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European Banking Barometer: Spring/Summer 2013 - Belgian focus

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EY’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 ...

EY’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 an the banking industry as a whole over the next six months.

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    European Banking Barometer: Spring/Summer 2013 - Belgian focus European Banking Barometer: Spring/Summer 2013 - Belgian focus Presentation Transcript

    • European Banking Barometer Growing optimism despite a weak economic outlook Spring/Summer 2013 Belgium Focus
    • 2 European Banking Barometer – Spring/Summer 2013 Introduction 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. The Spring/Summer 2013 Barometer consists of over 250 interviews with senior bankers across 11 markets in 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 throughout Spring 2013 by two external research agencies on Ernst & Young’s behalf. The aim was to interview senior bankers from a range of institutions representing at least 50% of the 11 markets, defined as banking assets owned. Interviews were not conducted with subsidiaries of member/group banks, and a range of bank types were 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 where charts do not add up to 100%, it is because participants either chose not to answer the question or selected ‘Don’t know’ or ‘Not applicable’ as their answer. Where possible we've compared answers against those given in Autumn/Winter 2012 but some questions have changed or are new. We would like to thank all the research participants for their contribution to the study.
    • 3 European Banking Barometer – Spring/Summer 2013 European overview Banks anticipate an improved performance over the next six months as restructuring programs begin to bear fruit. Although cost cutting and job losses will continue during this phase of strategic readjustment, many bank balance sheets are now stronger. However, although increased customer demand is expected, lending restrictions will continue to tighten across Europe. Restructuring continues, but some banks are beginning to invest in growth areas. ► Regulatory compliance remains the main focus for European banks, but cutting costs, streamlining and automating processes, and minimizing non-essential spend will continue to be amongst the top five priorities for institutions over the next six months. ► Many banks now see streamlining processes as more important than minimizing non-essential expenditure and cutting costs, suggesting they are moving from tactical to strategic cost reduction. ► Redundancies will continue to play a key role in cost reduction programs with 41% of respondents expecting an increase in redundancies compared with 45% in our Autumn/Winter 2012 Barometer. However, most of these job cuts will be part of redundancy programs already announced by banks. ► Staff cuts continue to be centered on back office functions as banks streamline and automate processes. Over one-third of banks expect cuts in Operations and IT, and other head office functions. ► However, some banks are beginning to recruit staff in key areas. Banks expect a net increase in staff in asset management, private banking and corporate banking divisions, where they anticipate increased demand. Opinions on the economic outlook, and the potential impact of the sovereign debt crisis, remain divided both within individual economies and across Europe. ► Fifty percent of respondents expect the current sluggish economic conditions to remain. The remainder are equally split on whether the economy will improve or deteriorate. This represents a modest improvement from our Autumn/Winter 2012 Barometer, when more than 40% expected the economy to deteriorate. ► Surprisingly, Spanish banks are the most optimistic about the economy, with 40% expecting improvement. Record unemployment and a seventh consecutive quarter of economic contraction in Spain may leave little scope for further deterioration. ► Banks in France and Italy are most pessimistic, with 56% and 42% of respondents respectively expecting the economy to decline. ► There is little change in expectations about the sovereign debt crisis from our Autumn/Winter 2012 Barometer. Thirty-five percent of respondents expect an increased impact from the sovereign debt crisis. Twenty percent expect its impact to diminish. ► Spanish and Italian banks remain the most concerned about the sovereign debt crisis.
    • 4 European Banking Barometer – Spring/Summer 2013 European overview European banks will continue to deleverage and sell assets to bolster their balance sheets, but the benefits of restructuring programs are becoming evident at some institutions. ► Banks continue to pursue a mix of actions to strengthen their balance sheets and build capital buffers. ► Fifty percent of banks expect to shrink their balance sheets over the next six months, with one-third of banks considering selling assets as they focus on their core businesses. ► Forty-five percent of respondents expect to improve their funding mix, with half introducing new incentives to attract deposits. ► However, some banks are already significantly stronger. Less than 25% of respondents now expect their bank to access central bank funding programs, compared with 33% in our Autumn/Winter 2012 Barometer. Almost 40% expect to repay such programs. Following recent M&A activity, fewer banks anticipate further consolidation in the next year. ► Only 38% of European banks expect further consolidation of the sector over the next year, compared with 48% in our Autumn/Winter 2012 Barometer, following M&A activity at the end of last year. ► Future consolidation is likely to be focused on a tail of smaller institutions, particularly private banks in Switzerland and small Spanish banks. Almost three-quarters of respondents in Spain and Switzerland anticipate further M&A. ► Banks are focused on right-sizing their European operations, with most expecting sales or acquisitions to take place within Europe. ► Where banks are looking for growth opportunities, they are more likely to buy assets (25%) than consider joint-ventures or partnerships (19%). Despite increased customer demand, non-performing loans remain a worry for banks and credit conditions will continue to tighten across Europe. ► Banks expect demand for retail savings products to remain strong, but savings rates will stay low. More stable equity markets and a search for yield mean more banks now anticipate increased demand for personal investment products. ► Although 44% of banks anticipate increased demand for corporate lending, they remain worried about non-performing loans, with 32% expecting to increase loan loss provisions over the next six months. ► Banks also expect lending policies to become even more restrictive for most sectors. Construction and commercial real estate will be worst hit, with more than 40% of banks anticipating more restrictive lending policies. ► European policy actions to boost lending to small and medium enterprises (SMEs) are beginning to take effect. Twenty-nine percent of banks expect lending policies to the SME sector to be less restrictive over the next six months.
    • 5 European Banking Barometer – Spring/Summer 2013 Economic environment
    • 6 European Banking Barometer – Spring/Summer 2013 Spring 2013 The general economic outlook has improved most for Belgian banks How do you expect the general economic outlook in your country to change over the next six months?* * Numbers reflect the percentage of respondents who answered. Autumn 2012 Comments: • Compared to six months ago, Belgian banks have become more confident that the general economic outlook will improve over the next six months, with only 11% expecting the situation to worsen compared to 33% in Autumn 2012, 71.5% expecting the situation to remain the same and 7% expecting to strengthen over the next 6 months. • European banks show the same trend, less banks expect to weaken in the next six months.
