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MONITORING BANK BUSINESS MODELS
Steve Slater of the IFR has penned a piece on the ECB's monitoring of bank business models in the January 9th edition of the IFR. It makes for interesting reading. The article argues with the background of the ECB report that many bank business models face structural challenges. The ECB is quoted as saying The key risk that stands out relates to bank's business models and profitability. Both are being challenged by high levels of asset impairments and a protracted period of low interest rates. The article also points out restructuring for many European banks started later than their American counterparts, resulting in retrenching only now in terms of clients, products and risk appetite. European bank ROE has lagged well behind US rivals for years and the means to catch up... cutting expenses and growing revenues appears to be a challenge, the article indicates. All of this of course is tied to modest risk appetite on one hand and growing needs to make higher returns and resultant tension this causes for many banks. More Banking Twister to come?
Steve Slater of the IFR has penned a piece on the ECB's monitoring of bank business models in the January 9th edition of the IFR. It makes for interesting reading. The article argues with the background of the ECB report that many bank business models face structural challenges. The ECB is quoted as saying The key risk that stands out relates to bank's business models and profitability. Both are being challenged by high levels of asset impairments and a protracted period of low interest rates. The article also points out restructuring for many European banks started later than their American counterparts, resulting in retrenching only now in terms of clients, products and risk appetite. European bank ROE has lagged well behind US rivals for years and the means to catch up... cutting expenses and growing revenues appears to be a challenge, the article indicates. All of this of course is tied to modest risk appetite on one hand and growing needs to make higher returns and resultant tension this causes for many banks. More Banking Twister to come?
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