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

Challenges for European banks in a crisis and post-crisis environment Chris Skinner Chairman, the Financial Services Club Commentator at www.TheFinanser.com

More and higher Prudential Improving the quality and quantity of bank capital quality capital Regulation Mitigating Capital buffer, leverage ratio procyclicality [BCBS] Risk coverage Imposing more capital requirements on trading and off B/S activities Liquidity Establishing long-term and short-term liquidity standards End 2010 Capital/liquidity surcharge (BCBS) More efficient supervision through supervisory change Reducing } the 1 Narrow banking. Glass-Steagall approach (utility vs speculn) Limiting the probability Volker Rule Reducing the business scope (USA) and impact 2 Prohibition on certain activities and unregulated businesses 1-3 moral hazard of a SIFIs of systemically failure Limiting the size 3 Market share/size ceilings important FSIs 4 Simplified legal structure (subsidiary vs branch issue) Limiting the complexity [FSB] 5 Constraints on cross-border operations Improving 1 Recovery and resolution plans (living wills) October 2010 Firm specific resolution contingency plans capacity 2 Crisis Management Group Cross-border resolution framework Stability Fund Reducing Measure to strengthen core financial infrastructure and markets (Sweden) contagion (CCPs, Repository, Tri-repo, Payment and Settlement System) risk Entity: SIFIs vs all FSIs Financial Crisis Recouping existing losses Financial Systemic Responsibility Tax Base: all liabilities / short-term liabilities / Fee (USA) Sector levy Financing for future crises non-deposit liabilities / wage bill Burden International Financial Transaction Tax Restrictions on Sharing capital inflow Contingent Capital (Brazil/Taiwan) [IMF[ Windfall Tax Supertax June 2010 Capital/Liquidity Insurance Fee etc. (UK/France)

Socially useful? “Some of it is socially useless activity” Adair Turner

“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

“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

“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

©Chris Skinner +44 790 586 2270 chris.skinner@fsclub.co.uk

Settings Fast Food Entertainment Gifts Oyster Money Search Travel Fast Fashion Tell Free Time

The language of QQ http://thechinaobserver.com/2008/12/an-introduction-to-virtual-currency-in-china/

How fast do you go? 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)

C:UsersChrisDocumentsA_Conferences2010_06, AFI SantanderBBVA A “customer centric”distribution model 74

http://thefinanser.co.uk/fsclub/2008/07/bbva-the- first.html

http://thefinanser.co.uk/fsclub/2009/06/a-spanish-first-social-banking.html

A bank that operates as a mobile network and bank Operador Móvil Virtual

Banks Large Gorilla Gorilla Bank Size Gorilla Gorilla Small Weak Strong Balance Sheet

Competition “regain trust” “acquire” Large Gorilla Gorilla Bank Size Gorilla Gorilla Small “avoidance” “camouflage” Weak Strong Balance Sheet

Customer “retention” “acquisition” Large Large Gorilla Gorilla Bank Size Gorilla Gorilla Small Small “loyalty” “advocacy” Weak Weak Strong Strong Balance Sheet

Technology “status quo” “real-time” Large Large Gorilla Gorilla Bank Size Nothing Gorilla Small Small “outsource” “innovation” Weak Weak Strong Strong Balance Sheet

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/

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

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