here are five good reasons
1.It has survived a number of downturns and still made a profit including 1987 when we had 50% decline and the tech wreck in 2000 and 2001 where we had a 22% decline on the ASX.
p31
http://www.macquarie.com.au/au/about_macquarie/acrobat/2008_agm_presentation_pp.pdf
2.It has a clearly delineated risk management policy called the “Freedom within Boundaries” philosophy
from the 2008 annual report p40 .. Risk management report
http://www.macquarie.com.au/au/about_macquarie/acrobat/annual_report2008_MGL.pdf
v
v
“Risk is an integral part of the Macquarie Group’s
businesses. Management of that risk is therefore critical to
Macquarie’s continuing profitability. Strong independent
prudential management has been a key to the Group’s
success over many years. Where risk is assumed, it is
within a calculated and controlled framework.
Risk is owned at the business level with business heads
responsible for identifying risks within their businesses and
ensuring that they are managed appropriately. The aim is
to give business heads a high level of entrepreneurial
freedom to develop and implement business unit strategy,
new products and services, new market initiatives and
domestic and international alliances. However, boundaries
exist in relation to credit, market, operational, regulatory
and reputation risks. These areas have implications outside
the businesses and are tightly controlled by the Risk
Management Group (RMG). This is referred to as the
“Freedom within Boundaries” philosophy.”
3. the company employs 331 risk management specialists in what is called a Risk Management Group
4. It attempts to always have enough liquid assets readily at hand to cover all debt obligations over a 12 month period
Recently it increased the level of liquid assets to $18 billion
“Group Treasury maintains portfolios of highly liquid assets
in both MBL and MGL to ensure adequate funding is
available under all conditions. These liquid assets are held
to cover both known and contingent sources of funding
outflows. The assets are predominantly held in the most
liquid asset classes – short dated interbank deposits and
stock eligible for repurchase with Central Banks.
Group Treasury and RMG undertake regular reviews of the
liquidity characteristics of the Group’s balance sheet. This
provides an understanding of the liquidity characteristics of
assets and liabilities against a backdrop of changing market
conditions. The analysis ensures that the balance sheet is
able to be appropriately funded and the liquidity
ramifications of market moves are clearly understood.
In response to the current funding market disruption, the
Group has increased its level of liquid asset holdings to
$18.3 billion as at 31 March 2008 (31 March 2007: $6 billion).
In addition to the liquid asset holdings, MBL has other
trading assets, many of which are liquefiable at short notice.”
5. the group constantly stress tests its business via modelling at the highest levels of stress.
eg they talk about the “market contagion” scenario
The “Market Contagion” scenario considers the impact of
a stock market crash, with simultaneous effects in global
foreign exchange, interest rates and corporate margins.
Downward shocks of up to 30 per cent are applied to
equity markets and hedge fund values, foreign exchange
and precious metals are moved by 5 per cent, interest
rates are shifted by up to 200 basis points, corporate
margins are shocked by 50 to 500 basis points and energy,
agricultural commodities and base metals are shocked by
up to 20 per cent. With associated moves in implied
volatilities and correlations, the “Market Contagion”
scenario accounts for all the significant markets to which
Macquarie is exposed. The assumptions in this scenario
are considerably more severe than the conditions that have
prevailed in the recent period of market volatility. Although
the new ‘Market Contagion’ scenario is very conservative,
exposure to the MEL scenarios remained only a small
percentage of the Group’s capital throughout the
financial year.
Did you notice anything interesting about this post?
All the comments were referenced and supported with evidence
Unlike a number on here who seem to have inflated opinions of themselves and make unsubstantianted opinions as if they were George Soros, Marc Faber or someone of that ilk.
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