Financial ServicesFinancial Services
Challenges and ProspectsChallenges and Prospects
Eurofound Breakfast Debate hosted by...
ProgrammeProgramme
Opening Pervenche Berès Chair, Employment and Social Affairs Committee
Jorma Karppinen Director, Eurofo...
Financial Services - Challenges andFinancial Services - Challenges and
ProspectsProspects
Radoslaw Owczarzak
Research Mana...
Financial Services - Challenges andFinancial Services - Challenges and
ProspectsProspects
Kurt Vogler-Ludwig
Managing Dire...
Source: Eurostat (LFS)
Employment changeEmployment change
I/2008 – I/2010I/2008 – I/2010
EU27EU27
% change
Source: Economix
Adaptation to the crisisAdaptation to the crisis
in European bankingin European banking
● Significant del...
Current business modelsCurrent business models
Liberal
approach
Sustainable
approach
State-ownership
approach
Profit orien...
Financial market regulationFinancial market regulation
EU USA G20
Prudential rules
Capital Requirements
Directive
Tighter ...
Drivers of scenariosDrivers of scenarios
Source: Economix
Three scenarios forThree scenarios for
the European financial services sectorthe European financial services sector
● The ...
The past is the futureThe past is the future
– a high-risk scenario– a high-risk scenario
Assumptions
Regulation Weak
Prof...
A new world order for financial marketsA new world order for financial markets
– the end of the golden age– the end of the...
Divided economiesDivided economies
– a worst case scenario– a worst case scenario
Assumptions
Regulation Weak
Profit orien...
The impact of investment funds onThe impact of investment funds on
restructuring practices and employmentrestructuring pra...
Eurofound financial service sector reports 13 october 2010
Eurofound financial service sector reports 13 october 2010
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Eurofound financial service sector reports 13 october 2010

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If European policymakers, big financial institutions and social partners cannot agree on the full extent of reform, then Europe's financial services sector runs the risk of being plunged back into the unsustainable situation of chasing short-term profit with high risks. Eurofound's new report on the challenges and prospects for the European financial services sector was presented to the European Parliament on Wednesday 13 October 2010.

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Eurofound financial service sector reports 13 october 2010

  1. 1. Financial ServicesFinancial Services Challenges and ProspectsChallenges and Prospects Eurofound Breakfast Debate hosted by Pervenche Berès European Parliament 13 October 2010
  2. 2. ProgrammeProgramme Opening Pervenche Berès Chair, Employment and Social Affairs Committee Jorma Karppinen Director, Eurofound Financial Services: Challenges and Prospects Speakers: Radoslaw Owczarzak Research Manager, Eurofound Kurt Vogler-Ludwig Managing Director, Economix Commentators: Oliver Roethig Head of UNI Europa Finance Arnold Kuijpers Managing Director, Rabobank Exchange with participants The impact of investment funds on restructuring practices and employment Donald Storrie Head of Unit, Eurofound Exchange with participants Closing Jorma Karppinen Director, Eurofound Pervenche Berès Chair, Employment and Social Affairs Committee
  3. 3. Financial Services - Challenges andFinancial Services - Challenges and ProspectsProspects Radoslaw Owczarzak Research Manager, Eurofound
  4. 4. Financial Services - Challenges andFinancial Services - Challenges and ProspectsProspects Kurt Vogler-Ludwig Managing Director, Economix
  5. 5. Source: Eurostat (LFS) Employment changeEmployment change I/2008 – I/2010I/2008 – I/2010 EU27EU27 % change
  6. 6. Source: Economix Adaptation to the crisisAdaptation to the crisis in European bankingin European banking ● Significant deleveraging and substantial write-downs on risky assets ● Declining profits rates ● Downsizing of state-owned banks ● Partial concentration on retail and commercial banking ● Partial revival of investment banking ● Reform of remuneration systems (deferred payments) ● Advance of risk assessment tools ● Substantial job cuts (-5 %)
  7. 7. Current business modelsCurrent business models Liberal approach Sustainable approach State-ownership approach Profit orientation • • • • • • • Client orientation • • • • • • • Policy stake • • • Restructuring of activities • • • • • • Proprietary trading • • • • • Retail and commercial banking • • • • • • • Globalisation • • • • • Job cuts • • • • • • Main target Leading (global) financial service provider Quality services with strong customer commitment Leading (national) retail and commercial financial service provider • • • strong • • medium • weak Source: Economix
  8. 8. Financial market regulationFinancial market regulation EU USA G20 Prudential rules Capital Requirements Directive Tighter rules for core tier 1 capital; Lower leverage ratios Taxes and levies Divers national regulation Bank levy of $ 117 bn Guarantee funds European Financial Stabilisation Mechanism (€ 750 bn); National funds Strengthening of IMF Restructuring Partial separation of investment banking Consumer protection Divers national regulation Consumer Financial Protection Bureau Compensation schemes Divers national regulation Advanced shareholder rights Sustainable compensation rules Supervisory boards European System of Financial Supervision Financial Stability Oversight Council Risk monitoring European Systemic Risk Board Living wills for complex institutions Financial Stability Board Derivatives markets Alternative Investment Funds Directive Central trading platforms Supervision of hedge funds Rating agencies EU Commission proposal Office of Credit Ratings Tighter rules Source: Economix
  9. 9. Drivers of scenariosDrivers of scenarios Source: Economix
  10. 10. Three scenarios forThree scenarios for the European financial services sectorthe European financial services sector ● The past is the future – a high-risk scenario ● A new world order for financial markets – the end of the golden age ● Divided economies – a worst case scenario
  11. 11. The past is the futureThe past is the future – a high-risk scenario– a high-risk scenario Assumptions Regulation Weak Profit orientation Strong Trading Strong Labour productivity increase High Risk assessment Sophisticated Economies of scale High M&A High Impact on - liberal FI + + + - sustainable FI + - state-owned FI − − − - insurance = Employment − − − Working conditions Rising efficiency standards Social dialogue Difficult Risk of instability High Source: Economix
  12. 12. A new world order for financial marketsA new world order for financial markets – the end of the golden age– the end of the golden age Assumptions Regulation Strong Profit orientation Limited Trading Low Labour productivity increase Low Risk assessment Strong Economies of scale Medium M&A Weak Impact on - liberal FI − − − - sustainable FI + + + - state-owned FI − − - insurance + + Employment − Working conditions Competence enhancement Social dialogue Rising impact Risk of instability Low Source: Economix
  13. 13. Divided economiesDivided economies – a worst case scenario– a worst case scenario Assumptions Regulation Weak Profit orientation Strong and weak Trading Strong and weak Labour productivity increase High and low Risk assessment Weak and strong Economies of scale High and low M&A High and low Impact on - liberal FI ++ - sustainable FI ++ - state-owned FI − − − - insurance = Employment − − − Working conditions Strong differences Social dialogue Very difficult and strongly integrated Risk of instability Very high Source: Economix
  14. 14. The impact of investment funds onThe impact of investment funds on restructuring practices and employmentrestructuring practices and employment Donald Storrie Head of Unit, Employment and Competitiveness, Eurofound
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