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European Bank Barometer
 

European Bank Barometer

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Ernst & Young’s European Banking Barometer is a bi-annual study to determine the views of senior bankers across the major banking markets in Europe. The research focuses on the current ...

Ernst & Young’s European Banking Barometer is a bi-annual study to determine the views of senior bankers across the major banking markets in Europe. The research focuses on the current macro-economic environment and how it will impact their organization and the banking industry as a whole over the next six months.

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    European Bank Barometer European Bank Barometer Presentation Transcript

    • European Bank BarometerWeaker confidence and continued internalfocus makes for a poor 2013 outlookAutumn 2012
    • About the studyErnst & Young’s European Banking Barometer is a bi-annual study to determine the views of seniorbankers across the major banking markets in Europe. The research focuses on the current macro-economic environment and how it will impact their organization and the banking industry as a whole overthe next six months.The Autumn / Winter 2012 Barometer consists of 269 interviews with senior bankers across 11 marketsin Europe – Austria, Belgium, France, Germany, Italy, the Netherlands, the Nordics, Poland, Spain,Switzerland and the UK.The fieldwork, consisting of telephone interviews and online questionnaires, was conducted throughoutAutumn 2012 by two external research agencies on Ernst & Young’s behalf. The aim was to interviewsenior bankers at a range of institutions representing at least 50% of the market, defined as assetsowned.Interviews were not conducted with subsidiaries of member / group banks, and a range of bank typeswere interviewed in each market to ensure a fair reflection of the industry in each country.The results are presented in an aggregate format and shown in percentages. Please note that wherecharts do not add up to 100%, it is because participants either chose not to answer the question orselected ‘Don’t know’ or ‘Not applicable’ as their answer. Where possible weve compared answersagainst those given in Spring 2012 but some questions have changed or are new.We would like to thank all the research participants for their contribution to the study.Page 2 European Bank Barometer Survey results: Belgium
    • European OverviewFurther cost cutting measures, restricted lending and consolidation pressures will define an even more cautiousbanking industry in the next six months.Cost cutting to bite in first half of 2013 with more job losses as crisis refuses to fade► Cost cutting is now second only to compulsory regulation and risk management in European banks’ priority list.► Cutting costs, streamlining processes and minimizing non-essential spend are all now in the top five priorities of banks for the next six months.► Forty-five percent of European banks expect headcount to decrease in the next six months as they struggle to control costs in the low-growth environment.► Banks in the Netherlands and the UK will be worst affected with 70% and 64% of banks respectively expecting to decrease their headcount.► Banks in the Nordics are more optimistic but even in this region 22% are expecting to reduce headcount.► Most cuts will be in head office functions with 58% of banks expecting cuts in this area.► The biggest cuts are expected from the universal and corporate / investment banking sectors, where over half of respondents expect to make headcount reductions.Growing concerns about the European economy and sovereign debt crisis dominate the industry► There are rising concerns about the impact of the Eurozone debt crisis in the next six months.► Banks in Spain, France, Switzerland and Italy are most worried. Banks in the Netherlands and Belgium are the least worried.► Macro-economic worries continue to dominate the European banking industry with banks split on whether their economy will remain the same (40%) or worsen (42%).► The outlook is worse now then when we launched the Spring 2012 edition of the European Banking Barometer.Page 3 European Bank Barometer Survey results: Belgium
    • European OverviewActions in 2013 will result in fewer banks, many of them much smaller, as they struggle with current businessmodels and the capital intensive environment► The industry will be reshaped through consolidation, asset sales and joint ventures, with 47% of banks expecting to see significant consolidation happening in their markets within the next three years.► Almost all Swiss respondents and 78% of Spanish respondents anticipate consolidation, but just 1 in 10 in the UK, and none in Belgium do.► Industry consolidation is most anticipated in wealth management and private banking. Specialist banks are least likely to see consolidation.► Some 30% of banks surveyed intend to sell assets in the next six months, with Spanish and UK banks likely to be the most active.Banks are placing renewed emphasis on increasing cash reserves and deleveraging► Pressure to build capital buffers means that banks are pushing to increase the size of their cash reserves through a mix of actions.