2021 MEDIA PACK - International Tax Review

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2021 MEDIA PACK - International Tax Review
2021 MEDIA PACK
2021 MEDIA PACK - International Tax Review
ABOUT ITR

First published in 1989 as International Tax Review, ITR is the market-
leading publication providing daily, weekly and monthly insights on
the changing corporate tax landscape.
Peer insight drives our news, special features and events, and we do this by talking to market leaders to uncover the tactics and
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ITR now incorporates the former standalone publication TP Week into a single service, and as such, caters for our subscribers in
in-house tax teams, advisory firms and governmental bodies within the areas of direct and indirect tax and transfer pricing. Within
these areas, we also focus on controversy and litigation, technology and automation, tax compliance and much more, ensuring that
our content goes beyond black letter analysis and legislative updates.
2021 MEDIA PACK - International Tax Review
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NEWS AND ANALYSIS                                                                                                                                 LOCAL INSIGHTS                                                                                                                                    ITR is distributed in print and online formats to over
EDITORIAL COVERAGE                                                                                                                                ITR provides an opportunity for firms and individuals                                                                                             2,700 tax professionals and individuals in tax-related
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 TA X R E F E R E N C E L I B R A RY N O 1 3 7
                                                                                                                                                   TA X R E F E R E N C E L I B R A RY N O X Y Z                                                    TA X R E F E R E N C E L I B R A RY N O X Y Z
                                                                                                 International Tax Review

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 burckhardt Ltd
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                                                 TA X R E F E R E N C E L I B R A RY N O 1 3 9

 Mergers &                                                                                                                                         Local Insights                                                                                   Local Insights                                                                                   43.8%
                                                                                                 TAX REFERENCE LIBRARY NO XYZ: TRANSFER PRICING

                                                                                                                                                                                                   TAX REFERENCE LIBRARY NO XYZ: TRANSFER PRICING

                                                 Published in association with:

 Acquisitions                                                                                                                                      China                                                                                            USA                                                                                                  EMEA

                                                 Transfer Pricing
                                                 Financial Services 1st edition
                                                                                                                                                                                                                                                                                                     28.2%
                                                                                                                                                                                                                                                                                                        Americas
                                                                                                 www.itrinsight.com

                                                                                                                                                                                                   www.itrinsight.com

                                                                                                                                                                                                                                                                                                                                     26.8%
                                                                                                                                                                                                                                                                                                                                     Asia-Pacific
2021 MEDIA PACK - International Tax Review
FIRM RANKINGS

    WORLD TAX, WORLD TP AND LEADERS GUIDES                                                                                                       GEOGRAPHICAL BREAKDOWNS
                                                                                                                                                 WORLD TP VISITORS1

    ITR publishes rankings once a year on the leading tax and transfer pricing firms
    and individuals covering over 100 jurisdictions and practice areas including tax
    controversy, general corporate tax, transactional tax and indirect tax.
                                                                                                                                                    38.9%
                                                                                                                                                      Americas                 23.9%                                32.8%
                                                                                                                                                                                    Asia-Pacific                      EMEA

    Firms are recognised in the World Tax and World TP guides, and individuals are listed in the
    Leaders Guides. All guides are distributed and promoted to our ITR, World Tax and World TP                                                   WORLD TAX VISITORS1
    readership. The guide is also promoted to the client referees from the research.

    OUR REACH AND AUDIENCE
                                                                                                                                                    31.3%                      27.3%                                36.6%
    352,300+                                                                                                                                          Americas
                                                                                                                                                                                    Asia-Pacific                     EMEA

    page views annually on itrworldtax.com
    and worldtransferpricing.com1
                                                                                                                                                                                   Sign up to the newsletter
                                                                                                                                                 TOP 10 COUNTRIES VISITING WORLD TP1 TOP 10 COUNTRIES VISITING WORLD TAX1
    8,800+                                                                                                                                       USA
                                                                                                                                                 Indonesia
                                                                                                                                                                        Germany
                                                                                                                                                                        Finland
                                                                                                                                                                                                   USA
                                                                                                                                                                                                   India
                                                                                                                                                                                                                     Indonesia
                                                                                                                                                                                                                     Portugal
    World Tax/World TP newsletter sent out
    to tax practitioners globally5                                                                                                               Netherlands            Mexico                     United Kingdom    Italy
                                                                                                                                                 India                  Singapore                  Brazil            Germany
                                                                                                                                                 United Kingdom         Italy                      Netherlands       Mexico

