September 2011
Banks: Most of the world’s biggest banks face fundamental challenges to their business models
Almost without exception, they have lowered expectations on the return they will be able to provide on the equity that their shareholders supply. Gone are the days of RoEs of 25% or more. Now, a much more conservative 12% to 15% is the target.
But in so many cases, big successful banks are struggling to hit even those targets. Euromoney has reported before (see ‘Banking isn’t working’, Euromoney, April 2011) on the fundamental issue of banks not being able to provide a return on equity above the cost of their capital. That’s not a recipe for survival, let alone prosperity, in the future....
