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Conference on cross border financial services at National Bank of Belgium today
Goetz von Peter (BIS): deglobalization post 2008 driven by European banks (see third panel in picture)
Importance of London (blue circle) based on FX turnover #fingeo
Mathias Hoffman (University of Zurich): Europe's flawed banking integration results in costs without benefits
Jan Van Hove (KBC): don't expect more cross border M&A of EU banks:
1) home bias of services in general
2) bank profitability too low
3) no regulatory playing field
4) national consolidation needed first, there are too many small banks
5) no business case for EU consolidation
Jan Van Hove: the Capital Market Union is a political project, not an economic one. There is no economic rationale for it, EU companies not used to market based finance.
Urs Birchler (University of Zurich, SUERF): there are much more statistics on cross border financial flows than on financial services.
Robert Koopman (WTO): who benefits from cross border financial services?
Koopman: Financial services are second largest service sector traded globally (note that this includes foreign affiliate sales)
Gonzalo Gasos (EBF) with brief history of European bank integration
Gasos: post crisis, less M&A of banks in Europe, contrast with increase in US.
Gasos: in the 1990's reduction of barriers, now cross border consolidation is getting harder
Philipp Härle (McKenzie & Company) talking about foreign owned banks in Europe. I blogged about that previously
Härle: banks who digitize in one country at scale are better at it than banks with 10 small foreign subsidiaries
Härle: if you want more M&A, bank profitability needs to increase, which means interest rates need to go up. Regulation is marginal hurdle compared to profitability.
Again on the Capital Markets Union: bank funding is cheaper than market based funding. When corporates issue bonds, it's to diversify their funding mix, not to reduce costs (Härle, during Q&A)
FYI, @suerf_org is also live-tweeting this event.
*Hoffmann, not Hoffman :(
Timothy Clausen (HSBC): fragmentation of regulation has costs: for HSBC about $50 million* per jurisdiction + recurring annual costs
*Not sure if I heard that figure correctly
Frank Wulfs (Bank Julius Bär & co) on financial geography of Europe: each center has specialization. Wealth management in Switzerland, corporate banking in Frankfurt...
Peter Hahn (London Institute of Banking & Finance): banks spend a lot of money on AML. Can they sell this data?
François Benaroya (BNP Paribas): policy makers are scizophrenic. They want mergers, but penalize large banks with larger capital buffers, without taking into account enhanced diversification.
Benaroya: challenges today are not capital, but profitability and technology. We need massive investment to satisfy our clients. US banks can invest in technology and book it as intangible asset. EU banks cannot!
Benaroya: wherever we go (Africa, Turkey, Ukraine...), EU banks recognize the regulation, because countries copy EU regulation. So EU banks are at an advantage.
Peter Hahn: fee income of US banks is phenominal, because clients pay a lot of fees for credit cards and payments. EU clients are better protected.
Wulfs during Q&A:
-60% of costs of Julius Bär are personnel costs
-huge currency mismatch: income in USD and EUR, expenses in CHF
-growth in Asia, not in Europe
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