    3,200+
    followers on social media6 and
    announcements are also shared through
    ITR’s main social media channels                                                                                                                              RESEARCH SCHEDULE DATES
                                                                                                                                                                                                                    SIGN UP TO THE
                                                                                                                                                                                                                    NEWSLETTER
                                                                                                                                                    RESEARCH BEGINS - JANUARY 2021
                                                                                                                                                    SUBMISSION DEADLINE - MARCH 2021
1
 Google Analytics: 18th November 2019 – 17th November 2020 2Based on followers: LinkedIn - ITR Insights and ITR (International Tax
Review), and ITR Twitter (17th November 2020) 3Weekly newsletters: ITR Direct Tax, ITR Indirect Tax, ITR Transfer Pricing, ITR Friday Round-up      RESEARCH INTERVIEWS CONDUCTED WITH
(17th – 23rd November 2020) 4Subscribers and controlled circulation (November 2020) 5Monthly newsletter: October 2020 6Based on                     PRACTITIONERS AND CLIENTS - APRIL - JUNE 2021
followers: World Tax and World Transfer Pricing accounts (17th November 2020)
                                                                                                                                                    RANKINGS PUBLISHED - OCTOBER 2021
2021 MEDIA PACK - International Tax Review
THOUGHT LEADERSHIP

Our thought leadership opportunities can                                                                                                                                                                                                                                CHAPTER 2: NEW REALISM                                                                                                                                        CHAPTER 2: NEW REALISM

solidify your status as an expert in your field,                                                                                                                                                                                                                                                                                                                                                                                                           Shortage of specialist skills to
                                                                                                                                                                                                                                                                                                                                                                                                                                                           operate/maintain technology
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             Smaller
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             companies
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             Large

where potential clients and customers will
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        50% 36%                                                                                              companies
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             (turnover above $2bn)

                                                                                                                                                                                                                                                                        CHAPTER 2
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  Integrating

                                                                                                                                                                                                                                                                        New realism                                                                                                                                                                                            humans + tech

                                                                                                                                                                                                                                                                                                                                                                                                                                                                           32% 26%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             Regulatory constraints

look to you for advice, as well as information
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             7% 17%
                                                                                                                                                                                                                                                                                                                                                                                                                                                           Board/ senior
                                                                                                                                                                                                                                                                        In recent years countless predictions                            I feel that much of the industry is merely using                                                                  management                                                                                                                                         Data privacy
                                                                                                                                                                                                                                                                   7    have been made about the far-reaching                            AI as a buzzword with little actual material                                            9                               buy-in                                                                                                                                       concerns

                                                                                                                                                                                                                                                                                                                                                                                                                                                     28% 26%                                                                                                                                                  21% 30%

