Two September presentations by a CIO of a major money management firm and a high profile academic discussed the credit cycle. The CIO was more bullish, the academic more bubbly, but both agreed that rates may not rise as quickly as expected.
A risk management panel in New York discussed systemic risk, the effectiveness of Dodd-Frank, and how risk managers can prepare for the dreaded “unknown unknowns” such as August’s market gyrations. Perspectives included a CCP, a U.S. government agency, an academic, and a financial policy think tank.
All three U.S. GSIBs are hesitant to go the M&A route for growth. Instead they plan for organic growth via deeper penetration of their existing client bases. Rates views vary according to benefits and deposit stickiness.BAC MS MS JPM jpmorgan morgan stanley
Regional banks are under assault by a combination of disruptive trends that could be loosening their grip on their regional customer bases. Where once this customer base was insulated by the threats from outside the region big banks, now GSIB banks and non-bank financial institutions have penetrated their regions and are offering national consumer, brokerage, and commercial loan products that ignite more pricing competition.
At the Barclay’s Financial Services Conference AXP and DFS continued to highlight their growth initiatives, Plenti and OptBlue (AXP) and student and personal loans (DFS). Capital One focused on digital investments, but didn’t have much to add after a disappointing second quarter.
The two global investment servicing champions have similar strategies to drive growth via innovation & expanding existing customers. BK addressed its recent fund accounting snafu.
BB&T and Regions both chanted the same refrain as the roadmap to growth – diversified revenues, products, services and geographies. Regions’ energy exposure is in the riskier segments and is bigger than peers as a percentage of total loan book.
Citi and Wells Fargo presented similar stick to their knitting, focus on efficiency stories at the Barclay’s Global Financial Services Conference. Interestingly both are interested in growing credit cards – one back to national prominence and the other to compete with the national goliaths.
Both Morgan Stanley & Goldman Sachs living wills provided more specific guidance on how to proceed through a Dodd Frank Title I resolution process. While the regulators should be more satisfied, still the plans are best guesses of rather difficult to navigate hypothetical loss scenarios.
Discover Financial (DFS) recently presented at the recent Deutsche Bank Financial Services Conference. While more focus was on macro card trends, technology, and mobile payments, we were more interested in the company’s views on the emerging online lending landscape. So far, DFS is watching it, but has not decided how to react. Investors and risk managers are similarly intrigued by this newer financial services group entrant.