► Fifty-six percent plan to introduce more incentives to boost customer deposits, heightening the war for deposits in some markets.► Fifty-three percent are aiming to reduce the size of their balance sheet.Credit remains tight across Europe and banks are increasingly nervous about the impact of non-performingloans on their books, which is having a knock-on effect on their lending policies► Eighty-five percent of banks expect provisions to remain at their current level or increase in the short-term.► Worst hit are Poland, Spain and Italy where 67%, 56% and 54% of respondents respectively expect to increase provisions. Best performing are the Nordics where only 23% expect an increase in provisions, closely followed by 30% in Austria and 32% in the UK.Page 4 European Bank Barometer Survey results: Belgium
    • Economic environment & financial marketsPage 5 European Bank Barometer Survey results: Belgium
    • Belgian banks less confident than European averageHow do you expect the general economic outlook in your country to change over the next sixmonths?Autumn 2012 Spring 2012 100 2 24 80 28 60 36 43 40 20 36 24 4 3 0 Belgium Europe Very negative Slightly negative Neutral Slightly positive Very positivePercentage of respondents answering Spring 2012: What’s your outlook for the business environment over the next six months? Comments: • Compared to Spring 2012 Belgian banks have become less confidentPage 6 European Bank Barometer Survey results: Belgium
    • European banks show indications of a fall in optimismregarding the economic outlook over the next six monthsHow do you expect the general economic outlook in your country to change over the next sixmonths?Autumn 2012 Spring 2012 Austria 20 80 Austria 24 41 35 Belgium 67 33 Belgium 24 36 40 Europe 19 39 41 Europe 30 43 27 France 37 11 52 France 28 40 32 Germany 4 48 48 Germany 29 49 22 Italy 38 36 26 Italy 34 42 24 Netherlands 11 47 42 Netherlands 31 42 27 Nordics 26 48 26 Nordics 25 44 31 Poland 6 17 78 Poland 18 63 18 Spain 11 30 59 Spain 38 28 34 Switzerland 4 59 37 Switzerland 13 63 25 UK 41 27 32 UK 51 43 6 0 20 40 60 80 100 0 20 40 60 80 100 Improve Remain at today’s levels Worsen Positive Neutral NegativePercentage of respondents answering Spring 2012: What’s your outlook for the business environment over the next six months? Comments: • Compared to Spring 2012 Belgian banks have become less optimistic in Autumn 2012. None of the Belgian banks expects the economy to improve in the next six months. • UK is most optimistic with 41% foreseeing an improvement, closely followed by Italy and France. Poland is the most pessimistic country: 78% worsening.Page 7 European Bank Barometer Survey results: Belgium
    • European debt crisisPage 8 European Bank Barometer Survey results: Belgium
    • Belgian banks expect a decreased impact of thesovereign debt crisis over the next six monthsWhat level of impact do you think the Eurozone sovereign debt crisis will have on the bankingsector in your country over the next six months, in comparison to the previous six months?Autumn 2012 Spring 2012 100 100 9 17 30 80 26 80 42 60 50 60 42 40 45 40 38 20 33 20 17 28 20 0 3 0 Belgium Europe Belgium Europe Significantly decreased impact Slightly decreased impact No impact Yes, a minor impact Yes, a substantial impact About the same Slightly increased impact Significantly increased impact Comments: • Compared to the Europe, Belgian banks are much more optimistic. 20% of the European banks expect a decreased impact against 83% of the Belgian banks. • In Europe 35% of the banks expect an increased impact of the sovereign debt crisis over the next six monthsPage 9 European Bank Barometer Survey results: Belgium
    • Although there is a slight improvement in the sentimentat a European level, there are some notable exceptionsWhat level of impact do you think the Eurozone sovereign debt crisis will have on the bankingsector in your country over the next six months, in comparison to the previous six months?(cont’d)Autumn 2012 Spring 2012 Austria 20 50 30 Austria 64 28 8 Belgium 17 83 Belgium 30 42 28 Europe 35 45 20 Europe 42 38 20 France 44 41 15 France 28 54 18 Germany 32 52 16 Germany 55 31 14 Italy 44 31 26 Italy 44 34 22 Netherlands 15 60 25 Netherlands 32 38 30 Nordics 17 70 13 Nordics 29 42 29 Poland 17 72 11 Poland 42 48 10 Spain 67 11 22 Spain 56 24 20 Switzerland 41 37 22 Switzerland 63 25 13 UK 36 55 9 UK 33 41 27 0 20 40 60 80 100 0 20 40 60 80 100 Increased About the same Decreased Yes, a substantial impact Yes, a minor impact No impact Comments: • Belgium is the most optimistic country with 83% of the banks foreseeing a decreased impact of the sovereign debt crisis. Spain is by far the most pessimistic country with 67% of the banks foreseeing an increased impact. • Besides Belgium, in Autumn 2012 the Netherlands is the only country with more banks expecting an decreased impact than an increased impact (25% decreased vs 15% increased)Page 10 European Bank Barometer Survey results: Belgium
