Friday’s Headlines: World Financial Elite in Davos Think Banks Should Shrink
The world’s bankers are beginning to think small, Bloomberg reports. Citing interviews with bankers at the World Economic Forum in Davos, the newswire says a growing number of participants from the financial sector believe banks should become leaner and smaller to weather the current storm.
"Last year, every bank thought they could grow their way out of trouble," Huw van Steenis, who oversees European bank research for Morgan Stanley in London, told Bloomberg. "Now they realize they have to shrink their way out of trouble."
Bloomberg notes that many bankers have arrived at the annual conference humbled following a year of weak revenues, dropping shares and decimated staff counts and salaries.
European and U.S. financial firms have announced more than 238,000 job cuts since the last Davos meeting. Banking behemoths such as Bank of America and Deutsche Bank are selling businesses as they prepare to meet new Basel III capital requirements that come into effect next year.
"Challenging times for the financial services industry overall, so it’s hard not to be cautious,” Anshu Jain, who takes over as Deutsche Bank’s co-chief executive officer in May, told Bloomberg. "There’s going to be, and is, powerful consolidation within our industry."
The financial industry has been ranked the “least trusted” for two years in a row now by a global survey conducted by public relationsfirm Edelman, Bloomberg adds.
In Davos, bankers hopeful eurozone crisis can be resolved; see orderly Greece default. [Reuters]
California turned down $15 billion mortgage aid in settlement talks with accused U.S. banks. [Financial Times]
Bridgewater Associates returned 23 percent in 2011, when most hedge funds lost money. [New York Times]
Bank of America to freeze salary levels, limit cash bonuses to $150,000 for some investment bankers. [Bloomberg]
RBS CEO annual bonus cut in half; seen as test of UK government pledge on banker pay. [DealBook]
Bank of America CEO Moynihan says no acquisitions currently necessary. [Wall Street Journal]
Greenlight Capital, J.P. Morgan Cazenove fined by UK regulator over suspicious share sales. [Bloomberg]
Bank of America falls further in U.S. mortgage lender rankings, following new strategy. [Reuters]
CEO Ackermann’s curtain call at Davos, after a decade pushing Deutsche Bank to the top. [Businessweek]
BNP Paribas plans to offload $11 billion in energy loans to shrink balance sheet. [Financial Times]
Eurozone banks lent much less in December than a year ago, according to ECB data. [Wall Street Journal]