Lessons Learned from the Financial Crisis

Why Should Banks Do Scenario Planning?

(Part 1 of 20) 2:19

In times of high uncertainty, executives often choose one of two paths: They panic like a deer caught in headlights, or they simply make low-information, “gut” decisions. Scenario planning offers a more disciplined approach.

For additional information on scenario planning and global banking download our free video-enhanced eBook Global Banking 2020: Foresight & Insights.

Also posted in Banking: Future Growth Models, Risk Management, Scenario Planning, Video 7: Global Banking 2020: Using Scenario Planning to Guide Strategies |

What is a SIFI?

(Part 1 of 14) 2:14

A SIFI (Systemically Important Financial Institution) is a financial institution considered sufficiently large, complex and interconnected that – should it experience serious financial issues – could cause significant damage to other financial institutions and the global financial system.

Also posted in Governance, Managing Regulations, Video 5: SIFIs Rules Are Recasting Global Banking |

The Tension between ‘Too Big to Fail’ and Moral Hazard Continues

7:05 (Part 7 of 14)

On the one hand, SIFI designation can restrict banks with tighter rules. On the other hand, the designation could cause some investors and counterparties to view a SIFI as more likely to get bailed out if trouble arises. Regulators continue to struggle to find the right balance.

Also posted in Governance, Managing Regulations, Regulatory Arbitrage, Risk Management, Video 5: SIFIs Rules Are Recasting Global Banking |

Will SIFI Designations Succeed?

4:52 (Part 8 of 14)

Many observers see the SIFI designation process as an improvement over how risks were governed in the past. Ideally, a fully functioning SIFI regime would provide a seamless regulatory process across borders. But variations in how different jurisdictions might handle an actual crisis mean that much uncertainty remains.

Also posted in Governance, Managing Regulations, Regulatory Arbitrage, Risk Management, Video 5: SIFIs Rules Are Recasting Global Banking |

The Business Impact and Cost of Resolution and Recovery Plans

7:00 (Part 9 of 14)

Living Wills – or Recovery and Resolution Plans – are costly and time-consuming to prepare. But banks are gaining important benefits from the exercise, including a deeper understanding of their organizations, particularly when it comes to capital and liquidity issues.

Also posted in Governance, IT Investments, Managing Regulations, Risk Management, Video 5: SIFIs Rules Are Recasting Global Banking |

A New Category of Banks Beyond SIFIs

3:19 (Part 10 of 14)

The largest of large banks – perhaps the top five global banks – could face onerous restrictions as regulators try to cap the size of universal institutions. Will creating this “last bucket” category dim the outlook for bank mergers and acquisitions?

Also posted in Governance, Managing Regulations, Risk Management, Video 5: SIFIs Rules Are Recasting Global Banking |

The Outlook for Mergers and Acquisitions

3:13 (Part 11 of 14)

Are there too many financial institutions in the world competing for existing business? Some observers say yes. Yet, potential restrictions on mergers and acquisitions to prevent the creation of megabanks could make consolidation more difficult.

Also posted in Banking: Future Growth Models, Governance, Managing Regulations, Risk Management, Video 5: SIFIs Rules Are Recasting Global Banking |

Do Non-regulated Institutions Have an Advantage?

4:32 (Part 12 of 14)

Are banks at a disadvantage compared with unregulated non-bank institutions, such as hedge funds and money market funds?

Also posted in Banking: Future Growth Models, Governance, Managing Regulations, Video 5: SIFIs Rules Are Recasting Global Banking |

Recommendations for CEOs of Global Banks

5:27 (Part 13 of 14)

Key considerations for bank CEOs include understanding more deeply their customers and the services they need, identifying growth opportunities and using technology to strengthen their firms’ ability to adapt nimbly to changing conditions.

Also posted in Banking: Future Growth Models, Customer Focused Products, Emerging Markets, Governance, IT Investments, Managing Regulations, Retail Banking, Risk Management, Video 5: SIFIs Rules Are Recasting Global Banking |

Identifying Future Risks

3:31 (Part 14 of 14)

As banks increasingly rely on automated systems to meet customer needs, security issues around information technology will become critical. The relationship between risk and executive compensation models also will be an area of greater focus.