and ideas.
                                                                                                                                                                                                                                                                        impact AI and machine learning will                              implementation of the technology in any way
                                                                                                                                                                                                                                                                        have on financial services.                                      that is truly impactful.” It will “take five to eight
                                                                                                                                                                                                                                                                                                                                         more years for AI to completely disrupt the
                                                                                                                                                                                                                                                                        Nevertheless, while it’s hard to overestimate                    market,” predicts another participant.
                                                                                                                                                                                                                                                                        AI’s long term potential for the sector, all of the
                                                                                                                                                                                                                                                                        experts interviewed for this report stressed that                Greater realism has led to the recognition that AI
                                                                                                                                                                                                                                                                                                                                         is not a quick fix. A significant minority of 42%                                                                                                                                               CHART 3
                                                                                                                                                                                                                                                                        financial institutions should not get too carried
                                                                                                                                                                                                                                                                        away by the hype, just yet.                                      contend that AI capabilities in financial services                                                                                                                   Major obstacles for
                                                                                                                                                                                                                                                                                                                                         have progressed slower than expected (chart 2).
                                                                                                                                                                                                                                                                        Celent’s Latimore says some banks have been                      This rises to 47% amongst survey respondents                                                                                                                           large and small
                                                                                                                                                                                                                                                                        guilty of overpromising and underdelivering on                   from the Americas and 50% amongst larger firms                                                                                                                      organisations seeking
                                                                                                                                                                                                                                                                        AI projects. However, he believes lessons have                   with turnover greater than US$2bn.
                                                                                                                                                                                                                                                                        been learned as both institutions and their                                                                                                                                                                                             to introduce AI
                                                                                                                                                                                                                                                                        customers have become a lot more realistic                         CHART 2
                                                                                                                                                                                                                                                                                                                                           Progress in artificial intelligence:                                                                                                                                                   Multiple answers possible
                                                                                                                                                                                                                                                                        about what can be achieved.
                                                                                                                                                                                                                                                                                                                                           evolution or revolution?
                                                                                                                                                                                                                                                                        “All implementation of AI should be crafted for
                                                                                                                                                                                                                                                                        a specific purpose,” he says. “An axe and scalpel                                                                           42%                                                      Ethical concerns
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Cyber security

WHAT WE DO
                                                                                                                                                                                                                                                                        are both cutting instruments but you wouldn’t                                                                                                                                                 3% 9%                                                                                                                                   concerns

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              33% 30%
                                                                                                                                                                                                                                                                        use a scalpel to cut down a tree or an axe to                                                                         36%
                                                                                                                                                                                                                                                                        perform surgery. Banks need to be specific about
                                                                                                                                                                                                                                                                        what type of AI they want to focus on and what
                                                                                                                                                                                                                                                                        problem it is there to solve.”                                                                  22%

                                                                                                                                                                                                                                                                        Our survey respondents acknowledge that when                                                                                                                                             Identifying + mitigating                                                                                       Shortage of
                                                                                                                                                                                                                                                                        AI is focused on clearly defined tasks it can live
                                                                                                                                                                                                                                                                                                                                                Evolution not revolution:
                                                                                                                                                                                                                                                                                                                                                AI improved slower than expected                                                                                    all material legal risks                                                                                    analytical skills
                                                                                                                                                                                                                                                                        up to its potential. One commented: “With the
                                                                                                                                                                                                                                                                        help of AI we are able to generate tailored and
                                                                                                                                                                                                                                                                                                                                                AI capabilities progressed as expected
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        8% 12%                                                                                  27% 17%
                                                                                                                                                                                                                                                                                                                                                Revolution not evolution:
                                                                                                                                                                                                                                                                        actionable insights for our clients at a speed and                      AI capabilities progressed faster than expected

Identify your market’s pain points and delve into the
                                                                                                                                                                                                                                                                        scale human advisors would find hard to match.”
                                                                                                                                                                                                                                                                        Another noted: “Most of our underwriting
                                                                                                                                                                                                                                                                        process is automated, thanks to AI.”                             A more mature understanding of AI and its                                                                                                    Cost of AI systems
                                                                                                                                                                                                                                                                                                                                         current limitations has developed.
                                                                                                                                                                                                                                                                        However, there are also respondents who
                                                                                                                                                                                                                                                                        contend that progress has been slower than                       Janet Yuen, Asia Pacific Head of Innovation at
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          37% 53%
                                                                                                                                                                                                                                                                        sometimes suggested. “As a company that                          HSBC, points out that even the most advanced

key concerns of your audience. Address these points
                                                                                                                                                                                                                                                                        has been utilising AI for the past eight years,                  conversational AI applications are still a long way

