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Challenges for European banks in a crisis and post-crisis environment

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This is a presentation delivered in November 2010 as keynote in Spain. For more information, go to: http://thefinanser.co.uk/fsclub/2010/11/do-bankers-really-want-to-be-plumbers.html

This is a presentation delivered in November 2010 as keynote in Spain. For more information, go to: http://thefinanser.co.uk/fsclub/2010/11/do-bankers-really-want-to-be-plumbers.html

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  • 1. Challenges for European banks in a crisis and post-crisis environment Chris Skinner Chairman, the Financial Services Club Commentator at www.TheFinanser.com
  • 2. Capital buffer, leverage ratio Financial Sector Burden Sharing [IMF[ June 2010 Reducing the moral hazard of systemically important FSIs [FSB] October 2010 Prudential Regulation [BCBS] End 2010 More and higher quality capital Mitigating procyclicality Risk coverage Liquidity Reducing the probability and impact of a SIFIs failure Improving resolution capacity Reducing contagion risk Systemic levy InternationalFinancial Transaction Tax Contingent Capital Windfall Tax Capital/LiquidityInsuranceFee etc. Recoupingexisting losses Financingfor future crises Firm specific contingencyplans Limiting the complexity Limiting the size Limiting the businessscope Capital/liquiditysurcharge(BCBS) Improvingthe quality and quantity of bank capital Imposingmore capital requirementson trading and off B/S activities Establishinglong-term and short-termliquidity standards 1 Narrow banking. Glass-Steagall approach (utility vs speculn) 2 Prohibition on certain activities and unregulatedbusinesses 3 Market share/sizeceilings 4 Simplified legal structure(subsidiaryvs branch issue) 5 Constraintson cross-borderoperations 1 Recoveryand resolution plans (living wills) 2 Crisis Management Group Cross-borderresolution framework Measureto strengthen core financial infrastructureand markets (CCPs, Repository,Tri-repo, Payment and Settlement System) Volker Rule (USA) 1-3 Stability Fund (Sweden) Financial Crisis Responsibility Fee (USA) Restrictions on capital inflow (Brazil/Taiwan) Supertax (UK/France) Entity: SIFIs vs all FSIs Tax Base: all liabilities / short-termliabilities / non-deposit liabilities / wage bill More efficient supervision through supervisorychange }
  • 3. Socially useful? “Some of it is socially useless activity” Adair Turner
  • 4. “For people to have been selling products which they neither knew or understood – or, worse, did know and none the less did sell – is a profoundly moral issue.” Ken Costa
  • 5. “To restore trust and confidence, we will need to recognise the moral dimension of what has happened, and to restore a proper sense of values in our corporate lives” Stephen Green
  • 6. “The financial sector that is emerging from the crisis is even more riddled with moral hazard than the one that went into it.” Martin Wolf
  • 7. ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
  • 8. Oyster Money Search Travel Fast Fashion Tell Free Time Settings Fast Food Entertainment Gifts
  • 9. ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
  • 10. The language of QQ http://thechinaobserver.com/2008/12/an-introduction-to-virtual-currency-in-china/
  • 11. 1.0 second (s) 0.01 (a hundredth) centisecond (cs) 0.001 (a thousandth) millisecond (ms) 0.000 001 (a millionth) microsecond (µs) 0.000 000 001 (a billionth) nanosecond (ns) 0.000 000 000 001 (a trillionth) picosecond (ps) 0.000 000 000 000 001 femtosecond (fs) 0.000 000 000 000 000 001 attosecond (as) 0.000 000 000 000 000 000 001 zeptosecond (zs) 0.000 000 000 000 000 000 000 001 yoctosecond (ys) How fast do you go?
  • 12. ©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk
  • 13. 74 C:UsersChrisDocumentsA_Conferences2010_06, AFI SantanderBBVA A “customer centric”distribution model
  • 14. http://thefinanser.co.uk/fsclub/2008/07/bbva-the- first.html
  • 15. http://thefinanser.co.uk/fsclub/2009/06/a-spanish-first-social-banking.html
  • 16. A bank that operates as a mobile network and bank Operador Móvil Virtual
  • 17. Gorilla Gorilla Gorilla Gorilla Balance Sheet Weak Strong Bank Size Small Large Banks
  • 18. Gorilla Gorilla Gorilla Gorilla Balance Sheet Weak Strong Bank Size Small Large Competition “regain trust” “acquire” “camouflage”“avoidance”
  • 19. Gorilla Gorilla Gorilla Gorilla Balance Sheet Weak Strong Bank Size Small Large Customer “retention” “acquisition” “advocacy”“loyalty” Weak Strong Small Large
  • 20. Gorilla Gorilla Nothing Gorilla Balance Sheet Weak Strong Bank Size Small Large Technology “status quo” “real-time” “innovation”“outsource” Weak Strong Small Large
  • 21. Further reading: • “Can banks be trusted?” • http://thefinanser.co.uk/fsclub/2010/11/can-banks-be-trusted.html • “Are bankers good or bad for society?” • http://thefinanser.co.uk/fsclub/2009/11/are-bankers-good-or-bad-for-society-part-one.html • “Branches are dead, the future is social” • http://thefinanser.co.uk/fsclub/2010/04/branches-are-dead-the-future-is-social-part-two.html • “The Long Blog about the Long Now” • http://thefinanser.co.uk/fsclub/2010/11/the-long-blog-about-the-long-now.html • “Battleground 2010: Sharks vs Gorillas” http://www.thefinanser.co.uk/fsclub/2010/01/battleground-2010-sharks-versus-gorillas.html And much more at www.TheFinanser.com, as well as our books: http://thefinanser.co.uk/fsclub/books/
  • 22. Challenges for European banks in a crisis and post-crisis environment Chris Skinner Chairman, the Financial Services Club Commentator at www.TheFinanser.com

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