Also posted in Governance, Innovation Revisited, IT Investments, Managing Regulations, Risk Management, Transparency, Video 5: SIFIs Rules Are Recasting Global Banking |

Will Banks Continue to Pursue Complex Investment Vehicles or Focus on Core Competencies?

4:16 (Part 5 of 7)

Some customers will still require complex instruments. But what are the capital implications for the bank regarding how it prices the product and what can work for the investor?

Also posted in Banking: Future Growth Models, Innovation Revisited, Managing Regulations, Video 3: Putting Together the Global Banking Puzzle |

Recapitalization in the Asia-Pacific Region

2:35 (Part 2 of 8)

What worries banks in the Asia-Pacific region most about Basel III is the liquidity measures. Meantime, banks there are shifting to more medium- and long-term funding.

Also posted in Emerging Markets, Managing Regulations, Video 2: Regulatory and Growth Challenges Face Global Banks |

Regulation’s Effect on Existing Business Lines and Talent Retention

5:42 (Part 4 of 8)

Should financial services companies try to retain top proprietary trading and fun management staff now heading towards the exits in anticipation of the regulatory changes?

Also posted in Banking: Future Growth Models, Managing Regulations, Video 2: Regulatory and Growth Challenges Face Global Banks |

How Do Banks Rebuild Trust in Emerging and Developed Markets?

4:36 (Part 8 of 8)

For now the strategy will likely be to keep the image under the radar.

Also posted in Banking: Future Growth Models, Emerging Markets, Rebuilding Trust, Transparency, Video 2: Regulatory and Growth Challenges Face Global Banks |

Responding to the New Wave of Re-regulation

3:37 (Part 1 of 11)

As the finer details of bank regulation evolve, global banks should concentrate on understanding their core businesses, where they are making money and where profits are most likely to come from in the future.

Also posted in Banking: Future Growth Models, Managing Regulations, Risk Management, Video 1: Banking: The Road Ahead |

Governance Challenges

3:42 (Part 2 of 11)

Despite uncertainty over how all the new regulations will be interpreted by regulators, banks will need better internal dashboards to meet new requirements and to help shape them.

Also posted in Banking: Future Growth Models, Governance, Video 1: Banking: The Road Ahead |

Capital Requirements and Basel III

4:30 (Part 3 of 11)

Uncertainty over capital requirements makes it harder to form a strategic view, but at least one thing seems certain: Stricter requirements will reduce the return on assets.

Also posted in Banking: Future Growth Models, Managing Regulations, Video 1: Banking: The Road Ahead |

How Level Is the Playing Field?

2:36 (Part 5 of 11)

It will take some time for the banking industry to sort out how all the new regulations will be implemented. Expect the regulatory playing field to be uneven for a time, perhaps offering opportunities for regulatory arbitrage.

Also posted in Banking: Future Growth Models, Regulatory Arbitrage, Risk Management, Video 1: Banking: The Road Ahead |

Regulatory Impact on Return on Equity and Dividends

4:51 (Part 6 of 11)

Expect returns on equity to go down, the cost of capital to go up and margins to shrink. Banks will have to adapt. There is a lot of interest in migrating to businesses that require less capital and liquidity, and that are more fee based. But what does that mean for banking when it comes to credit creation and intermediation.

Also posted in Banking: Future Growth Models, Regulatory Arbitrage, Risk Management, Video 1: Banking: The Road Ahead |

Models for Future Growth

3:35 (Part 7 of 11)

While it is difficult to get a clear picture of future growth models until the dust settles around all of the new regulation, a couple of things stand out: There will be a much sharper focus on customer needs, and investments in emerging markets, already underway, will climb significantly higher.

Also posted in Banking: Future Growth Models, Customer Focused Products, Emerging Markets, Video 1: Banking: The Road Ahead |