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Things worth reading: 10th March 2010

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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.

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The Telegraph
Dresdner economist David Owen sues bank for £500k
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American Express Will Pay You $5 an Hour to Volunteer
The Daily Green
Regulators home in on derivativesFinancial Times

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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