    • 7 European Banking Barometer – Spring/Summer 2013 Spring 2013 At European level, the outlook has improved the most for Spanish and Polish banks How do you expect the general economic outlook in your country to change over the next six months?* 13 2 19 4 41 4 11 6 26 10 26 2 19 15 20 27 59 30 17 48 45 36 46 11 39 67 80 27 33 48 61 26 25 13 46 48 35 33 5 4 11 17 15 13 4 6 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Autumn 2012 Comments: • General tendency across Europe is that 50.5% of banks expect the situation to remain the same for the next 6 months. • Spain and Poland are the two countries in which outlook has most improved compared to Autumn 2012, with respectively 40 and 31% of banks expecting the situation to strengthen. • France is the most pessimist country regarding general economic outlook: 56% worsening * Numbers reflect the percentage of respondents who answered.
    • 8 European Banking Barometer – Spring/Summer 2013 European sovereign debt crisis
    • 9 European Banking Barometer – Spring/Summer 2013 8 35,7 27 35,7 45,5 28,5 18,5 1 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Belgium Europe Significantly increased impact Slightly increased impact About the same Slightly decreased impact Significantly decreased impact Spring 2013 Sovereign debt crisis concerns Belgian banks What level of impact do you think the Eurozone sovereign debt crisis will have on the banking sector in your country over the next six months compared with the previous six months?* 9 26 17 45 50 17 33 3 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Belgium Europe Autumn 2012 Comments: • Belgian banks are more concerned regarding impact of Eurozone sovereign debt crisis than in Autumn 2012. Six months ago, 88% of Belgian banks expected a decreased impact on the banking sector while only 28.5% expect such impact now. Today, 35.7% of Belgian banks foresee an increased impact on the country banking sector compared to 17% six months ago. • European banks remain steady on the impact of the sovereign debt crisis on their banking sector * Numbers reflect the percentage of respondents who answered.
    • 10 European Banking Barometer – Spring/Summer 2013 6 7 16 23 5 12 8 12,5 31 34,5 34 15,5 7 30 42 22 24 27 35,7 12,5 44 45 41 38,5 64 30 42 54 36 45,5 35,7 62,5 19 10 9 23 29 40 8 19 24 18,5 28,5 12,5 3,5 8 4 1 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Significantly increased impact Slightly increased impact About the same Slightly decreased impact Significantly decreased impact Spring 2013 Spanish and Italian banks remain the most concerned about the impact of the sovereign debt crisis What level of impact do you think the Eurozone sovereign debt crisis will have on the banking sector in your country over the next six months compared with the previous six months?* 4 15 6 5 15 8 26 9 36 37 52 11 17 10 28 24 19 26 20 55 37 11 72 70 60 31 52 41 45 17 50 9 22 22 6 13 20 21 14 11 17 50 30 6 5 5 2 4 3 33 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Autumn 2012 Comments: • The Netherlands is the most optimistic country with 40% of banks foreseeing a decrease impact of the sovereign debt crisis. • On the contrary, Spain and Italy are the most pessimist ones with respectively 50 and 42% of banks foreseeing an increase impact of the debt crisis on their banking sector * Numbers reflect the percentage of respondents who answered.
    • 11 European Banking Barometer – Spring/Summer 2013 Business outlook and focus areas
    • 12 European Banking Barometer – Spring/Summer 2013 How do you expect your bank’s overall performance to change over the next six months?* 0 7,5 50 45,5 36 31 14 14 0 2 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Belgium Europe Strengthen significantly Strengthen slightly Stay the same Weaken slightly Weaken significantly Belgian banks are more optimistic on their overall performance Spring 2013 0 5 50 32 0 39 50 21 0 3 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Belgium Europe Autumn 2012 Comments: • Confidence level of Belgian banks increased slightly, with a remaining 50% of banks expecting to strengthen and 39% to remain the same while six months ago, 50% of banks expected their performance to weaken. • Europe confidence is also slightly increasing with 53% of banks expecting to strengthen compared to 37% in Autumn 2012. * Numbers reflect the percentage of respondents who answered.
    • 13 European Banking Barometer – Spring/Summer 2013 How do you expect your bank’s overall performance to change over the next six months?* 22 22 14,3 4 7,5 12,5 53 62 41 23 64,3 20 50 42,3 40 45,5 50 37,5 19 17,3 34 54 21,4 50 25 34 40 31 36 25 3 17,3 3 15 30 25 20,3 16 14 14 25 3 3,4 8 3,4 2 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Strengthen significantly Strengthen slightly Stay the same Weaken slightly Weaken significantly At European level, Nordics being the most optimistic Spring 2013 4 7 6 9 13 2 4 5 59 31 30 18 36 25 38 23 26 32 50 44 32 50 41 29 55 45 38 35 41 39 33 9 15 22 41 15 10 33 26 21 50 22 6 15 6 4 3 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Autumn 2012 Comments: • The Nordics are the most optimistic with 78,6% saying the performance will strengthen • While in some countries we can see a small % of banks expecting to weaken significantly, the overall confidence of European banks in their performance is increasing compared to six months ago. * Numbers reflect the percentage of respondents who answered.
    • 14 European Banking Barometer – Spring/Summer 2013 Belgian banks expectations on LLP are improving Over the next six months, what do you expect your bank’s total provisions against loan losses to do?* Spring 2013 0 4 29 28 57 53 14 12 0 3.4 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Belgium Europe Increase significantly Increase slightly Remain at current levels Decrease slightly Decrease significantly 0 9 67 35 33 41 0 12 0 2 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Belgium Europe Autumn 2012 Comments: • Positive expectations from Belgian banks regarding loan loss provisions with 29% of banks expecting LLP to increased against 67% in Autumn 2012 and with14% expecting to decrease compared to 0% six months ago. • At European level, the growth in LLP is abating, 32% of banks expect to have to increase provisions over the next 6 months, compared to 44% of banks six months ago. * Numbers reflect the percentage of respondents who answered.