                                                         GHOSTS
through a range of compelling formats from reports to
videos, microsites to infographics.
                                                                                                                                                                                                                                                                        CHAPTER 2: NEW REALISM                                                                                                                                        APPENDIX

                                                                                                                                                                                                                                                                           CASE STUDY
                                                                                                                                                                                                                                                                           KEEPING A CLOSE
                                                                                                                                                                                                                                                                           EYE ON THE ROBOTS
                                                                                                                                                                                                                                                                           Artificial intelligence systems can read and
                                                                                                                                                                                                                                                                           analyse data in a way that humans often can’t

BUILD YOUR CREDIBILITY AND TRUST
                                                                                                                                                                                                                                                                                                                                                                                                                                      Appendix
                                                                                                                                                                                                                                                                           match. However, fully-automated systems can

                                                                                   IN THE MACHINE
                                                                                                                                                                                                                                                                           have their own problems, according to Jeff
                                                                                                                                                                                                                                                                           Holman, Chief Investment Officer at Sentient
                                                                                                                                                                                                                                                                           Technologies, responsible for the company’s
                                                                                                                                                                                                                                                                           trading and investment arm.

                                                                                                                                                                                                                                                                           Sentient Investment Management operates a

                                                                                                                 REVISITED
                                                                                                                                                                                                                                                                           hedge-fund strategy that uses deep learning                                                                                                                Q1.
                                                                                                                                                                                                                                                                                                                                                                                                                                       Q1.How much do you think the following financial                                                              Q3.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      Q3.What impact will A.I. and machine learning
                                                                                                                                                                                                                                                                   13      and one of the world’s largest evolutionary                                                                                                         21      services
                                                                                                                                                                                                                                                                                                                                                                                                                                      How  muchfunctions    willthe
                                                                                                                                                                                                                                                                                                                                                                                                                                                 do you think    befollowing
                                                                                                                                                                                                                                                                                                                                                                                                                                                                     changedfinancial
                                                                                                                                                                                                                                                                                                                                                                                                                                                                               by A.I. and
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        services                                                     haveimpact
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    What   on thewill
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  following    aspectslearning
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      AI and machine     of the have
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                financial
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     on the
                                                                                                                                                                                                                                                                           computation systems to derive trading strategies                                                                                                            machine-learning
                                                                                                                                                                                                                                                                                                                                                                                                                                      functions            technology
                                                                                                                                                                                                                                                                                                                                                                                                                                                will be changed           over
                                                                                                                                                                                                                                                                                                                                                                                                                                                                  by AI and    the next 3
                                                                                                                                                                                                                                                                                                                                                                                                                                                                            machine-learning                                                         markets aspects
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    following over theof next   3 years?markets over the next 3
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          the financial
                                                                                                                                                                                                                                                                                                                                                                                                                                      technology
                                                                                                                                                                                                                                                                                                                                                                                                                                       years?    over the next 3 years?                                                                             years?
                                                                                                                                                                                                                                                                           from previously unseen patterns.
                                                                                                                                                                                                                                                                                                                                                                                                                                           Credit assessment                                                                                             Credit assessment

With your original content, take advantage of ITR’s
                                                                                                                                                                                                                                                                                                                                                                                                                                                                       24%               52%                                      19%          3%                                25%                    56%                                                14%

                                                                                                                                                                                                                                                                           Originally, the idea was to offer a fully                                                                                                                       Risk management             27%                 48%                                   20%       5%            Risk management         21%                 50%                                            20%            6%

                                                                              The state of artificial intelligence, risks
                                                                                                                                                                                                                                                                           autonomous hedge fund that made all of
                                                                                                                                                                                                                                                                                                                                                                                                                                            Financial analysis         23%               51%                                     21%           4%               Compliance       22%                 45%                                      25%                  5%
                                                                                                                                                                                                                                                                           its stock trades using AI. But, during testing,                                                                                                                                                                                                                                Competitiveness
                                                                                                                                                                                                                                                                                                                                                                                                                                                         Trading       15%        56%                                       22%            5%                                    20%               45%                                    23%                    10%
                                                                                                                                                                                                                                                                           limitations were spotted in this approach. The                                                                                                                                                                                                                                     of markets

