The financial sector’s prospects in the wake of the credit crisis!Oct 17th, 2008 | By Sören Kupke | Category: Credit Crisis
Strategy+business has published a resilience report article: “Taking a Calmer View” by Klaus-Peter Gushurst, Ivan de Souza, and Vanessa Wallace.
The authors point out that…
“The financial sector’s prospects in the wake of crisis may be better than you think.”
What are their arguments?
“There is no sign of substantial risk of sovereign default in any of the major strong economies around the world. Moreover, the effects of this crisis will not be uniform. To be sure, many healthy banks and financial institutions are being punished by association; they are suffering from the shortage of credit and of investor confidence. But these effects will subside. As governments and central banks cordon off the problem institutions, a level of relative calm and confidence will return to the markets.”
There are still some financial insitutions which will open new opportunities:
“Even now, a number of financial-services organizations are surviving the crisis without major turmoil. They have a historic opportunity to capitalize on the events of the past six months and emerge better positioned than they have ever been before. Their next stage will be to develop new business models and revamp management practices for lasting success in the post-crisis world. The current uncertainty provides a base for their future advantage.”
Which institutions will win?
“The financial-services survivors in developed countries seem to be largely retail banks and wealth management companies. They are gaining significant market share — by attracting customers who seek security and quality and by taking advantage of opportunities for acquisition.”
The authors identify three factors that could help these insitutions:
- They avoided the excesses of fast growth.
- These surviving institutions have maintained strong capital positions and diversified funding sources.
- They have communicated effectively with their boards and the market.
“The crisis will ultimately create a healthy call for change and improvements in the financial world, particularly in risk control, governance, and regulation. Financial-services companies that focus on restructuring their businesses, partnering constructively with regulators, and tightening risk controls and capital strength can play an active role in the redesign of the global industry. For many of them, it will represent a natural evolution from the role they have played in this crisis. Now they must apply the same skills and capabilities as they move from short-term triage to build the next long-term platform of a sustainable global financial-services regime.”