Eurogroup Consulting is pleased to share with you our latest European CIB Outlook 2019 focusing on how banks can address the fundamental constraints the industry is facing: cost inelasticity, revenue decline and talent evasion.
In FY 2018, a large majority of European CIBs experienced negative Jaws and find themselves in a very difficult position, torn between regulatory requirements, much needed infrastructure investments and cost reduction imperatives.
In our study, we assessed how European CIBs can bridge the performance gap with their US peers and investigated potential strategic and organizational levers.
State of the nation
- In FY18, overall CIB revenues grew by +3.5%, mostly driven by Equity and Prime Services and a favourable exchange rate
- By Q1’19, Equities & Prime businesses had fallen by -21.6% causing a -10% YoY fall in operating revenues
- Cost reduction programmes have struggled to keep pace with top line decline, combined with increase volatility in the market and unprecedently low interest rates
How to bridge the profitability gap
- Asset industrialisation: RoE increase c.+2-4%
- Structured finance opportunities: Revenue growth leading to RoE increase c.+2-3%
- Talent empowerment: RoE increase c.+1-2%
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