BI Chinese website report on September 15
Wall Street banks have not done enough to repair their financial situation and carry out restructuring activities, even though they have cut costs by billions of dollars and reduced spending on major businesses since the global financial crisis, according to a recent report.
On Wednesday, McKinsey published a report onbankingThe annual report points out that Wall Street banks still face risks brought about by negative factors such as weak profit performance, high costs, and strategic uncertainty. In this report, McKinsey expressed disappointment that the company's banking customers have not made much progress on these issues.
“It is an inescapable fact that restructuring activities in the banking sector have so far failed to deliver sustainable performance.” The report said. “The banking industry needs a more fundamental change because we recognize that for most banks, the traditional model of global capital markets and investment banks is no longer an option.”
The report points out that the world's top ten banks are particularly under pressure to adapt to the post-financial crisis environment. The reason is that these banks are struggling to cope with problems such as rising operating costs, extremely low interest rates, and revenue pressure on critical fixed income businesses. In mid-2015, the overall return on equity of these banks was only 7%. In contrast, analysts usually expect a minimum return on equity of 10% to enable banks to meet their capital cost requirements.
Since 2012, revenue from the capital markets and investment banking business of the world's top ten banks has declined 10% to 144 billion US dollars. The market share of these banks has been invaded by regional banks and local banks, and the latter's revenue has increased 14% over the same period.
McKinsey pointed out that if these large banks want to increase their return on equity, then they should consider a range of options, such as selling their products separately to their customers rather than selling a complete set of bundled services; better allocating their balance sheets to create more profits; using digital technology androbotsTechnology; participating in industry utility construction to reduce costs; and addressing the risk-taking behavior of bank employees, etc.
The report also points out that in addition to the banking industry, many other industries have been successfully restructured, such as the telecommunications, semiconductor, and automotive industries.
“The path to a sustainable future is still open, but they must make tough choices and act boldly now.” The report concluded. (Nebula)
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