    • 15 European Banking Barometer – Spring/Summer 2013 The largest rise in LLPs is expected in Spain, where the economy has contracted for the seventh consecutive quarter Over the next six months, what do you expect your bank’s total provisions against loan losses to do?* Spring 2013 5,5 3,4 16 8,3 8 4 16,5 14 41 54 14,3 20 25 34 28 28 29 25 64 76 34 23 57 50 58,3 49 48 53 57 75 11 3,4 9 23 14,3 30 8,3 14 12 12 14 3 3.4 14,3 3 4 3 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Increase significantly Increase slightly Remain at current levels Decrease slightly Decrease significantly 19 17 9 10 18 6 7 9 10 32 44 37 50 14 20 36 40 33 35 67 20 45 52 37 28 59 45 33 42 37 41 33 40 23 4 7 14 20 13 8 19 12 30 6 5 5 4 4 2 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Autumn 2012 Comments: • While in the UK, Switzerland and Austria write-offs look to have stabilized, banks remain worried about loan losses and more than half of the banks in Poland and Spain expect to increase loan loss provisions in the next six months. * Numbers reflect the percentage of respondents who answered.
    • 16 European Banking Barometer – Spring/Summer 2013 Spring 2013 European and Belgian banks are now becoming less reliant on central bank funding programs… How likely are the banks in your market to be engaged in the following activities over the next six months?* * Numbers reflect the percentage of respondents who answered. Banks were not asked about initiatives to promote growth and repaying central bank funding programs in the Autumn/Winter2012 Barometer. 5 4 7 7 7,5 4 9 9 10 11 19 24 28 29 28,5 34,9 31 36 40 39 40 44,5 39 42 42 49,7 45,5 40 33 35 26 23,5 16 16 18 8,7 11,5 13 13,5 10,5 10 4 10 6 4 2.7 3 2 3.5 4,5 Significantly more Slightly more About the same Slightly less Signficantly less Autumn 2012 10 17 10 0 0 10 9 7 4 7 43 39 34 27 28 28 23 26 32 33 39 45 43 43 39 47 12 10 13 14 12 13 29 14 3 2 4 4 7 9 5 6 Reducing the size of the balance sheet Introducing/Increasing incentives to increase customer deposits Reducing loan to deposit ratios Launching initiatives to promote growth Repaying central bank funding programs Seeking funding from wholesale capital markets Selling assets in markets outside their home market Selling assets in markets outside Europe Lending to customers Accessing central bank funding programs Comments: • Fewer banks now expect to access central bank funding programs, and 40% are looking to repay such funding. While it is clear that many banks are significantly stronger than six months ago, the restructuring of the sector is set to continue. • 50% of respondents still expect to continue shrinking their balance sheets and to improve their funding mix.
    • 17 European Banking Barometer – Spring/Summer 2013 Austria Germany Belgium Italy France …but they will continue to shrink their balance sheets… How likely are the banks in your market to be engaged in the following activities over the next six months?* * Numbers reflect the percentage of respondents who answered. 12,5 12,5 12,5 12,5 12,5 25 50 37,5 12,5 75 37,5 25 37,5 50 25 25 62,5 62,5 37,5 25 25 62,5 50 37,5 50 25 25 37,5 25 12,5 Accessing central bank funding programs Lending to customers Selling assets outside Europe Selling assets outside home market Seeking funding from wholesale capital markets Repaying central bank funding programs Launching initiatives to promote growth Reducing loan to deposit ratios Introducing/Increasing incentives to increase… Reducing the balance sheet 14 7 7 29 21 21 28,5 57 21,5 36 36 43 36 64 36 36 43 36 71,5 50 14 29 57 7 29 36 28,5 7 7 14 36 21 14 7 8 4 12 12 28 8 12 20 16 20 32 8 40 28 28 36 20 40 44 40 40 52 32 52 36 52 52 20 36 36 12 36 16 8 4 4 12 20 8 4 4 4 4 8 8,3 16,7 50 25 17 50 41,5 33 33,3 42 33,3 33 33 58 58 42 41,5 50 50 25 33,3 17 50 8 17 17 8,3 25 8,3 17 17 17 8 8,3 Significantly more Slightly more About the same Slightly less Significantly less 3 3 6 4 2 11 11 5 6,5 19 34 18 22 19 33,5 33,5 31 57 39 34 47 42 42 44 44,5 22 51 29,5 36 29 14 20 26 30 11 33,5 16 5 12 15 2 14 6 5 2 3,5 6,5 Accessing central bank funding programs Lending to customers Selling assets outside Europe Selling assets outside home market Seeking funding from wholesale capital markets Repaying central bank funding programs Launching initiatives to promote growth Reducing loan to deposit ratios Introducing/Increasing incentives to increase… Reducing the balance sheet Comments: • Belgium is following European trend ; 57% of Belgian banks expect to reduce access to central bank funding, and 50% expect to reduce their balance sheet and increase incentive to increase customer deposit
