Morgan Stanley’s head of banking/trading discussed how it needs to adapt FICC to the weaker & smaller market opportunities. Though it has been restructuring for the last several years, more needs to be done to drive higher overall equity returns.
Bank of America and JP Morgan had fireside chats about capital constraints and business growth strategies at a recent financial services conference. BAC adopting a more customer focused strategy similar to that employed with great effect by JPM.
Goldman Sachs seeks to get investors and risk managers more comfortable with its Investing & Lending business, which had more volatility in 2015. Shedding more light on strategy, size and composition on a periodic basis would continue to be well-received by investors and risk managers.
We attended a risk management forum discussing the dynamics surrounding non-cleared derivatives. These include data, collateral, margining, liquidity, and funding issues. Though there have been major strides, more needs to be done to improve control risks.
FDIC Chairman Gruenberg gave a speech recounting the progress that the FDIC, U.S. regulators and international prudential authorities have made toward better and more coordinated GSIB bank/GSIFI intervention and resolution. We have noticed that the 2015 GSIB “living wills” from GS & MS show more specific resolution steps.
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.