Analytical Diaries

Bankers prophets are doing the roller-coaster again – or still. First we are drowned in messages claiming the end of the biggest crisis in modern day Financial Services. Drowned in weather changing fairytales of re-newing and changing the global financial systems to be more responsible, better governed and tightly regulated in order to avoid the next and bigger systemic earthquake. And just as we start to trust these news and start to question our common sense and even more the meaning of the economic figures we are shown the tide starts to turn again. So what is your take on the status and mid-term direction of the financial services industry? Have bankers learned their lesson?

• Investment focus says ‘No’ – many of the banks hit hard during the last crisis have shortly shyed away from the volatile Investment Banking business. But most or all of them openly proclaim that they are getting back into the game now. And spending analysis underlines that statement. For some global universal banks we know the Investment Banking business takes 2/3 of all new spend.
• Bonus & Salary figures say ‘No’ – when looking at the job openings and the managerial levels sought after it becomes obvious, that many of the jobs slashed during the crisis are being re-staffed, and often on the next level of the corporate hierarchy. So it has become appropriate again to talk about sign-on bonuses and about salaries at the right hand end of the Gaussean distribution curve.
• Regulatory pressure says ‘No’ – while both in Europe and the US there will be after-shocks that lead to tightening of the regulatory oversight all-in-all the rules haven’t changed dramatically. All banks seem to invest in better risk management, both with an operational risk as well as a market risk focus. But the reasoning for most of these investments is self-preservation rather than regulatory mandates.

So looking at the post crisis situation bluntly you could become somewhat of a zynic. Yes, the bankers have learned their lesson: “Let’s make sure we don’t get caught next time round…”

Article first published as Are We Over the Hill Yet – Going Down…. on Technorati.