    • 18 European Banking Barometer – Spring/Summer 2013 11 8 14 11 14 6 11 17 11 22 17 33 36 44 33 47 41,5 33 30 39 44 45 30,5 31 42 33 41,5 39 42 22 25 14 16,5 11 8 11 3 11 17 11 3 3 3 3 3 3 6 Significantly more Slightly more About the same Slightly less Significantly less 4 4 7 7 14 7 7 21,5 29,5 11 11 10 20 26 29 41 52 46,5 37 46,5 44,5 50 70 45 32 31 18,5 25 11 14 37 10 15 21 14 18,5 7 18,5 21,5 7,5 30 10 7 4 7 Accessing central bank funding programs Lending to customers Selling assets outside Europe Selling assets outside home market Seeking funding from wholesale capital markets Repaying central bank funding programs Launching initiatives to promote growth Reducing loan to deposit ratios Introducing/Increasing incentives to increase… Reducing the balance sheet Nordics Switzerland Poland UK Spain … and improve their funding mix How likely are the banks in your market to be engaged in the following activities over the next six months?* 6 6 13 13 15,5 3 16 12,5 9 9 34,5 25 37,5 47 38 28 31 37,5 28 44 28 41 40,5 31 28 56 41 37,5 47 41 25 22 3 9 15,5 13 9 12,5 13 3 6,5 6 6 3 3 3 3 7,5 8 8 15,3 7,5 15 31 38 31 31 38,5 62 23 85 85 54 92 54 38 23 46 23 54 7,5 7,5 15 23 15,3 15,5 7,5 7,5 8 8 15,3 7 7 7 7 7 14 7 7 21 29 29 43 29 29 50 43 36 43 29 29 36 50 57 21 29 36 43 14 29 21 21 7 29 7 14 36 14 21 7 7 14 7 7 Accessing central bank funding programs Lending to customers Selling assets outside Europe Selling assets outside home market Seeking funding from wholesale capital markets Repaying central bank funding programs Launching initiatives to promote growth Reducing loan to deposit ratios Introducing/Increasing incentives to increase… Reducing the balance sheet * Numbers reflect the percentage of respondents who answered. Netherlands 10 10 20 10 10 20 40 50 60 50 40 40 50 40 60 50 30 30 30 40 40 40 20 30 30 20 30 20 10 10 30 20 10
    • 19 European Banking Barometer – Spring/Summer 2013 Partnerships and joint ventures will be reduced by Belgian banks 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?* * Numbers reflect the percentage of respondents who answered (respondents could select more than one option) 21 32 21 257 19 50 41 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Belgium Europe Sell assets Buy assets Partnerships or joint ventures None of these 17 34 33 18 50 29 0 30 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Belgium Europe Spring 2013Autumn 2012 Comments: • 32% of European banks expect to sell assets in the next six months – in line with our Autumn Barometer – with targeted sales of small books most likely. • While Belgian banks still consider to sell assets, with 21% compared to 17% in Autumn 2012, the main change lies in their likeliness to significantly reduce partnerships or joint ventures (7%). 50% will not engage in these activities compared to none in Autumn 2012.
    • 20 European Banking Barometer – Spring/Summer 2013 31 17 53 15 43 30 50 29 36 32 21 25 42 24 31 38 29 20 20 20 25 21 25 28 16 8 36 20 42 7 36 19 7 28 41 16 54 43 50 17 61 28 41 50 75 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Sell assets Buy assets Partnerships or joint ventures None of these While more European banks are now targeting acquisitions 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 * Numbers reflect the percentage of respondents who answered (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’. 55 19 52 17 22 30 38 18 33 30 17 30 18 11 19 11 17 15 10 12 56 18 33 10 41 19 37 33 17 50 33 18 26 29 50 10 23 52 7 39 43 15 28 52 22 34 70 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Spring 2013 Comments: • The difficulties of trying to find a buyer for large operations, at a time when most banks are still looking to boost capital levels, have recently been highlighted in the UK. However, some banks are now beginning to focus on growth opportunities, with 25% considering asset purchases, compared to just 18% six months ago. • European banks are focused on right-sizing their footprint in their home markets, with the vast majority of asset acquisitions and disposals anticipated in Europe.
    • 21 European Banking Barometer – Spring/Summer 2013 38 100 61 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Belgium Europe Yes Don’t know No The restructuring of the banking industry will continue, but fewer European banks now anticipate consolidation Do you expect significant consolidation of the banking sector in your country?* * Numbers reflect the percentage of respondents who answered. 0 47 100 49 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Belgium Europe Spring 2013Autumn 2012 Comments: • Expectations of consolidation have moderately declined across Europe, following recent M&A activity. While 100 % of Belgian banks do not expect significant consolidation in the banking sector in Belgium, same as six months ago.
    • 22 European Banking Barometer – Spring/Summer 2013 14 72 72 23 29 17 44 36 38 37,5 3 10 8 1 86 28 25 77 71 90 75 56 64 61 100 62,5 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Yes Don’t know No Switzerland and Spain are the markets most likely to see consolidation in 2H13 Do you expect significant consolidation of the banking sector in your country?* * Numbers reflect the percentage of respondents who answered. 9 96 78 44 48 25 41 34 48 47 70 5 6 15 8 11 4 86 4 22 50 52 60 51 66 41 49 100 30 UK Switz… Spain Poland Nordics Nethe… Italy Germ… France Europe Belgium Austria Spring/Summer 2013Autumn/Winter 2012 Comments: • While expectations of consolidation have moderately declined across Europe, the fall is most notable in Switzerland, which saw mergers in the private banking sector at the end of last year. • Nevertheless, 72% of Swiss respondents still expect further consolidation as private banks struggle with declining profitability, due to increased compliance and IT costs, and revenue pressure, following recent bilateral tax agreements with the UK and Germany. • In Spain, where the Fund for Orderly Bank Restructuring is re-shaping the banking landscape, 72% of respondents anticipate further consolidation.
