Thursday, 18 July 2019
Climbing Mount Improbable: Changing an investment bank’s culture can be a slow, painful and fraught endeavour. Driving fundamental change in the midst of a cataclysmic market dislocation and in the absence of a transformational merger is no mean feat. One bank did just that without sacrificing business execution, at the same time as pre-empting regulatory outcomes on compensation and generating one of the highest ROEs in the business. Credit Suisse is IFR’s Bank of the Year.
One of the worst-hit banks in the financial crisis, UBS’s road to recovery has seen a state bail-out, fund raisings, restructuring, cost-cutting and retrenchment. Having apparently got past the worst, it has formulated a three- to five-year plan that it believes will put it back near the top of the investment banking hierarchy. It is a long time to wait, but turning around such a dysfunctional organisation takes time. Justin Pugsley reports.
The success of Citigroup’s international securities and banking business has surprised rivals who predicted its demise. Yet at home problems are proving depressingly persistent. Having completed a comprehensive restructuring, the bank had hoped to put its recent woes behind it. But with the bank shedding staff and facing the logistical nightmare of overseeing a vast banking empire, it is hard for management to maintain focus. David Rothnie reports.
Bank of America got more than it bargained for when it acquired Merrill Lynch in September 2008. The healthy Charlotte-based bank bought a US$50bn company that was rapidly disintegrating. By the end of the year, Merrill Lynch had amassed massive write-downs, which led to a fourth quarter loss of US$21.5bn. The combined group also faced rising losses in consumer loans, and numerous lawsuits. Christian Murray reports.
Deemed too big to fail, Royal Bank of Scotland was saved in late 2008 by the UK government through an emergency nationalisation, the scale of which had not been seen for many decades. Since then, the firm has found itself the focus of any number of debates, including the morality of bankers’ pay. Working against that backdrop is a new management team that is trying to generate a return for the taxpayer. Their task is an unenviable one, as Mark Baker reports.
It has been a busy year for central banks, most of which have been conducting emergency monetary policy operations over the last 18 months to try to alleviate the global recession. These operations must eventually end, but as asset purchase plans draw to a close and the global economy improves, it remains unclear how such exit strategies will be executed. Oxford Economics’ Scott Livermore reports.
Conditions may be right for a global equity sell-down by governments of bank shares. The political will is certainly in place, as government support for bankers has hardly been popular among voters. But not all banks concerned are fit and ready. Even for those that are, the process is likely to take time, nullifying the political capital politicians will earn by pushing the process. David Rothnie reports.
Japan’s banks will end 2009 in better shape than they entered it. But they face considerable headwinds. Although the biggest banks escaped the financial crisis largely undamaged and in some cases internationally enhanced, they nevertheless operate amid persistent deflation and must raise billions of dollars in capital to bolster themselves for the future. The stakes – and opportunities – are immense. Chris Wright reports.