly CFO survey from Deloitte.

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Shaun Drummond

Bank of Queensland has finally got its house in order – now it has to carve a new niche.

Good news is bad news if you didn’t see it coming, according to Bank of Queensland chief financial officer Anthony Rose. “If you get a surprise, even if it happens to be a good surprise, the question should be: ‘Why didn’t we know that this was going to occur?’ ”.

It sums up neatly the problem that besets challengers to the dominant banks. They often have to lend to riskier borrowers to grow, but to do that they need top-notch early warning systems, and that includes competing with big banks for the best people.

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Ruth Liew and Shaun Drummond

Incoming AMP chief Craig Meller...“This new simpler structure will allow us to sharpen our focus on customers and respond to emerging opportunities more rapidly.”

Incoming AMP boss Craig Meller has restructured the wealth behemoth’s leadership team and appointed a new finance chief as he prepares to take over the reins of the company next year.

The restructure, in which group strategy general manager Jonathan Deane has been dropped from the management team, will consist of 10 executives reporting directly to Mr Meller.

The $13.5 billion market cap wealth and insurance giant has also appointed Gordon Lefevre, the current finance boss of property developer Grocon, as chief financial officer. Mr Lefevre was formerly the deputy finance boss at National Australia Bank.

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Shaun Drummond

Geoff Bills ... two-tier pricing.

Adelaide dental lab owner Geoff Bills offers two prices to dentists: one for Australian-made dentures, another for false teeth made at his lab in the Philippines for a third of the price.

The quality is the same, says Bills. It takes a week longer. But a dental technician in Manila costs $10 a day, compared with $30 per hour in Australia.

Offshore centres exploiting labour arbitrage in low-cost countries are a favoured cost reduction strategy of big business.

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Shaun Drummond

Chief among worries for CFOs are emerging markets, such as Mexico. British finance officers are losing confidence in these markets to a significant degree. Photo: AFP

Finance bosses in Britain are feeling decidedly chipper, with a quarterly survey out this week showing a record number willing to take risks.

But can happy thoughts in Europe be translated to Australia? To some extent, the answer is yes. Europe buys a lot of goods made in Asia with Australian raw materials.

Fifty-four per cent of British chief financial officers told Deloitte that now is a good time to take more risk on their balance sheet – the highest in six years. At the same time, the level of external uncertainty continues to fall, although the majority still think there is more than normal uncertainty (62 per cent compared to 97 per cent two years ago).

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The winners of the Financial Review CFO Awards 2013 will be announced on October 31. Photo: Louise Kennerley

Congratulations to the 75 finalists in the Financial Review CFO Awards 2013! They have been chosen from several hundred entries spanning the work of individuals, teams and deals in the last financial year by Financial Review journalists and more than 50 external judges.

To see if you’re a winner, book your spot at the awards lunch being held on Thursday, October 31, at the Four Seasons Hotel in Sydney.

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Brian Hood, the former CFO and company secretary of Reserve Bank subsidiary Not Printing Australia, cannot understand why ASIC has not investigated former NPA and Securency board members over allegations of corrupt dealings by the companies with numerous countries, report Richard Baker and Nick McKenzie

“It seems that there are a group of people that are untouchable. Why, I don’t know,” Hood says.

Comment: No excuse for ASIC’s inaction

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Shaun Drummond

The well-known brands have always been able to raise debt locally. The real test is how often they are prepared to return and whether the local market will invest in less well-known and lower-rated companies on terms that compete with overseas markets. Illustration: Karl Hilzinger

It’s a question that’s been asked for as long as anyone can recall: what will it take to give Australia a competitive debt market to reduce our corporate reliance on banks and offshore markets?

The search for the answer has become more urgent since the GFC, as many local companies were left with only bank debt during the crisis.

Since then, however, offshore debt has been so cheap that some companies have been able to fund at lower rates overseas than the big four banks – even make money on such issues by depositing the proceeds in term deposits.

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Shaun Drummond

It is vital the new rules give more certainty for investment in a sector becoming riskier due to falls in energy demand and individual and business consumers generating more of their own power. Photo: Andrew Quilty

Energy and gas networks are calling for a truly national energy regulator as new rules and market forces cloud the outlook for the sector.

The Energy Networks Association said the case for consolidation of the Australian Energy Regulator, the WA Economic Regulation Authority and the NT Utilities Commission has been made by differing interpretations of new network rules on the cost of capital.