    • 23 European Banking Barometer – Spring/Summer 2013 Business priorities and product line expectations
    • 24 European Banking Barometer – Spring/Summer 2013 While cost cutting continue to overshadow the growth agenda, innovation becomes more important to Belgian banks Rank the importance of the following agenda items for your organization* 6% 10% 13% 14% 15% 16% 16% 16% 19% 19% 22% 23% 25% 26% 36% 37% 42% 46% 49% 54% 56% 60% Off-shoring Reducing the number of products Outsourcing Acquiring new assets or businesses New remuneration systems Disposing of assets or businesses New foreign markets/internationalization Developing partnerships with non-banks Restructuring the business to comply with regulations Establishing new business segments Developing Recovery and Resolution Plans Current changes in financial reporting/IFRS Developing/introducing new products Restructuring the business to cut costs Investing in customer-facing technology Compliance with capital market regulations Compliance with consumer regulation/remediation Cutting costs Minimizing non-essential expenditure Preparing for Basel III Streamlining processes Risk management Europe * Numbers reflect the percentage of respondents who answered. Respondents were asked to rank the importance of activities on a scale of 0 to 10, where 0 means not at all important and 10 means very important. Percentage shows the proportion of respondents selecting either 8, 9 or 10. Innovation and growth Cost cutting and… Risk and regulation 7% 7% 7% 14% 14% 0 0 0 15% 14% 23% 31% 21% 29% 43% 33% 50% 36% 50% 50% 57% 57% Off-shoring Reducing the number of products Outsourcing Acquiring new assets or businesses New remuneration systems Disposing of assets or businesses New foreign markets/internationalization Developing partnerships with non-banks Restructuring the business operations or legal entities Establishing new business segments Developing Recovery and Resolution Plans Current changes in financial reporting/harmonization with… Developing/introducing new products Restructuring the business operations or legal entities Investing in new customer-facing technology, eg mobile… Compliance with capital market regulations Compliance with consumer regulation issues and/or… Cutting costs Minimizing all non-essential expenditure Preparing for Basel III Streamlining processes/ further automation Risk management Belgium Comments: • European Banks continue to focus on improving risk management and complying with a wide array of post-crisis regulation. • Cost cutting also remains a critical activity, as banks attempt to improve their bottom line in a low-revenue growth environment. However, strategic cost reduction, through process automation, is now more important than short-term cuts. Belgian banks rank cost cutting as 7th item on their agenda while European banks rank it as 5th item. • Even the innovation and growth agenda appears to be driven by cost cutting, with 36% of European banks and 43% of Belgian banks, believing it is important to invest in new customer-facing technology, such as mobile, which has the capability to reduce branch costs. However, with reductions in discretionary spend, banks are unlikely to invest in other longer-term cost reduction strategies such as outsourcing or off-shoring.
    • 25 European Banking Barometer – Spring/Summer 2013 Although short-term cost cutting remains a key priority for many banks... Rank the importance of the following agenda items for your organization* Austria 7% 7% 7% 14% 14% 0 0 0 15% 14% 23% 31% 21% 29% 43% 33% 50% 36% 50% 50% 57% 57% Belgium 10% 0 5% 5% 22% 18% 14% 17% 22% 21% 27% 27% 17% 30% 24% 50% 26% 46% 42% 52% 33% 42% France 0 14% 14% 0 13% 0 0 13% 14% 14% 14% 13% 13% 14% 38% 25% 71% 75% 50% 75% 88% 75% Off-shoring Reducing the number of products Outsourcing Acquiring new assets or businesses New remuneration systems Disposing of assets or businesses New foreign markets/internationalization Developing partnerships with non-banks Restructuring the business to comply with regulations Establishing new business segments Developing Recovery and Resolution Plans Current changes in financial reporting/IFRS Developing/introducing new products Restructuring the business to cut costs Investing in customer-facing technology Compliance with capital market regulations Compliance with consumer regulation/remediation Cutting costs Minimizing non-essential expenditure Preparing for Basel III Streamlining processes Risk management * Numbers reflect the percentage of respondents who answered. Respondents were asked to rank the importance of activities on a scale of 0 to 10, where 0 means not at all important and 10 means very important. Percentage shows the proportion of respondents selecting either 8, 9 or 10. 7% 12% 0 3% 5% 7% 5% 13% 11% 10% 7% 18% 14% 22% 13% 16% 31% 51% 49% 68% 64% 59% Off-shoring Reducing the number of products Outsourcing Acquiring new assets or businesses New remuneration systems Disposing of assets or businesses New foreign markets/internationalization Developing partnerships with non-banks Restructuring the business to comply with regulations Establishing new business segments Developing Recovery and Resolution Plans Current changes in financial reporting/IFRS Developing/introducing new products Restructuring the business to cut costs Investing in customer-facing technology Compliance with capital market regulations Compliance with consumer regulation/remediation Cutting costs Minimizing non-essential expenditure Preparing for Basel III Streamlining processes Risk management 14% 18% 45% 20% 30% 45% 25% 55% 27% 27% 40% 9% 27% 45% 64% 40% 55% 75% 75% 50% 75% 75% 0 25% 0 30% 40% 25% 10% 0 33% 10% 40% 44% 40% 11% 33% 80% 75% 40% 50% 78% 50% 90% Germany Italy Netherlands Innovation and growth Cost cutting and… Risk and regulation
    • 26 European Banking Barometer – Spring/Summer 2013 4% 10% 11% 17% 7% 7% 17% 0 11% 14% 4% 11% 34% 21% 40% 30% 24% 41% 59% 41% 48% 55% Off-shoring Reducing the number of products Outsourcing Acquiring new assets or businesses New remuneration systems Disposing of assets or businesses New foreign markets/internationalization Developing partnerships with non-banks Restructuring the business to comply with regulations Establishing new business segments Developing Recovery and Resolution Plans Current changes in financial reporting/IFRS Developing / introducing new products Restructuring the business to cut costs Investing in customer-facing technology Compliance with capital market regulations Compliance with consumer regulation/remediation Cutting costs Minimizing non-essential expenditure Preparing for Basel III Streamlining processes Risk management ...more institutions are now focused on strategic cost reduction through streamlining and automating processes Rank the importance of the following agenda items for your organization* Nordics 0 20% 17% 18% 8% 20% 10% 17% 8% 15% 15% 31% 23% 33% 50% 46% 62% 62% 58% 45% 54% 54% Poland 12% 7% 23% 16% 22% 33% 28% 19% 30% 25% 39% 37% 22% 35% 32% 38% 47% 38% 44% 48% 35% 47% Spain 8% 7% 0 21% 0 15% 8% 8% 15% 15% 14% 8% 36% 23% 57% 43% 38% 36% 29% 69% 64% 79% Off-shoring Reducing the number of products Outsourcing Acquiring new assets or businesses New remuneration systems Disposing of assets or businesses New foreign markets/internationalization Developing partnerships with non-banks Restructuring the business to comply with regulations Establishing new business segments Developing Recovery and Resolution Plans Current changes in financial reporting/IFRS Developing/introducing new products Restructuring the business to cut costs Investing in customer-facing technology Compliance with capital market regulations Compliance with consumer regulation/remediation Cutting costs Minimizing non-essential expenditure Preparing for Basel III Streamlining processes Risk management * Numbers reflect the percentage of respondents who answered. Respondents were asked to rank the importance of activities on a scale of 0 to 10, where 0 means not at all important and 10 means very important. Percentage shows the proportion of respondents selecting either 8, 9 or 10. Switzerland 3% 9% 11% 22% 26% 21% 36% 21% 29% 36% 37% 29% 42% 23% 27% 54% 50% 36% 44% 33% 64% 69% UK Innovation and growth Cost cutting and… Risk and regulation
