Some early hints about the scope of Project “New BAC” BofA to slash costs by 15% Bank of America is poised to announce a three-year programme to slash costs by as much as 15 per cent – or $10bn – shedding up to 40,000 jobs in the process. Continue reading Some early hints about the scope of Project “New BAC”
There is the usual talk that increased bank capital requirements will curtail bank lending. I have been a fan of David Cameron, but he is wrong here. His inexperience is showing through. This from E&Y (pdf) who are as guilty. The combination of regulatory change, lower leverage and an uncertain economic outlook means that banks may struggle to lift return-on-equity toward their 12-15% targets. We forecast total assets of the UK banking sector to expand at a significantly reduced rate of just 3%pa during 2011-15. Given these considerable headwinds, there remains a risk that credit shortages could restrict the pace … Continue reading David Camerons pending argument to leave banks unregulated is wrong and reeks of lobbying
John Kay is a smart author and columnist focussed on economics. This piece is smart and incisive. I particularly liked this quote and the reference to some of the financial products that contributed to the 2008 collapse [emphasis mine] Economics fails to resolve exceptions to the rule | ft.com The behaviour of great industrialists such as Henry Ford or Steve Jobs, or great investors such as Warren Buffett and George Soros, cannot be predicted by general rules. If such prediction were possible, their actions would have been anticipated and these individuals would not have been innovative or become rich. And … Continue reading Economics fails to resolve exceptions to the rule
Bank of America is now in the category “beleaguered“. Bank of America has reshuffled its top ranks, ousting Sallie Krawcheck from its wealth management division in an effort to streamline the beleaguered financial group. Continue reading Bank of America is now in the category “beleaguered“
Probably prescient choice of words. Deutsche Bank’s chief executive has said he may have to consider cutting costs in a stark warning Banks also needed to ask themselves more questions about the usefulness of many of their services for the real economy. Continue reading Deutsche Bank’s chief executive has said he may have to consider cutting costs in a stark warning
A remarkable statistic from a small bank in Nebraska. Banking in a Time of Over-Regulation | WSJ Consider a conversation I had recently with a banker in Nebraska. For the first time, he said, his bank now devotes more work hours to compliance than to lending. Specifically, he has 1.2 employees on compliance for every one employee focused on lending and bringing in business. Continue reading 1.2 employees on compliance for every one employee focused on lending and bringing in business | Nebraska banker
With one speech Lagarde, the new head of the IMF makes it clear that she believes the state of economies and banks is running severe risks that are not being accepted by politicians both in Europe and US. This follows the similar but softer theme from Bernanke. Lagarde calls for urgent action on banks European banks need “urgent recapitalisation” to stop the spread of the eurozone’s sovereign and financial crisis; the US must act to stop a downward spiral in house prices; and both need credible long-term fiscal policies that allow spending to continue to support growth in the short … Continue reading Lagarde (IMF) calls for action on Banks
Much has been written on the Global Financial Crisis (GFC) and the focus has leant heavily on re-regulation, and higher bank capital. However there remains a nagging sense that nothing really has changed and that it could happen again. This piece from Wray at Levy is a refreshing look at some practical aspects of the GFC that resonate more clearly as potential foundational causes and that remain in place, and are not dealt with by regulation, at least not directly. The first is financial leverage amongst banks. Lessons we should have learned from the Global Financial Crisis : Wray – … Continue reading Some fresh thinking points to bank practices as root cause of the Global Financial Crisis – Wray, Levy Institute
I am watching “’Inside Job’ tonight. Its a documentary on the financial crisis narrated by Matt Damon. The thing that is fascinating me is the dates. Many of the senior people interviewed including bankers and government are noting 2009 as the time they saw a problem. I searched my own blog, and the first indications of a problem were are least two years earlier. All I do is read the press. I am not involved directly in investment banking, but am directly involved in retail financial services. Yet this blog had indications of the eventual problem as early as 2007, … Continue reading Where were the financial media in 2007 ?
There is a lot of downsizing going in with banks. My speculation is that this will broaden into a more sweeping breakup of universal banks. As a prelude, I will start a scorecard of employee shifts amongst the large banks. Here is the first installment. Continue reading Banks employee reduction assessment – 1
Bankwatch 