    • Business outlook and focus areasPage 11 European Bank Barometer Survey results: Belgium
    • Belgian banks less confident than in Spring 2012How do you expect your bank’s overall performance to change over the next six months?Autumn 2012 Spring 2012 100 5 100 20 23 80 32 80 50 60 60 39 70 67 40 40 50 20 20 21 10 10 0,2 0 3 0 Belgium Europe Belgium Europe Weaken significantly Weaken slightly Very poorly Fairly poorly Fairly well Very well Stay the same Strengthen slightly Strengthen significantly Comments: • Confidence levels of Belgian banks decreased sharply. In Spring 2012 10% of the banks expected that their performance would weaken over the next six months, against 50% in Autumn 2012. • Compared to European levels Belgian banks became much less confident in Autumn 2012, while in Spring 2012 the outlook of Belgian banks was almost identical to the European levelsPage 12 European Bank Barometer Survey results: Belgium
    • Major changes in sentiment were evident across EuropeHow do you expect your bank’s overall performance to change over the next six months?(cont’d)Autumn 2012 Spring 2012 Austria 44 33 22 Austria 6 68 26 Belgium 50 50 Belgium 20 70 10 Europe 5 32 39 21 3 Europe 23 67 10 0,2 France 4 26 41 26 4 France 16 74 10 Germany 2 23 35 33 6 Germany 14 69 16 Italy 13 38 38 10 Italy 18 76 6 Netherlands 25 45 15 15 Netherlands 32 64 4 Nordics 9 36 55 Nordics 18 76 6 Poland 6 18 29 41 6 Poland 50 48 2 Spain 7 30 41 22 Spain 35 53 10 2 Switzerland 4 31 50 15 Switzerland 13 63 25 UK 59 32 9 UK 24 68 8 0 20 40 60 80 100 0 20 40 60 80 100 Strengthen significantly Strengthen slightly Very well Fairly well Fairly poorly Very poorly Stay the same Weaken slightly Weaken significantly Comments: • The UK is most optimistic with 59% saying the performance will strengthen. • Polish and Dutch banks changed from the most positive outlook in Spring 2012 to the countries with the slightest positivity in Autumn 2012.Page 13 European Bank Barometer Survey results: Belgium
    • Banks are reacting to continued economic uncertaintyby increasing loan loss provisions...Over the next six months, what do you expect your bank’s total provisions against loan losses todo?Autumn 2012 Austria 10 20 40 30 9 Belgium 67 33 Europe 9 35 41 12 2 35 France 7 33 37 19 4 Germany 6 40 42 8 4 Italy 18 36 33 13 Netherlands 10 20 45 20 5 Nordics 9 14 59 14 5 41 Poland 17 50 28 6 Spain 19 37 37 7 Switzerland 44 52 4 12 UK 32 45 23 2 Decrease significantly Decrease slightly Remain at current levels Increase slightly Increase significantly Comments: • The economic uncertainty is reflected in 44% of banks expecting loan loss provisions (LLPs) to increase over the next 6 month and a further 41% expecting them to remain at their current (elevated) levels. While LLPs remain high it is unlikely that banks will seek to increase lending significantly, constraining revenue growth and potentially perpetuating the economic malaise.Page 14 European Banking Barometer – Autumn / Winter 2012
    • And tightening lending policiesHow do you expect the corporate lending policies of banks in your country to change in each ofthe following sectors over the next six months?Autumn 2012 Spring 2012 Construction 40 22 Real estate 41 12 Commercial real estate 35 24 Construction 39 13 Transport (incl. automotive and shipping) 33 13 Services 38 10 Financial services 31 20 Retail 35 11 Retail and consumer products 27 16 Transport 33 12 SMEs 26 26 Infrastructure 33 12 Energy, mining and minerals 24 19 Automotive 32 10Manufacturing and industrials (incl. chemicals, eng.) 22 22 Tech., media and telecomms 31 13 Media and telecommunications 21 17 Shipping 30 11 Commercial and professional services 20 19 Utilities 27 10 Information technology 20 25 Mechanical engineering 26 8 Healthcare 15 27 Commodities 26 11 Craft 25 13 Chemicals and pharmaceuticals 24 8 Other 12 10 More restrictive Less restrictive Comments: • The outlook for lending across a number of industries will weaken in 1H2013, with construction and commercial real estate (CRE) looking particularly pessimistic. In addition to the relatively poor health of these sectors, this also reflects the higher risk-weightings attached to CRE.Page 15 European Banking Barometer – Autumn / Winter 2012
    • Construction and property will feel the greatest lendingpolicy tightening in 1H2013How do you expect the corporate lending policies of banks in your country to change in each ofthe following sectors over the next six months?