    • 27 European Banking Barometer – Spring/Summer 2013 4,5 4 8,5 4,5 11,5 11 11 13 11 22 26 28 34 32 35 36 37 40,5 52 45 42 43 41 38 39 29 34 16,5 21 14 16 13,5 13 10 18 12,5 5 4 7,5 2,5 2 3 4 3 2 Transaction advisory (e.g., M&A) Securities trading Debt and equity issuance Securities services Corporate banking Private banking and wealth management Retail banking Asset management Deposit business Very good Fairly good Neither good nor poor Fairly poor Very poor How do you rate the outlook for your bank over the next six months in each of the following business lines?* * Numbers reflect the percentage of respondents who answered. Please note, chart may not add up to 100% due to rounding. Private banking, Wealth management and Asset management were combined in the Autumn/Winter2012 Barometer. Spring 2013 - Europe Banks anticipate an improved outlook for most business lines… Autumn 2012 - Europe 4 4 3 6 5 10 6 14 16 22 23 24 31 40 30 37 51 45 45 46 45 34 40 37 19 24 20 18 16 13 18 12 11 5 8 7 2 3 6 1 Transaction advisory (e.g., M&A) Securities trading Debt and equity issuance Securities services Corporate banking Retail banking Private wealth management/AM Deposit business Comments: • The outlook for the next six months is most positive in retail and private banking, as well as deposit taking. However, after a challenging 2012, the greatest improvement is for investment banking activities. Over 25% of respondents are positive about the outlook for M&A, hopeful that with greater economic stability cash-rich corporations will pursue new acquisitions. Further, with the European Central Bank easing credit spreads, banks also expect an improved performance from their debt issuance and trading businesses.
    • 28 European Banking Barometer – Spring/Summer 2013 8 8 13 22,2 25 16,5 9 9 11 25 28 25 40 33,4 50 50 37 36 36 42 57 40 46 30 44,5 17 67 25 48 41 39 33 16 8 7 8 16,5 25 6 14 10 43 8 13 10 4 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Very good Fairly good Neither good nor poor Fairly poor Very poor 16 11,5 6,5 11 40 20 12,5 6 9 11 18 52 57,5 17 67 50 40 62,5 19 17 35 27 43 24 27 50 10 20 12,5 63 35 38 46 43 8 4 20 11 20 12,5 10 30 13 9 14 6,5 11 2 9 3 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria 15 10,5 16 8,5 12,5 9 13 11 14 48 25 48,5 60 50 37,5 44,5 33 43,5 40,5 36 50 18 53,5 29 20 33,5 12,5 44,5 40 30,5 34 36 37,5 15 7 6,5 20 37,5 11 18 13 12,5 7 4 4 8 2 7 12,5 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria How do you rate the outlook for your bank over the next six months in each of the following business lines?* Deposit business Retail banking …with the strongest performance expected in deposit taking, retail banking plus wealth and asset management * Numbers reflect the percentage of respondents who answered (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’. 10 20 10 42 29 16,5 13 13 8 52 10 30 50 25 57 50 35 37 46 43 21 60 30 25 25 30 67 22 29 38 28,5 14 27 25 8 14 20 16,5 26 18 8 28,5 3 10 3 4 3 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Asset management Private banking and wealth management
    • 29 European Banking Barometer – Spring/Summer 2013 14 7 18 5 13 8,5 50 45 26,6 14 9 55 25 37,5 26 17,5 28 37,5 33 38 46,6 48 82 27 50 50 38 43,5 42 12,5 17 3 6,6 24 9 25 12,5 19 13 14 37,5 20 7 12 13 7,5 12,5 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Very good Fairly good Neither good nor poor Fairly poor Very poor How do you rate the outlook for your bank over the next six months in each of the following business lines?* Even the investment banking outlook is improving… * Numbers reflect the percentage of respondents who answered (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’. Corporate banking Securities services 4,5 7 3,3 11 4 9,5 4,5 30 25 33,3 33,5 30 40 50 40 28,5 34 44,5 29 43,5 61 43,3 33,5 50 40 50 31 43 43 44,5 57 17,5 3,5 16,7 22 10 20 25 14 16 11 14 4,5 3,5 3,3 10 5 2,5 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria 17 8,3 6,5 33,3 9,5 13 11,5 33,5 31 33,3 23 44,5 25 43 44,5 29 35 32 33,5 50 35 46 37 44,5 33,3 14 44,5 55,5 30,5 41 22 50 17 8,3 27 11 8,3 43 11 4 17,5 13,5 11 4 6,5 2 4 2 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Debt and equity issuance Securities trading 4 3,5 7 11 9 9 4 32 39 13 22 18 44,5 25 23 26 30 28,5 43 43 50 33,5 64 50 44,5 44 36 45 50 43 14 11 27 33,5 9 25 11 31 23 21 10 28,5 7 3,5 3 25 9 4 10 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria
    • 30 European Banking Barometer – Spring/Summer 2013 4 3 11 5 13,6 4,5 24 28 14 29 33,5 16,5 57 16 13,6 22 20 50 60 50 52 57 33,5 67 29 65 32 52 60 33 12 22 24 14 22 16,5 14 7 27,2 16,5 10 17 7 7 13,6 5 10 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Very good Fairly good Neither good nor poor Fairly poor Very poor How do you rate the outlook for your bank over the next six months in each of the following business lines?* Transaction advisory …with banks hopeful that greater economic stability will boost M&A and securities trading activity * Numbers reflect the percentage of respondents who answered (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: • Clear positive outlook on corporate and retail with respectively 33,5 an 25% of very good rating for Belgian banks • Weakest performance is expected on debt and equity issuance with 50%
    • 31 European Banking Barometer – Spring/Summer 2013 4,2 3 7 11 6 28 32 37 35 44 56,6 41 39 32,5 33 9,6 19 14 15,5 16 1,6 5 3 6 1 Credit cards Personal loans Personal investment products Personal real estate loans Personal savings and deposits Increase significantly Increase slightly Stay the same Decrease slightly Decrease significantly * Numbers reflect the percentage of respondents who answered. Spring 2013 - Europe In retail banking, demand for savings and investment products remains strong… How do you expect customer demand for retail products at your bank to change over the next six months?* Autumn 2012 - Europe 4 6 3 6 9 27 26 31 38 35 45 35 36 26 34 10 20 20 18 15 4 4 3 6 1 Credit cards Personal loans Personal investment products Personal real estate loans Personal savings and deposits Comments: • Retail customers continue to strengthen their personal balance sheets. As a result, demand for savings and deposit products is strong. However, low interest rates on savings and more stable equity markets have also led to a dramatic increase in demand for personal investment products, as retail customers seek higher yields. Banks also anticipate slightly increased demand for personal real estate lending. Mortgage growth will be strongest in Germany, Italy, Belgium and the Nordics. Mortgage growth may be stronger than expected in the UK, following the government’s recent introduction of the “Help to Buy” initiative to help first-time buyers access mortgage finance. Expectations for other credit products are broadly in line with our Autumn/Winter Barometer.