                                                                                                                                                                                                                                                                           San Francisco-based company now pairs its AI                                                                                                                                          IT    23%               40%                          25%                10%               Market liquidity      9%      40%                                  35%                           11%

                                                                                and regulation in financial services
                                                                                                                                                                                                                                                                                                                                                                                                                                                 Investment/
                                                                                                                                                                                                                                                                           capabilities with human portfolio managers.                                                                                                                Portfolio management
                                                                                                                                                                                                                                                                                                                                                                                                                                                                       12%      49%                                  30%                  7%         Regulation of markets       10%     37%                               33%                            15%

global presence and have your content published on
                                                                                                                                                                                                                                                                                                                                                                                                                                       Clerks/Administrators           13%       32%                    28%                      19%       6%              Market stability      12%        24%                   28%                    30%
                                                                                                                                                                                                                                                                            We realised
                                                                                                                                                                                                                                                                           “We  realisedthat
                                                                                                                                                                                                                                                                                         thataapurely
                                                                                                                                                                                                                                                                                                 purelyAI-driven
                                                                                                                                                                                                                                                                                                         AI-driven approach
                                                                                                                                                                                                                                                                                                                 approach
                                                                                                                                                                                                                                                                                                                                                                                                                                       Legal and compliance
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          Structure of the
                                                                                                                                                                                                                                                                                                                                                                                                                                                                       10%     31%                     37%                         16%                                             18%             34%                            37%                              7%
                                                                                                                                                                                                                                                                                   can be
                                                                                                                                                                                                                                                                           can be very    very difficult
                                                                                                                                                                                                                                                                                       difficult          to manage.
                                                                                                                                                                                                                                                                                                 to manage,”  says Holman.                                                                                                                                                                                                                               human workforce

                                                                                                                                                                                                                                                                                                                                                                                                                                                             Sales     10%     24%               43%                              19%
                                                                                                                                                                                                                                                                           “You might exclude them from strategies that                                                                                                                                                                                                                                         Very positive    Positive       Neutral       Negative        Very negative     Don't know

                                                                                                                                                                                                                                                                           you don’t want to engage in, like market timing,                                                                                                            General management              11%      23%              33%                       29%

                                                                                                                                                                                                                                                                           and occasionally, without human oversight, they                                                                                                                                                                                                                           Q4.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      Q4.How much do you think your own job will be
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     changed
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    How  much by
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               do A.I.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  you and
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       thinkmachine
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             your ownlearning   technology
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       job will be changed by
                                                                                                                                                                                                                                                                           might find ways to engage in them.”
                                                                                                                                                                                                                                                                                                                                                                                                                                                    Completely        Substantially    Moderately   Little    Not at all    Don't know

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     over
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    AI and the medium
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           machine       andtechnology
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   learning   longer terms?
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         over the medium and

ITR.com, our social media channels, shared with our
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    longer terms?
                                                                                                                                                                                                                                                                                                                                                                                                                                        Q2.
                                                                                                                                                                                                                                                                                                                                                                                                                                      InQ2. In which
                                                                                                                                                                                                                                                                                                                                                                                                                                          which        financial
                                                                                                                                                                                                                                                                                                                                                                                                                                                financial servicesservices sectors
                                                                                                                                                                                                                                                                                                                                                                                                                                                                   sectors do      do you
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              you expect AI and                                                       Over the next 3 years       16%             48%                                         30%                      5%
                                                                                                                                                                                                                                                                                                                                                                                                                                        expect learning
                                                                                                                                                                                                                                                                                                                                                                                                                                      machine   A.I. and to
                                                                                                                                                                                                                                                                                                                                                                                                                                                          machine
                                                                                                                                                                                                                                                                                                                                                                                                                                                            have thelearning  to have the impact
                                                                                                                                                                                                                                                                                                                                                                                                                                                                      most transformative  most
                                                                                                                                                                                                                                                                                                                                                                                                                                        transformative
                                                                                                                                                                                                                                                                                                                                                                                                                                      over                impact over the next 5 years?
                                                                                                                                                                                                                                                                                                                                                                                                                                            the next 5 years?                                                                                        Over the next 10 years      14%         51%                                              26%                 5%