*Austria Belgium France Manufacturing* 40 20 Commercial services** Construction 47 16 Transport** 40 10 Information technology Financial services 42 16 Construction 30 30 Manufacturing** Commercial services** 32 21 Energy and mining 20 20 Retail** Energy and mining** 26 5 Healthcare 20 40 SMEs SMEs 26 37 SMEs 20 30 Transport** 33 Commercial real estate 21 26 Commercial services** 10 20 Commercial real estate 67 Manufacturing** 16 26 Financial services 10 20 Construction 67 Retail** 16 32 Media and telecomms 10 30 Energy and mining** 33 Transport** 16 11 Retail** 10 20 Financial services 33 Healthcare 11 47 Commercial real estate 30 Healthcare 33 Media and telecomms 11 37 Information technology 30 Media and telecomms 33 33 Information technology 5 32Germany Italy Netherlands Transport** 50 13 Construction 50 22 Commercial real estate 69 15 Energy and mining** 48 18 Commercial real estate 38 22 Construction 54 23 Financial services 40 10 Media and telecomms 34 19 Financial services 46 23 Retail** 30 15 Financial services 31 28 Transport** 46 15 Construction 25 30 Manufacturing** 31 19 Commercial services** 38 8 Commercial real estate 23 25 Energy and mining** 28 25 Media and telecomms 38 15 Information technology 23 30 Healthcare 28 25 Retail** 38 Media and telecomms 23 15 Transport** 28 13 Information technology 31 15 Manufacturing** 20 30 Commercial services** 25 22 SMEs 31 8 Commercial services** 18 15 Information technology 25 25 Healthcare 15 15 SMEs 18 38 Retail** 22 13 Manufacturing** 15 Healthcare 13 28 SMEs 22 22 Energy and mining** 8 23 More restrictive Less restrictive* Numbers are percentage of respondents answering.** Manufacturing includes industries, chemicals and engineering; Transport includes automotive and shipping, Retail includes consumer products, Energy and mining includes metails and commercial services includes professional services.Where totals do not add up to 100%, remaining respondents answered ‘Remain unchanged or ‘Dont know. Where no data is shown all respondents answered ‘Remain unchanged or ‘Dont know’.Page 16 European Banking Barometer – Autumn / Winter 2012
    • Construction and property will feel the greatest lendingpolicy tightening in 1H2013How do you expect the corporate lending policies of banks in your country to change in each ofthe following sectors over the next six months?*Nordics Poland Spain Commercial real estate 40 25 Construction 59 35 Construction 38 13 SMEs 40 5 Commercial real estate 53 35 Commercial real estate 31 25 Construction 30 25 Retail* 53 24 SMEs 31 38 Retail** 30 10 Commercial services** 41 12 Energy and mining 13 25 Transport** 30 5 SMEs 41 18 Financial services 13 25 Financial services 25 20 Transport** 41 24 Healthcare 13 38 Manufacturing** 25 15 Energy and mining** 35 18 Media and telecomms 13 19 Commercial services** 20 Financial services 35 29 Retail* 13 38 Energy and mining** 15 25 Media and telecomms 29 6 Transport** 13 6 Information technology 15 20 Healthcare 24 6 Information technology 6 50 Healthcare 10 25 Information technology 24 29 Manufacturing** 6 44 Media and telecomms 10 10 Manufacturing** 24 18 Commercial services** 31Switzerland UK Retail** 41 12 Commercial real estate 50 7 Commercial real estate 35 29 Construction 50 Information technology 35 12 Financial services 29 14 Manufacturing** 35 29 Information technology 29 7 Transport** 35 18 Transport** 29 21 SMEs 29 35 Media and telecomms 21 14 Construction 24 24 Retail** 21 7 Financial services 18 29 Commercial services** 14 21 Media and telecomms 12 6 SMEs 14 29 Commercial services** 6 47 Manufacturing** 7 14 Energy and mining** 6 24 Energy and mining** 14 Healthcare 6 41 Healthcare 7 More restrictive Less restrictive* Numbers are percentage of respondents answering.** Manufacturing includes industries, chemicals and engineering; Transport includes automotive and shipping, Retail includes consumer products, Energy and mining includes metails and commercial services includes professional services.Where totals do not add up to 100%, remaining respondents answered ‘Remain unchanged or ‘Dont know. Where no data is shown all respondents answered ‘Remain unchanged or ‘Dont know’.Page 17 European Banking Barometer – Autumn / Winter 2012
    • As well as shrinking their balance sheets, banks arefocused on making them stronger and more stableHow likely are the banks in your market to be engaged in the following activities over the next 6months?Autumn 2012Introducing / increasing incentives to increase customer deposits 17 39 33 10 2 Reducing the size of the balance sheet 10 43 32 12 3 Reducing loan to deposit ratios 10 34 39 13 4 Seeking funding from wholesale capital markets 10 27 45 14 4 Accessing central bank funding programs 7 26 47 14 5 Selling assets outside the home market 9 28 43 12 7 Selling assets in markets outside Europe 7 28 43 13 9 Lending to customers 4 23 39 29 5 Significantly more Slightly more About the same Slightly less Signficantly less Comments: • As banks prepare for Basel III implementation there continues to be a heightened focus on stable deposits and delivering the balance sheet. However, increased competition is likely to push up the cost of these deposits and, given the depressed economy, asset sales may not deliver the required returns.Page 18 European Banking Barometer – Autumn / Winter 2012
