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

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

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Page 1: Challenges for European banks in a crisis and post-crisis environment

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

Chris SkinnerChairman, the Financial Services Club

Commentator at www.TheFinanser.com

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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 capitalMitigating

procyclicality

Risk coverage

Liquidity

Reducing

the

probability

and impact

of a SIFIs

failure

Improving

resolution

capacity

Reducing

contagion

risk

Systemic

levy

International Financial Transaction Tax

Contingent Capital

Windfall Tax

Capital/Liquidity Insurance Fee etc.

Recouping existing losses

Financing for future crises

Firm specific

contingency plans

Limiting the

complexity

Limiting the size

Limiting the

business scope

Capital/liquidity surcharge (BCBS)

Improving the quality and quantity of bank capital

Imposing more capital requirements on trading and off B/S activities

Establishing long-term and short-term liquidity standards

1 Narrow banking. Glass-Steagall approach (utility vs speculn)

2 Prohibition on certain activities and unregulated businesses

3 Market share/size ceilings

4 Simplified legal structure (subsidiary vs branch issue)

5 Constraints on cross-border operations

1 Recovery and resolution plans (living wills)

2 Crisis Management Group

Cross-border resolution framework

Measure to strengthen core financial infrastructure and 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-term liabilities /

non-deposit liabilities / wage bill

More efficient supervision through supervisory change

}

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Socially useful?

“Some of it

is socially

useless

activity”

Adair Turner

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“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

Page 24: Challenges for European banks in a crisis and post-crisis environment

“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

Page 25: Challenges for European banks in a crisis and post-crisis environment

“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

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©Chris Skinner +44 790 586 2270 [email protected]

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Oyster Money Search Travel

Fast Fashion Tell Free Time

Settings Fast Food Entertainment Gifts

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©Chris Skinner +44 790 586 2270 [email protected]

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The language of QQ

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

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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?

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©Chris Skinner +44 790 586 2270 [email protected]

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74

� C:\Users\Chris\Documents\A_Conferences\2010_06, AFI Santander\BBVA

A “customer centric”distribution model

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

first.html

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

Page 77: Challenges for European banks in a crisis and post-crisis environment

A bank that operates as a mobile network and bank

Operador Móvil Virtual

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Gorilla Gorilla

Gorilla Gorilla

Balance SheetWeak Strong

Bank Size

Small

Large

Banks

Page 81: Challenges for European banks in a crisis and post-crisis environment

Gorilla Gorilla

Gorilla Gorilla

Balance SheetWeak Strong

Bank Size

Small

Large

Competition“regain trust” “acquire”

“camouflage”“avoidance”

Page 82: Challenges for European banks in a crisis and post-crisis environment

Gorilla Gorilla

Gorilla Gorilla

Balance SheetWeak Strong

Bank Size

Small

Large

Customer“retention” “acquisition”

“advocacy”“loyalty”

Weak Strong

Small

Large

Page 83: Challenges for European banks in a crisis and post-crisis environment

Gorilla Gorilla

Nothing Gorilla

Balance SheetWeak Strong

Bank Size

Small

Large

Technology“status quo” “real-time”

“innovation”“outsource”

Weak Strong

Small

Large

Page 84: Challenges for European banks in a crisis and post-crisis environment

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/

Page 85: Challenges for European banks in a crisis and post-crisis environment

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

Chris SkinnerChairman, the Financial Services Club

Commentator at www.TheFinanser.com


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