    • 32 European Banking Barometer – Spring/Summer 2013 11,1 4,4 12 12,5 7,7 5,9 5,9 6,8 7,1 16,7 30,4 36 25 38,5 60 55,6 41,2 29,4 36,8 50 42,9 55,6 52,2 32 25 38,5 20 33,3 37,3 47,1 39,5 35,7 28,6 11,1 8,7 16 12,5 15,4 20 11,1 15,7 11,8 13,7 7,1 28,6 5,6 4,4 4 25 5,9 3.2 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Increase significantly Increase slightly Stay the same Decrease slightly Decrease significantly …with Poland and Spain expecting the greatest growth in personal investment products… How do you expect customer demand for retail products at your bank to change over the next six months?* * Numbers reflect the percentage of respondents who answered. 5,3 4,4 8 7,7 4 11,8 6,2 14,3 12,5 47,4 34,8 56 40 61,5 40 44,4 46 35,3 43,5 35,7 12,5 47,4 34,8 20 10 30,8 60 33,3 40 29,4 33,2 28,6 25 21,7 16 40 22,2 10 23,5 16,1 21,4 50 4,4 10 1 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Personal savings and deposit products Personal real estate loans 11,1 9,5 15,4 14,3 17,3 11,8 11,2 21,4 38,9 28,6 24 22,2 46,2 14,3 51,9 11,8 34,6 35,7 42,9 33,3 57,1 40 44,4 23,1 14,3 23,1 52,9 32,5 28,6 11,1 16 11,1 15,4 100 42,9 5,8 17,7 15,4 14,3 57,1 5,6 4,8 20 22,2 14,3 1,9 5,9 6,4 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Personal investment products 4 10 25 5,9 3,2 15,4 27,8 13,6 48 50 30,8 25 35,3 29,4 32,3 38,5 25 61,1 59,1 24 20 46,2 25 12,5 56,9 23,5 41,3 15,4 37,5 5,6 22,7 12 23,1 50 62,5 7,8 29,4 18,5 30,8 37,5 5,6 4,6 12 20 11,8 4,8 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Personal loans
    • 33 European Banking Barometer – Spring/Summer 2013 …but demand for non-mortgage lending remains subdued How do you expect customer demand for retail products at your bank to change over the next six months?* * Numbers reflect the percentage of respondents who answered. Credit cards 4,8 4 4 11,8 4,3 7,7 12,5 29,4 14,3 36 30 46,2 40 28 17,7 27,8 30,8 12,5 64,7 76,2 32 70 38,5 66,7 60 64 41,2 56,7 53,9 62,5 28 15,4 33,3 4 23,5 9,6 7,7 12,5 5,9 4,8 5,9 1.6 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Increase significantly Increase slightly Stay the same Decrease slightly Decrease significantly Comments: • Belgian banks expect customers demand to increase by 57,7% on personal real estate loans and personal investment products over the next six months.
    • 34 European Banking Barometer – Spring/Summer 2013 * Numbers reflect the percentage of respondents who answered. Banks anticipate increased demand for most corporate banking products and services… How do you expect demand for corporate products at your bank to change over the next six months?* 3 2 5 5 6 16 24 29 39 41 52 50 44 40 34 20 15 18 13,5 14 9 9 4 2,5 5 Equity issuance/IPOs M&A advisory Hedging products Corporate loans Debt issuance Increase significantly Increase slightly Stay the same Decrease slightly Decrease significantly Comments: • Banks anticipate the greatest demand in corporate lending and debt issuance. The growth in corporate lending is unsurprising as European corporations remain heavily dependent on bank debt for their financing needs, but bond issuance is also becoming an increasingly attractive form of finance for large corporations that are able to access the debt markets. Bond financing has become cheaper as central bank action has eased credit spreads. The outlook for equity issuance is more disappointing. Despite recent gains in equity markets, IPO valuations remain low and the high-profile failure of a number of large IPOs last year has discouraged new listings. Equity issuance is also typically more expensive than other forms of finance.