    • Simplifying and strengthening the balance sheet willcontinue to be a priority across EuropeHow likely are the banks in your market to be engaged in the following activities over the next 6months?* Austria Belgium France Incentives to increase customer deposits 20 60 10 10 33 33 17 17 11 41 37 11 Reducing the balance sheet 30 60 10 17 33 17 33 11 56 26 44 Reducing loan to deposit ratios 30 50 10 10 17 17 67 11 56 22 7 4Seeking funding from wholesale capital markets 30 70 50 50 26 15 44 11 4 Accessing central bank funding programs 20 70 10 17 83 4 41 37 11 7 Selling assets outside home market 10 20 60 10 17 17 67 19 30 41 7 4 Selling assets outside Europe 40 40 20 17 33 33 17 11 30 37 19 4 Lending to customers 70 30 33 50 17 11 19 30 41 Germany Italy Netherlands Incentives to increase customer deposits 21 46 23 6 4 23 26 44 8 50 40 10 Reducing the balance sheet 12 40 34 10 4 3 46 28 18 5 15 40 35 10 Reducing loan to deposit ratios 4 27 50 13 6 8 41 38 10 3 15 20 50 15Seeking funding from wholesale capital markets 2 12 50 26 10 23 23 44 8 3 10 50 35 5 Accessing central bank funding programs 6 18 43 22 10 10 33 44 13 5 25 55 15 Selling assets outside home market 2 21 60 11 6 10 33 33 10 13 5 40 40 10 5 Selling assets outside Europe 4 26 55 13 2 3 28 44 18 8 5 50 40 5 Lending to customers 8 30 48 14 3 21 33 31 13 5 30 55 10 Significantly more Slightly more About the same Slightly less Significantly less* Numbers are percentage of respondents answering.Page 19 European Banking Barometer – Autumn / Winter 2012
    • Simplifying and strengthening the balance sheet willcontinue to be a priority across EuropeHow likely are the banks in your market to be engaged in the following activities over the next 6months?* Nordics Poland Spain Incentives to increase customer deposits 22 22 43 13 39 39 22 15 41 30 11 4 Reducing the balance sheet 4 22 52 13 9 6 61 11 22 15 44 19 22 Reducing loan to deposit ratios 4 26 61 9 22 39 11 22 6 15 41 11 26 7Seeking funding from wholesale capital markets 39 39 22 17 28 44 11 11 41 33 11 4 Accessing central bank funding programs 22 61 9 9 6 22 50 11 11 22 41 30 44 Selling assets outside home market 4 70 17 9 11 56 11 22 15 59 22 4 Selling assets outside Europe 9 57 13 22 6 56 11 28 15 48 30 44 Lending to customers 4 26 48 22 6 11 11 56 17 7 30 37 26 Switzerland UK Incentives to increase customer deposits 4 42 35 15 4 5 36 41 14 5 Reducing the balance sheet 11 37 41 7 4 18 36 45 Reducing loan to deposit ratios 7 33 33 22 4 9 14 68 5 5Seeking funding from wholesale capital markets 4 19 62 4 12 9 32 45 14 Accessing central bank funding programs 4 11 63 19 4 14 32 32 23 Selling assets outside home market 12 27 19 31 12 14 36 36 14 Selling assets outside Europe 14 23 23 23 18 9 27 45 14 5 Lending to customers 37 44 11 7 23 36 32 9 Significantly more Slightly more About the same Slightly less Significantly less* Numbers are percentage of respondents answering.Page 20 European Banking Barometer – Autumn / Winter 2012
    • European banks expect most of Deposits and RetailBankingHow do you rate the outlook for your bank over the next six months in each of the followingbusiness lines?Europe – Autumn 2012 Europe – Spring 2012 Corporate banking 5 29 42 15 2 7 Corporate banking 34 38 11 3 15 Debt and equity issuance 3 20 40 18 7 11 Deposit business 39 44 8 3 7 Deposit business 13 35 35 11 15 Other 5 7 523 78 Other 22 36 11 2 29 Private wealth management/AM 5 27 36 16 5 11 Private wealth management/AM 28 41 10 2 19 Retail banking 9 37 32 12 3 7 Retail banking 37 44 8 1 11 Securities services 5 22 41 16 6 9 Securities trading 20 34 17 6 23 Securities trading 4 20 41 22 5 9 Transaction advisory (e.g., M&A) 3 15 44 16 9 13 Transaction advisory (e.g., M&A) 26 37 9 1 27 0 20 40 60 80 100 0 20 40 60 80 100 Very good Fairly good Good Fairly good Fairly poor Poor Does not apply Neither good nor poor Fairly poor Very poor Does not applyPercentage of respondents answeringPlease note, that chart may not add up to 100% due to the respondents not answering the respondent selecting ‘Don’t know’ or ‘Not applicable’ Comments: • In Autumn as well as Spring 2012 the outlook for Deposit Business and Retail Banking is most positive. • Overall the outlook for all business lines in Autumn 2012 is considered less optimistic than it was in Spring 2012Page 21 European Bank Barometer Survey results: Belgium
    • Banks will be net sellers of assets in 1H2013 Which, if any, of the following is your bank likely to consider over the next six months in relation to the countries in which it operates?* Autumn 2012 Austria 30 10 10 70 Belgium 17 33 50 34 Europe 30 18 29 34 France 33 56 26 22 Germany 18 12 18 52 29 Italy 38 10 33 28 Netherlands 30 15 50 15 18 Nordics 22 17 17 43 Poland 17 11 33 39 Spain 52 19 37 7 30 Switzerland 19 11 19 52 UK 55 18 41 23 None of these Partnerships or joint ventures Buy assets Sell assets* Numbers are percentage of respondents answering (respondents could select more than one option).Please note, chart may not add up to 100% due to respondents selecting ‘Don’t know’ or ‘Not applicable’. Comments: • Banks will continue to de-leverage during 1H2013 as they sell assets to reduce risk and build capital ahead of Basel III implementation. In some geographies, the selling of assets has also been prompted by competition regulation (e.g., UK) and attempts to stabilize the banking sector (e.g., Spain). Page 22 European Banking Barometer – Autumn / Winter 2012
    • EmploymentPage 23 European Bank Barometer Survey results: Belgium
