Wednesday, April 15, 2009

about Bank CEO

The Banker magazine hit the mark again this month with a research report on CEOs views.

During February and March, they surveyed 87 bank CEOs across Western (6.5%) and Eastern (15.6%) Europe, North (5.2%) and South (14.3%) America, Africa (20.8%) and Asia (23.4%).

The figures in brackets are the percentage of CEOs from each region responding, and here’s a summary of key results:

Will business be better or worse in 2009 compared to 2008?

28.7% expect business to be better;
31% expect business to be a little worse; and
11.5% expect business to be a lot worse.

Comment: if 1 CEO was Canadian, then Western European and the USA would equal around 11.5%, about the same number that expect things to be a 'lot worse'!

When will we recover?

Q2 2009 25.3%,
Q3 9.2%
Q4 23.0%
1H 2010 17.2%
2H 2010 19.5%
2011+ 5.7%

That means approximately 57.5% of CEOs expect recovery this year … interesting that South America, Africa and Asian CEOs equal 57.7% of respondents, which means American and European CEOs may be looking to next year.

The main causes of the crisis were:

  1. Exotic financial structures
  2. Excessive leverage
  3. Global macroeconomic imbalances creating excessive liquidity
  4. Poor regulation
  5. Poor management

48.2% described their capital levels as higher than regulatory requirements, whist only 3.5% thought theirs was too low (Citi? BoA? RBS?).

50.6% expect their balance sheet structure to stay the same, whilst 15% thought a significant restructuring would be needed … woohoo!

A key note for those in my community is where do you see investment areas in 2009:

71.3% IT Systems
64.4% Core Banking Systems
63.2% The Bank's Retail Network
56.3% Compliance
36.8% Customers Surveys
29.9% New Staff
25.3% Environmentally Friendly Technology
24.1% CSR Projects

In other words, bugger the planet … we’re more interested in survival and prosperity!

Some other interesting notes include:

  • 40% of CEOs reported retail savings and deposits are the most active business are for the bank and 25.3% said that corporate lending is the most active area; less than 5% said that mortgage lending would be the most active area; and
  • Asked how governments can help banks, less than a third answered through quantitative easing … is that why the Treasury is having second thoughts about more quantitative easing



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