                                                                                                                                                                                                                                                                                                                                                                                                                                       (Select
                                                                                                                                                                                                                                                                                                                                                                                                                                      (Select    upthree)
                                                                                                                                                                                                                                                                                                                                                                                                                                              up to  to three)
                                                                                                                                                                                                                                                                            We realised that a purely AI-driven approach                                                                                                                                                                                                                             Over the next 15 years      41%                                 37%                                  12%          6%

                                                                                                                                                                                                                                                                                  can be very difficult to manage.                                                                                                                            Mobile payments and
                                                                                                                                                                                                                                                                                                                                                                                                                                                     digital wallets           41%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                Completely      Substantially      Moderately        Little      Not at all     Don't know

ITR subscribers, newsletter subscribers and more.
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Asset management             40%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Q5.
                                                                                                                                                                                                                                                                                                                                                                                                                                                   Provision of credit
                                                                                                                                                                                                                                                                                                                                                                                                                                         (eg. credit cards; unsecured loans;   37%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     Q5. Where
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Where        inorganisation
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           in your  your organisation     is A.I.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 is AI being  used being
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     today,used
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            and
                                                                                                                                                                                                                                                                                                                                                                                                                                                                car finance)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     today,doand
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    where     youwhere
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   expectdo   you
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          it to be expect   it toinbe
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   introduced       the next 3
                                                                                                                                                                                                                                                                                                                                                                                                                                                        Retail banking
                                                                                                                                                                                                                                                                                                      •JEFF HOLMAN•
                                                                                                                                                                                                                                                                                       Chief Investment Officer, Sentient Technologies
                                                                                                                                                                                                                                                                                                                                                                                                                                                                               31%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     introduced in the next 3 years? (Select only those
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    years?
                                                                                                                                                                                                                                                                                                                                                                                                                                      Stock and trading exchanges              27%                                                                   that only
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    (Select apply)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               those that apply)

                                                                                                                                                                                                                                                                           To prevent this, human portfolio managers are                                                                                                                                       Insurance       26%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Financial analysis/research          31%                      50%

                                                                                                                                                                                                                                                                           there to check that the AI isn’t misbehaving.                                                                                                                                  Hedge funds          25%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    IT      35%                          40%
                                                                                                                                                                                                                                                                           Holman says that portfolio managers will, for                                                                                                                         Investment banking            15%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               Risk management              18%           56%
                                                                                                                                                                                                                                                                           example, run AI-generated strategies through                                                                                                                       Peer-to-peer lending/            14%
                                                                                                                                                                                                                                                                                                                                                                                                                                                   Shadow banking
                                                                                                                                                                                                                                                                           standard performance analytics, like risk                                                                                                                                Corporate finance          12%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             Trading        21%             51%

                                                                                                                                                                                                                                                                           decomposition and performance attributions.                                                                                                                 Private wealth management               11%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             Investment/Portfolio
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    management
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            23%               48%

                                                                                                                                                                                                                                                                           “You are trying to ensure it isn’t generating                                                                                                                                                                                                                              Fraud prevention including
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            25%                43%
                                                                                                                                                                                                                                                                                                                                                                                                                                                         Private equity        10%                                                                                KYC and AML
                                                                                                                                                                                                                                                                           returns in a way you find objectionable, such as

                                                                                   http://ghosts2.thoughtleadershipconsulting.com
                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Other        1%                                                                       Credit approval process            22%               43%
                                                                                                                                                                                                                                                                           systematic exposure to well-known risk factors
                                                                                                                                                                                                                                                                           or through excessive concentration,” he adds.                                                                                                                                                                                                                                                        Sales       12%      48%