    • Half of Belgian banks expect headcount decrease overnext six monthsOver the next six months, do you expect the headcount of your bank to … ?Belgium Europe 100% 100% 3 3 24 17 22 18 80% 80% 33 60% 60% 34 58 58 40% 40% 50 37 20% 20% 18 15 2 0% 0% 8 Spring 2012 Autumn 2012 Spring 2012 Autumn 2012 Decrease significantly Decrease slightly Stay the same Increase slightly Increase significantlyPercentage of respondents answering Comments: • Compared to Spring 2012 more Belgian banks expect to see their headcount decrease. From 18% in Spring to 50% in Autumn 2012. • Compared to the European average Belgian banks in Autumn 2012 have become much less positive about headcount developments than they were in Spring.Page 24 European Bank Barometer Survey results: Belgium
    • Most European banks expect headcount decreaseOver the next six months, do you expect the headcount of your bank to … ? (cont’d)Autumn 2012 Spring 2012 Austria 44 56 Austria 26 58 16 Belgium 17 33 50 Belgium 24 58 18 Europe 21 34 45 Europe 25 58 17 France 19 41 41 France 38 56 6 Germany 18 40 42 Germany 12 65 22 Italy 33 23 44 Italy 20 72 8 Netherlands 15 15 70 Netherlands 31 50 19 Nordics 30 48 22 Nordics 27 55 18 Poland 11 33 56 Poland 23 61 16 Spain 26 37 37 Spain 14 54 32 Switzerland 26 37 37 Switzerland 25 63 13 UK 9 27 64 UK 36 52 12 0 20 40 60 80 100 0 20 40 60 80 100 Increase Stay the same DecreasePercentage of respondents answering Comments: • Only the Nordics expect headcount growth during the second half of 2012. In the first half of 2012, 9 out of 11 countries expected headcount growth. • The Netherlands and UK see headcount shrinking considerably (70% and 64%). • In Autumn 2012 in all European countries, more banks expect headcount decrease than in Spring 2012.Page 25 European Bank Barometer Survey results: Belgium
    • Head office and administrative functions will face thebiggest cutbacksWhich areas of the business do you expect headcount to be most impacted?*Autumn 2012 Spring 2012 Operations 19 20 Head office functions / admin 58 11 HR 17 12 Retail and business banking 39 54 Marketing 16 19 Retail 16 22 Investment banking 30 20 Other 15 9 Technology 15 17Private wealth management / AM 20 27 Product / business unit 14 15 Corporate banking 19 11 Sales 14 31 Finance / tax 12 12 Other 10 13 IT 12 21 Decrease Increase* Numbers are percentage of respondents answering that headcount would either increase or decrease. Comments: • Retail banking is likely to see an increase in staff numbers over the coming months, in line with bankers’ expectations of increased demand for retail products. Investment banking divisions and head office functions will be most impacted as banks are forced to reshape business and operating models.Page 26 European Banking Barometer – Autumn / Winter 2012
    • Business priorities and product line expectationsPage 27 European Banking Barometer – Autumn / Winter 2012
    • Belgian banks don’t expect consolidation over the nextsix monthsDo you expect there to be significant consolidation of the banking sector in your country?Autumn 2012 Spring 2012 100 100 14 13 80 47 80 37 60 60 50 100 4 40 40 49 49 37 20 20 0 0 Belgium Europe Belgium Europe No Don’t know Yes No Yes, in the medium to long term Yes, in the short term (within the next 12 months)Percentage of respondents answering Comments: • Contrary to Belgium, the European banks are evenly spread. Half of the banks expect consolidation and the other half doesn’t expect consolidation over the next six months.Page 28 European Bank Barometer Survey results: Belgium
    • Expectations in Europe in relation to likely consolidationvary considerably by countryDo you expect there to be significant consolidation of the banking sector in your country?(cont’d)Autumn 2012 Spring 2012 Austria 70 30 Austria 14 71 14 Belgium 100 Belgium 14 37 49 Europe 47 4 49 Europe 13 50 37 France 48 11 41 France 12 43 45 Germany 34 66 Germany 74 27 Italy 41 8 51 Italy 4 62 34 Netherlands 25 15 60 Netherlands 14 39 47 Nordics 48 52 Nordics 21 46 33 Poland 44 6 50 Poland 6 37 57 Spain 78 22 Spain 31 51 18 Switzerland 96 4 Switzerland 13 50 38 UK 9 5 86 UK 10 42 48 0 20 40 60 80 100 0 20 40 60 80 100 Yes Don’t know No Yes, in the short term Yes, in the medium to long term NoPercentage of respondents answering Comments: • Expectations in Europe vary considerably; Belgium and UK expect (almost) no consolidation (0% and 9% respectively), while 96% of the Swiss banks expects banking consolidationPage 29 European Bank Barometer Survey results: Belgium
