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Illustration: Kevin February; research Tessa Wilkie |
Large global banks have spent the years since the financial crisis raising equity, shedding assets, reducing risk and cutting costs in a now constant effort to reinvent themselves and present a credible business case for shareholders to invest in. But one thing keeps changing. Banks’ own forecasts of the return on equity they can promise eventually to deliver to those shareholders continue to shrink.
Banks that had earned over 20% returns in the era of untrammelled leverage that ended in 2008 cut their promise to shareholders in the years after the collapse of Lehman.
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