Guide to Analysing Companies

Conflict of interest
An occasion where the interests of a person or firm in one guise
are in conflict with the interests of a person or firm in another
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guise. For example, a bank advising a company in its battle
against a takeover will have a conflict if it is also a share-
holder in the bidding company. Similarly, an analyst who is
likely to be rewarded for helping a company with its flota-
tion may have a conflict if he or she is also expected to make
an independent recommendation of the company’s merits to
would-be investors. chinese walls between different parts
of the same investment bank or securities firm are de-
signed to reduce such conflicts of interest. But they can never be
high enough to stop conflicts altogether. The excesses of the
dotcom boom (and subsequent bust) forced regulators on both
sides of the Atlantic to re-examine the nature of possible con-
flicts and to tighten up the rules where they could.
Consensus
The common name for the International Agreement for Guide-
lines on Officially Supported Export Credit. The consensus is an
agreement between member countries of the oecd on how far
they will go in subsidising the rate of interest on loans to
buyers of their country’s exports. The maximum interest rates
that they agree to permit vary according to whether the import-
ing country is rich, intermediate or poor.
Consortium bank
A bank owned by a group of other banks from a number of dif-
ferent countries. Consortium banks were popular in the 1970s
when they were seen as a way to gain a foothold in the markets
represented by all the banks in the consortium. Many of these
consortia have since been disbanded because banks either
become confident enough to go into new markets on their own
or decided that the markets were not sufficiently interesting.