Global Corporate an Investment Banking

Global Corporate & Investment Banking Practice

Global Corporate and Investment Banking:

An Agenda for Change

Global Corporate and Investment Banking:

An Agenda for Change

Foreword

1

Day of Reckoning? New Regulation and Its Impact

3

On Capital Markets Businesses

Europe: Beyond the Crisis, New Challenges

31

And Opportunities

Asia: The Future of Corporate and

37

Investment Banking

Out of the Shadows: Central Clearing of

56

Repurchase Agreements

Winning in Flow: Scale Is Everything

83

Foreword

1

Foreword

F our years after the financial crisis, the agenda for change within the global corporate and investment banking (CIB) industry remains significant. In this compendium, we bring together five articles published over the past year that serve as a ready reckoner for the CIB agenda--not just for capital markets and banking, but also for critical components of the banking infrastructure that supports funding.

Day of Reckoning explores the impact of new regulation on capital markets businesses. After-tax return on equity for these businesses is likely to fall from 20 percent pre-regulation to 7 percent, absent any mitigating actions by banks. We suggest strategies that banks can pursue to manage the impact of regulation on their capital markets businesses and to maintain an acceptable level of profitability. We examine portfolio optimization, model and data quality improvements, financial efficiency and operational enhancements.

In Europe: Beyond the Crisis, New Challenges and Opportunities, we review the impact of new regulation on corporate banking businesses. Despite significant reductions in credit costs, profits remain well below 2007 peaks in these businesses. Many of the mitigation strategies for capital markets businesses are relevant to restoring profitability to corporate banking. In addition, banks should consider upgrading cross-selling, taking pricing to the next level and improving risk culture.

Asia: The Future of Corporate and Investment Banking provides a comprehensive overview of one of the key CIB growth markets. Asia is expected to account for a startling 43 percent of global CIB market growth between 2010 and 2015. Here, the agenda is focused on how to take advantage of three large business opportunities for banks: the rapidly growing midcorporate segment, the growth of Asia's capital markets and the continued expansion of regional transaction banking.

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