“What you have got is two different regulators both applying the same rules in different ways,” says energy networks association chief executive John Bradley.

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Shaun Drummond

The credit quality of mortgages in the Australian cover pools will remain stable in the next 12 months if the issuers continue to maintain a similar composition for the pools. Photo: Jessica Shapiro

The credit quality of covered bonds issued by Australian and New Zealand banks will stay high over the next 12 months and banks will issue more covered bonds to diversify funding and manage debt maturities, according to a report by ratings agency Moody’s.

The ratings of the issuers, Australian government ratings, the credit quality of the mortgages that back the covered bonds and the level of capital the banks hold against the bonds all have a bearing on covered bonds’ credit rating.

“We believe the credit quality of the bonds will be strong because of the issuers’ high Aa2 to A1 ratings and stable outlooks, the sovereigns’ Aaa ratings and stable outlooks, the stable credit quality of mortgages in the cover pool, and the issuers’ constant and committed levels of overcollateralisation,” says Karen Burkhardt, a Moody’s Associate Analyst.

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Shaun Drummond

Woolworths finance chief Tom Pockett says proposed changes to lease accounting rules will increase compliance costs with no benefit to the business or investors, in a submission to the International Accounting Standards Board. Photo: Louis Douvis

BHP Billiton, Woolworths, Wesfarmers and the big four banks oppose plans that would force them to recognise billions of dollars of lease liabilities on their balance sheets for the first time.

Woolworths said the change, designed by the International Accounting Standards Board (IASB) to give investors a clearer ­picture of corporate debt, will hit 6000 of its leases, trigger huge costs in return for “no benefit”.

“We see no benefit from moving away from the existing [standard],” Woolworths finance director Tom Pockett said in its submission. “The new standard leads to significant additional complexity, huge costs and administrative burden on companies for no benefit.”

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Shaun Drummond

Curtis Island LNG plants in Gladstone Harbour Photo: Harrison Saragossi

Gas giant BG Group’s regional finance director Graham Talbot left the company on Friday after 2½ years in the role in search of a new challenge.

Vice-president of finance David Connolly will take over from Talbot, who’s helped lead the $20 billion Queensland Curtis LNG project being developed near Gladstone by BG-owned QGC.

Talbot told CFO he had left because there wasn’t enough opportunity for further career development at BG after he missed out on the London-based BG group CFO role – which became vacant earlier than expected after the present chief financial officer, Fabio Barbosa, stepped down in February due to illness.

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Shaun Drummond

Australia’s CFO scene faces an invasion of blooded corporate warriors from overseas. Photo: Tanya Lake

Companies are hiring more finance chiefs from overseas who have been through the worst of the global financial crisis and been forced to make massive cuts and radically change their business, said finance executive recruiter Heidi Mason.

Up to 40 per cent of finance chiefs Mason placed in Australia in 2012 were from overseas – mostly the UK – and international experience in economically tough markets as well as culturally different markets in Asia remain the most sought-after traits.

“The biggest factor for our clients is that they have been through something so much tougher than we have done,” said Mason, the head of the Financial Officer practice at the local arm of international search firm Russell Reynolds. “That experience is what is really appealing to people right now.”

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Will Willitts

Siemens has appointed company insider Ralf Thomas as its new finance chief to succeed Joe Kaeser who has moved up to become chief executive’s post following the departure of Peter Loescher in a bitter boardroom battle, a news report said.

Thomas, 52, has been finance chief of Siemens’ industrial products business for five years, “overseeing a series of successful acquisitions of industrial software companies,” Reuters reported on its web site. He takes over as group CFO immediately. He succeeds Joe Kaeser who was promoted to chief executive after the ouster of former CEO Peter Loescher.

Shares in Siemens, a maker of gas turbines and high-speed trains, rose nearly 1 per cent to €89.42 by midday European time, putting them among the top gainers on Germany’s DAX index, Reuters reported on its web site.

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Shaun Drummond

Two companies hit by the downturn in mining investment hired new CFOs this week.

NSW Hunter Valley heavy equipment and engineering company SubZero Group appointed Robert Lojszczyk as finance boss on Wednesday from his role as chief financial officer at NSW Government owned coal miner Cobbora Holding Company.

His appointment comes after the company, formerly called SVC Group, was sold in April to shareholders in SubZero Holdings via a share purchase agreement for $30 million.

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