    • Belgian banks focus on cutting costs and riskmanagement over the next six monthsHow important are the following activities likely to be for your bank over the next six months?Belgium Europe Cutting costs 83 Risk management 65 Risk management 83 Preparing for Basel III 57 Developing/introducing new products 67 Minimising all non-essential expenditure 53 Minimising all non-essential expenditure 50 Cutting costs 52 Preparing for Basel III 50 Streamlining processes 50Current changes in financial reporting/IFRSs 33 Restructuring business operations 27 New remuneration systems 33 Developing/introducing new products 26 Restructuring business operations 33 Current changes in financial reporting/IFRSs 24 Streamlining processes 33 New remunterations systems 24 Acquiring new assets or businesses 17 Acquiring new assets or businesses 18 Establishing new business segments 17 Disposing of assets or businesses 17 New foreign markets/internationalisation 17 Establishing new business segments 17 Off-shoring 17 New foreign markets/internationalisation 13 Disposing of assets or businesses Off-shoring 13 Reducing the number of products Reducing the number of products 12 0 20 40 60 80 100 0 20 40 60 80 100Percentages with score 1 to 3 Comments: • Belgian banks focus more or less on the same activities as the European banks. Biggest difference is the much bigger focus on developing new products: 67% of the Belgian banks focuses on this activity against 26% of the European banksPage 30 European Bank Barometer Survey results: Belgium
    • Across Europe, the growth agenda continues to beovershadowed by a focus on risk, region and costHow important are the following activities likely to be for you bank over the next six months?Austria Belgium France Preparing for Basel III 90 Cutting costs 83 Preparing for Basel III 58 Streamlining processes 80 Risk management 83 Risk management 56 Minimizing all non-essential expenditure 70 Developing / introducing new products 67 Minimizing all non-essential expenditure 44 Risk management 70 Minimizing all non-essential expenditure 50 Cutting costs 41 Current changes in financial reporting / IFRSs 50 Preparing for Basel III 50 Streamlining processes 26 Cutting costs 40 Current changes in financial reporting / IFRSs 33 Developing / introducing new products 23 Developing / introducing new products 20 New remuneration systems 33 New remuneration systems 22 Acquiring new assets or businesses 10 Restructuring business operations 33 New foreign markets / internationalization 20 Restructuring business operations 10 Streamlining processes 33 Off-shoring 20 Disposing of assets or businesses 10 Acquiring new assets or businesses 17 Establishing new business segments 19 Establishing new business segments 10 Establishing new business segments 17 Acquiring new assets or businesses 15 New remuneration systems 10 New foreign markets / internationalization 17 Disposing of assets or businesses 14 Off-shoring 10 Off-shoring 17 Current changes in financial reporting / IFRSs 12 New foreign markets / internationalization Disposing of assets or businesses Reducing the number of products 11 Reducing the number of products Reducing the number of products Restructuring business operations 7 Germany Italy Netherlands Risk management 72 Risk management 74 Risk management 75 Preparing for Basel III 65 Cutting costs 59 Cutting costs 50 Streamlining processes 64 Minimizing all non-essential expenditure 59 Minimizing all non-essential expenditure 50 Cutting costs 56 Streamlining processes 56 Preparing for Basel III 50 Minimizing all non-essential expenditure 56 Preparing for Basel III 55 Current changes in financial reporting / IFRSs 45Current changes in financial reporting / IFRSs 21 New remuneration systems 51 Streamlining processes 45 Restructuring business operations 18 Restructuring business operations 47 Restructuring business operations 42 Acquiring new assets or businesses 16 Developing / introducing new products 44 Acquiring new assets or businesses 30 Developing / introducing new products 16 Establishing new business segments 37 New remuneration systems 30 Disposing of assets or businesses 14 New foreign markets / internationalization 34 Developing / introducing new products 22 New remunterations systems 10 Off-shoring 30 Disposing of assets or businesses 21 Reducing the number of products 10 Disposing of assets or businesses 28 Establishing new business segments 20 Establishing new business segments 6 Current changes in financial reporting / IFRSs 26 New foreign markets / internationalization 20 New foreign markets / internationalization 2 Acquiring new assets or businesses 24 Reducing the number of products 16 Off-shoring 2 Reducing the number of products 21 Off-shoring 5 * Percentages with scores 8 to 10. Page 31 European Banking Barometer – Autumn / Winter 2012
    • Across Europe, the growth agenda continues to beovershadowed by a focus on risk, region and costHow important are the following activities likely to be for you bank over the next six months?