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Administration           21%             37%

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           Legal and compliance             15%         42%

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             Today        Within the next 3 years

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                                                                                    /aviation-IFRS16

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    CHART 2

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  To minimise the impact of IFRS 16 existing
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   leases will be renegotiated and standard
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       terms for new leases will change

                                                                                                                             FOREWORD
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            AGREE             DISAGREE

                                                                                                                                                                         Pieter Burger,      pressures from infrastructure, labour and potentially                                                                                                                      Aircraft leasing has rapidly become an integral part                          Chart 1
                                                                                                                         3                                               Partner, Deloitte   fuel, and competitive pressures provide further               7                                                                                               8            of aviation finance. Operating leases offer low initial                                                                                                                                           10

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     90%                                                                                 2%
                                                                                                                                                                                                                                                                                                                                                                                                                                                      What level of impact will the adoption of IFRS 16

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                AIRLINES
                                                                                                                                                                                             headaches.                                                                                                                                                                 capital outlays, simpler risk management and enhanced                         have on your business?
                                                                                                                                                                                                                                                                                                                                                                        operational flexibility. These are key advantages for
                                                                                                                                                                                             And finally, IFRS 16 Leases is just around the corner
                                                                                                                                                                                                                                                                                                                                                                        low-cost carriers, which want to scale quickly, but many

                                                        Balancing the books
                                                                                                                                        Brian O’Callaghan,                                   (effective for annual periods beginning on or after 1
                                                                                                                                                                                                                                                                                                                                                                        full-service airlines are also now enthusiastic lessees.
                                                                                                                                        Partner, Deloitte                                    January 2019), which the industry consensus suggests
                                                                                                                                                                                             will have a notable impact from both an operational,                                                                                                                       Today, 38% of the global fleet of roughly 26,000 aircraft
                                                                                                                                                                                             reporting, and implementation perspective.                                                                                                                                 is leased, according to Airfinance Journal’s Fleet Tracker.                                                                                                38%
                                                                                                                                                                                                                                                                                                                                                                                                                                                         35%

                                                                                                                                                                                                                                                               INTRODUCTION
                                                                                                                             The most recent projections published by The                                                                                                                                                                                               If leasing sustains historic growth, that share will reach
                                                                                                                                                                                             The path to issuance of IFRS 16 has been long and
                                                                                                                             International Air Transport Association (IATA) suggests                                                                                                                                                                                    50% in the next 10 years.
                                                                                                                                                                                             winding, initially being added to the IASB’s agenda in July                                                                                                                                                                                                                                       59%
                                                          IFRS 16 AND AVIATION FINANCE                                       the global airline industry net profit will rise from the
                                                                                                                             $34.5 billion expected in 2017 to a forecast figure of
                                                                                                                                                                                             2006.                                                                                                                                                                      Long before then – from January 2019 – airlines will
                                                                                                                                                                                                                                                                                                                                                                        have to record operating leases on their balance sheets.
                                                                   December 2017                                             $38.4 billion in 2018. The boost in net profit is being         But what does IFRS 16 hold in store for the aviation
                                                                                                                                                                                                                                                                                                                                                                        Under IFRS 16 this means recognising leased aircraft as
                                                                                                                             fuelled by robust demand, reduced finance costs and             finance industry? It is clear that the impact on airlines
                                                                                                                                                                                                                                                                                                                                                                        right-of-use assets and rental payments as liabilities.
                                                                                                                             operational efficiencies, and will translate to the fourth      is far more pronounced than their financing partners.                                                                                                                                                                                                       56%                                   39%                                 58%
                                                                                                                             consecutive year of sustainable profits for the airline         Substantial new assets and liabilities will appear on                                                                                                                      According to Fleet Tracker data, approximately $325                         OVERALL                               AIRLINES                           LESSORS
                                                                                                                             industry.                                                       airline balance sheets, while reported profit and                                                                                                                          billion of aircraft assets will transfer to airline balance
                                                                                                                                                                                             performance measures will be impacted.                                                                                                                                     sheets as a result. It comes therefore as no surprise                    Moderate impact                      Significant impact
                                                                                                                             The positive macro fundamentals underpinning the
                                                                                                                                                                                                                                                                                                                                                                        that aviation experts agree that the industry will be
                                                                                                                             airline industry growth have also benefitted the aviation       Perhaps most significantly, the impact on individual
                                                                                                                                                                                                                                                                                                                                                                        affected by IFRS 16.
                                                                                                                                                                                             airlines will depend on their particular financing and