    • 35 European Banking Barometer – Spring/Summer 2013 …especially corporate loans and debt issuance… How do you expect demand for corporate products at your bank to change over the next six months?* * Numbers reflect the percentage of respondents who answered. 9,5 10 6,7 10 4,9 47,6 18,2 14,3 22,2 40 40 25 62,2 35 39,3 28,6 33,3 42,9 72,7 52,4 33,3 20 20 50 26,7 35 39,9 71,4 50 9,5 9,1 14,3 33,3 30 40 12,5 4,4 20 13,5 16,7 9,5 11,1 12,5 2,5 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Corporate loansDebt issuance 16,7 4,8 10 23,8 6,2 16,7 61,9 50 23,8 20 87,5 25 75 28,6 33,3 41,1 33,3 66,7 33,3 16,7 42,9 50 12,5 50 12,5 45,7 23,8 33,6 16,7 16,7 4,8 16,7 23,8 20 25 11,4 19,1 14,4 50 4,8 12,5 14,3 4,8 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria 5 5,3 1.5 40 20 16,7 50 62,5 12,1 26,3 24,4 20 40 50 50 60 71,4 50 25 12,5 66,7 26,3 49,6 40 40 5 25 10 33,3 25 25 12,1 21,1 15,3 40 20 25 10 28,6 9,1 21,1 9,2 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria M&A advisoryHedging products 27,3 4,8 25 2,6 5,3 4,6 45,5 27,3 28,6 33,3 25 25 14,3 18,4 42,1 29,1 33,3 16,7 45,5 27,3 42,9 55,6 37,5 50 57,1 52,6 36,8 44,4 33,3 33,3 9,1 18,2 14,3 37,5 28,6 21,1 10,5 17,9 33,3 50 9,5 11,1 5,3 5,3 4 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Significant increase Slight increase Stay the same Slight decrease Significant decrease
    • 36 European Banking Barometer – Spring/Summer 2013 …but demand for equity issuance will continue to decline outside of France, Switzerland and the UK How do you expect demand for corporate products at your bank to change over the next six months?* * Numbers reflect the percentage of respondents who answered. 5 16,7 12,5 5,3 2.9 20 16,7 23,8 25 12,5 5,9 36,8 16,1 20 55 50 47,6 70 100 25 37,5 58,8 31,6 51,8 25 60 20 16,7 14,3 20 50 12,5 20,6 21,1 19,7 50 20 14,3 10 25 14,7 5,3 9,5 25 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Increase significantly Increase slightly Stay the same Decrease slightly Decrease significantly Equity issuance/IPOs Comments: • While European banks anticipate increased demand for most corporate banking products and services especially for corporate loans with 44% and debt issuance with 47,3%, Belgian banks expect increase of 33% on Hedging products. • However, Belgian banks expect significant decrease of 75% in Equity issuance/IPOs and 50% on debt issuance
    • 37 European Banking Barometer – Spring/Summer 2013 Employment
    • 38 European Banking Barometer – Spring/Summer 2013 3 20 57 36 43 32 9 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Belgium Europe Increase significantly Increase slightly Stay the same Decrease slightly Decrease significantly Spring 2013 Job cuts remains on the agenda of European banks and Belgian banks Over the next six months, how do you expect the headcount of your bank to change?* * Numbers reflect the percentage of respondents who answered. 3 17 17 33 34 50 37 8 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Belgium Europe Autumn 2012 Comments: • European banks expect job cuts to continue to play a significant role in their restructuring and cost reduction agendas, with 41% anticipating a fall in headcounts over the next six months. • Belgian banks follow the same trend , while no increase is expected compared 17% six months ago, 43% expect to reduce headcounts over the next six months
    • 39 European Banking Barometer – Spring/Summer 2013 5,5 9,5 7,1 4 3 25 28 31 8 7,1 30 17 17 20 20 12,5 25 55 22 31 21,5 30 17 51 36 36 57 12,5 30,5 14 28 46 57,1 20 58 24 32 32 43 62,5 14 3 9,5 15 7,1 20 8 8 8 9 12,5 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Increase significantly Increase slightly Stay the same Decrease slightly Decrease significantly Spring 2013 Ongoing restructuring programs will lead to further job cut Over the next six months, how do you expect the headcount of your bank to change?* * Numbers reflect the percentage of respondents who answered. 11 6 9 3 4 3 9 15 26 6 22 15 31 14 19 17 17 27 37 37 33 48 15 23 40 41 34 33 44 55 37 26 44 22 55 28 34 37 37 50 56 9 11 11 15 15 8 4 8 UK Switzerland Spain Poland Nordics Netherlands Italy Germany France Europe Belgium Austria Autumn 2012 Comments: • Austria and Nordics are expecting the greatest headcount reductions with respectively, 75% and 64%. • Spain and UK are the most optimistic countries in terms of headcount increase with respectively 40,5% and 30,5%
    • 40 European Banking Barometer – Spring/Summer 2013 5 7 12 18 28 28 30 33 37 34 32 5 24 19 12 34 23 -29 -25 7 -6 9 28 18 -1 14 54 13 11 27 54 11 58 30 10 20 39 19 -4 n/a n/a -17 1 0 7 15 -8 Other head office functions Operations and IT Compliance, risk and finance Investment banking Other Asset management Private banking and wealth management** Retail and business banking Corporate banking Spring 2013 Back office functions will bear the brunt of job cuts, but banks are beginning to recruit in growth areas... Autumn2012 * Numbers reflect the percentage of respondents who answered that headcount would either increase or decrease. Where no data is shown, respondents thought headcount would stay the same. ** Asset management, Private banking and Wealth management were combined in Autumn/Winter2012, but these have been split for Spring/Summer2013. Respondents were not asked about Compliance, risk and finance or Operations and IT in Autumn/Winter2012. ■ Decrease ■ Increase Net increase/ decrease in headcount Net increase/ decrease in headcount Which areas of the business do you expect headcount increases/decreases to take place?* Comments: • Redundancies will be centered on the back office, where banks are actively streamlining and automating processes to cut costs. However, the rate of job cuts in front office functions – including investment banking – has slowed. More positively, some growth areas expect to see new jobs created, including private banking and asset management across Europe, and corporate banking in the UK and Spain.
    • Ernst & Young Assurance | Tax | Transactions | Advisory About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization 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 not provide services to clients. For more information about our organization, please visit www.ey.com. © 2013 EYGM Limited All Rights Reserved. EYG no. EK0152 This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither EYGM Limited nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor. ED None