*Nordics Poland Spain Preparing for Basel III 61 Risk management 66 Risk management 77 Streamlining processes 61 Cutting costs 56 Cutting costs 70 Cutting costs 56 Streamlining processes 51 Minimizing all non-essential expenditure 70 Minimizing all non-essential expenditure 44 Preparing for Basel III 50 Preparing for Basel III 46 Risk management 39 Current changes in financial reporting / IFRSs 28 Developing / introducing new products 44 Developing / introducing new products 30 Developing / introducing new products 23 Disposing of assets or businesses 37 Current changes in financial reporting / IFRSs 26 New remuneration systems 22 Restructuring business operations 37 Acquiring new assets or businesses 17 Restructuring business operations 18 New remuneration systems 33 Restructuring business operations 17 Minimizing all non-essential expenditure 11 Current changes in financial reporting / IFRSs 31 Establishing new business segments 17 Acquiring new assets or businesses 6 Establishing new business segments 30 Reducing the number of products 13 Disposing of assets or businesses 6 Off-shoring 23 New remunterations systems 9 Establishing new business segments 6 Acquiring new assets or businesses 22 Off-shoring 9 Off-shoring 6 Reducing the number of products 19 New foreign markets / internationalization 4 Reducing the number of products 6 Streamlining processes 19 Disposing of assets or businesses 0 New foreign markets / internationalization 0 New foreign markets / internationalization 15Switzerland UK Minimizing all non-essential expenditure 60 Risk management 59 Preparing for Basel III 60 Cutting costs 55 Streamlining processes 56 Minimizing all non-essential expenditure 55 Risk management 53 Streamlining processes 48 Cutting costs 52 Preparing for Basel III 39 Restructuring business operations 19 Restructuring business operations 39 New foreign markets / internationalization 19 Disposing of assets or businesses 30 Acquiring new assets or businesses 18 Off-shoring 24 New remuneration systems 18 Current changes in financial reporting / IFRSs 19 Developing / introducing new products 11 New remuneration systems 19 Establishing new business segments 11 Acquiring new assets or businesses 15 Disposing of assets or businesses 7 Developing / introducing new products 14Current changes in financial reporting / IFRSs 4 Reducing the number of products 14 Off-shoring 4 Establishing new business segments 10 Reducing the number of products 4 New foreign markets / internationalization 10* Percentages with score 8 to 10.Page 32 European Banking Barometer – Autumn / Winter 2012
    • The outlook across all business lines is significantlyweaker going into 1H2013How do you rate the outlook for your bank over the next six months in each of the followingbusiness lines?*Autumn 2012 Spring 2012 Corporate banking 5 31 45 16 2 Corporate banking 34 38 11 3 Debt and equity issuance 3 20 40 18 7 Deposit business 39 44 8 3 Deposit business 13 35 35 11 1 Other 22 36 11 2Private wealth management / AM 5 27 36 16 5 Private wealth management / AM 28 41 10 2 Retail banking 9 37 32 12 3 Retail banking 37 44 8 1 Securities services 5 22 41 16 6 Securities trading 4 20 40 22 5 Securities trading 20 34 17 6Transaction advisory (e.g., M&A) 3 14 43 16 9 Transaction advisory (e.g., M&A) 26 37 9 1 Very good Fairly good Neither good nor poor Fairly poor Very poor Good Fairly good Fairly poor Poor Comments: Uncertainty continues to dampen investment banking activity as companies delay major investments and organic expansion. Reflecting this, banks expect deposits to increase, which will at least help those with funding challenges. Investment banks expect tougher conditions in the first half of 2013. Securities grew rapidly to become the principal contributor to investment banking revenues by 2008, but the volatility of returns through the crisis have led a number of banks to shift their focus to steadier business lines. The outlook for transaction advisory was also poor, as companies would rather consolidate or grow organically than expand through acquisition.* Numbers are percentage of respondents answering.Autumn 2012 responses are based on a five-point scale and spring 2012 responses are based on a four-point scale.Please note, chart may not add up to 100% due to respondents selecting ‘Don’t know’ or ‘Not applicable’.Page 33 European Banking Barometer – Autumn / Winter 2012
    • Ernst & YoungAssurance - Tax - Transactions - AdvisoryAbout Ernst & YoungErnst & Young is a global leader in assurance, tax, transaction andadvisory services. Worldwide, our 167,000 people are united by our sharedvalues and an unwavering commitment to quality. We make a difference byhelping our people, our clients and our wider communities achieve theirpotential.Ernst & Young refers to the global organisation of member firms of Ernst &Young Global Limited, each of which is a separate legal entity. Ernst &Young Global Limited, a UK company limited by guarantee, does notprovide services to clients. For more information about our organisation,please visit www.ey.com.About Ernst & Young’s Banking & Capital Markets CenterIn today’s globally competitive and highly regulated environment, managingrisk effectively while satisfying an array of divergent stakeholders is a keygoal of banks and securities firms. Ernst & Young’s Global Banking &Capital Markets Center brings together a worldwide team of professionalsto help you achieve your potential – a team with deep technical experiencein providing assurance, tax, transaction and advisory services. The Centerworks to anticipate market trends, identify the implications and developpoints of view on relevant sector issues. Ultimately it enables us to helpyou meet your goals and compete more effectively. It’s how Ernst & Youngmakes a difference.© 2013 EYGM Limited.All Rights Reserved.Page 34 European Bank Barometer Survey results: Belgium