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     73%                                                                                 25%
                                                                                                                             finance industry. Lessors have experienced strong

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                LESSORS
                                                                                                                             demand for narrow body jets by both airlines and                leasing structures, and may be very different from the                                                                                                                     For this report, we surveyed 381 executives from
                                                                                                                             investors, and new-order delivery lags suggest that             impact on their peers.                                                                                                                                                     airlines, lessors, investors and other sector stakeholders
                                                                                                                             there is no sign of such demand abating in the near-                                                                                                                                                                                       globally (see About the survey section for methodology).
                                                                                                                                                                                             It is less clear how the market will approach the
                                                                                                                             term.                                                                                                                                                                                                                                      Of them, 91% predict at least a moderate impact from
                                                                                                                                                                                             key judgement areas in the standard such as the
                                                                                                                                                                                                                                                                                                                                                                        IFRS 16 on aviation.
                                                                                                                             That said, lessor optimism emanating from the forecast          discount rate assumption which may have the largest
                                                                                                                             profit projections and strong macro demographics has            quantitative impact on the lease asset and liability                                                                                                                       Most airlines feel prepared for this shift, with 90%
                                                                                                                             been tempered by the challenges which the industry              valuations, and how the market will perceive, and                                                                                                                          telling our survey they have sufficient or comprehensive
                                                                                                                             faces.                                                          respond to, the anticipated impacts.                                                                                                                                       understanding of IFRS 16, confidence that is matched
                                                                                                                                                                                                                                                                                                                                                                        by the wider industry, only 9% of which admit little or no
                                                                                                                             The profitability outlined above has improved the airline       To provide perspective on the market sentiment,
                                                                                                                                                                                                                                                                                                                                                                        comprehension of the new accounting standard.
                                                                                                                             industry’s credit profile, which, together with increased       Deloitte and Euromoney Institutional Investor Thought
                                                                                                                             liquidity and investor appetite, has contributed to lease       Leadership have teamed up to prepare this report on                                                                                                                        Worth noting, though, is a difference in understanding
                                                                                                                             rate compression in recent periods, impacting lessor            the impact of IFRS 16 on the aviation finance industry.                                                                                                                    of IFRS 16’s accounting implications and of its
                                                                                                                             margins.                                                                                                                                                                                                                                   operational impact. For while there is broad consensus
                                                                                                                                                                                             The report contains perspectives gleaned from 381
                                                                                                                                                                                                                                                                                                                                                                        on how the standard will affect various financial metrics,
                                                                                                                             The recent airline struggles of Air Berlin, Alitalia,           senior executives surveyed from the aviation finance
                                                                                                                                                                                                                                                                                                                                                                        there is considerably less agreement on how it might
                                                                                                                             Monarch, and VIM have provided a timely reminder of             industry as well as in-depth interviews conducted with
                                                                                                                                                                                                                                                                                                                                                                        influence airlines’ decisions to lease or buy aircraft.
                                                                                                                             industry fragilities. International and US tax reform, cost     senior industry executives and independent experts. It
                                                                                                                                                                                                                                                                                                                                                                        Of course, such choices do not occur in isolation.
                                                                                                                                                                                                                                                                                                                                                                        Oil prices, interest rates and competitive pressures
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