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What’s next for global banks – McKinsey
In 2008, as the credit crisis broke, banks
underwent near-death experiences on a massive scale. Last year, many
enjoyed a recovery that was nearly as abrupt. In the intense uncertainty
that ensued, bankers around the world have rightly shifted their focus
away from growth and toward survival as they confront ambiguity about
markets, risk, regulation, and demand.
Amid such extreme mood swings, long-term structural changes now under
way will fundamentally affect banking in the years to come. To
understand these changes, we undertook research that combined a
historical view of the industry with an analysis of 25 global banks to
see how various portfolios of banking businesses and geographic
distributions would fare under different macro and regulatory scenarios.
Among our findings:
- Under a scenario of lower global economic growth and tough
regulatory restrictions, all but emerging-market banking giants will
probably destroy value over the next four years. Funding costs will
remain high, further hurting profitability.
- Without any management moves, banks of every type will need more
capital—as much as $600 billion over the next five years for the 25
banks we modeled. That suggests a real danger of a capital crunch,
further forced asset sales, and the need for additional government help.
- The range of performance by banks using similar business models will
widen. Big European banking groups, for example, will see returns on
equity (ROE) ranging from 9 to 18 percent.
Other news …
15 core banking system vendor iRanking table – inntron
Banking fraud 'moves to internet' – BBC
Rescued banks have not mended their ways, says Commons
inquiry – The Telegraph
Dresdner economist David Owen sues bank for £500k –
American Express Will Pay You $5 an Hour to Volunteer
– The Daily Green
Regulators home in on derivatives – Financial Times