Awards for Excellence 2016: Redefining global banking
This year marks the 25th anniversary of the Euromoney Awards for Excellence. They were the first of their kind in the global financial publishing industry. The nature of the global banking industry is constantly changing, and this year we made fundamental changes to the categories to reflect this.
The main purposes of these changes were three-fold. Firstly, we wanted to move away from awards based on individual product categories where other determinants of status and ability are readily available. Secondly, we focused the attention of our editors on the banks/investment banks that can demonstrate an ability to deliver the different parts of their firms to meet clients’ needs and adapt to market and regulatory conditions. And finally, we wanted to consider candidates for these awards that might not be global in scale, but are world-class in the way they are run and in the services they deliver to clients across multiple business lines and jurisdictions.
We firmly believe these changes will ensure that Euromoney’s awards remain the hardest to win, and the most sought-after, in the global banking industry. We received more than 1,000 submissions for the awards this year. We conducted more than 500 meetings related directly to the awards process. And, in the end, we recognize the best banks in the industry across 20 global categories, 70 regional awards, and awards in more than 100 countries around the world.
Through that exhaustive process, we learned a lot about the state of the global banking industry today. You can read more about that from the individual editors in our new-look comment pages. But here’s some important things that anyone who works in banking or investment banking today, or is a client of one of the banks, or a shareholder, should know:
Find the right strategy and stick to it
There’s something fundamental that links the three most recent winners of our award for the world’s best bank: UBS in 2014, Citi last year and BNP Paribas in 2016. They looked at their unique, core competencies, built their businesses around those and have stuck to the plan. Differentiation is not easy to find, but in today’s markets it’s vital. And one other thing to note: they are all universal banks.
The US banks aren’t having it all their own way
You’ll read, in these pages and elsewhere, about how big US banks are dominating global finance, helped by their huge franchises in their domestic market. If you’re looking at group revenues, or revenues in global investment banking, what you read is correct.
Redefining global banking
But banking is about performance beyond revenues or absolute profits. And in those terms, the big US banks aren’t always making their advantage count. Look at the returns on equity of those dominant banks. In 2015, the year in which their dominance was supposed to reach new heights, none of Citi, Bank of America, Goldman Sachs or Morgan Stanley delivered a return on equity of more than 10%. But BNP Paribas did, UBS did, and so too did banks such as Lloyds in the UK and DBS in Singapore. In investment banking, where the US banks are supposed to have taken an unassailable lead, our investment bank of the year delivered full-year 2015 results in which revenues were up 7% and profits up 30%. That bank was HSBC, one that has a limited US franchise. No US firm could claim a similar performance.
Digital is coming faster than you think
The past 12 months were the time when banks had to stop just talking about the challenges of new, disruptive technology. Some have already taken the lead. DBS, for example, our digital bank of the year, launched a new digital bank in India this year which it claims could serve five million customers with a staff numbering less than the typical branch of a McDonald’s. Just re-read that and think about it for a moment. As our banker of the year, Francisco González of BBVA, once told us: “Banks that are not prepared for new competitors face certain death.”
The best banks have the best management
This is the most important point of all. It’s not really about whether a bank has a good business model or a bad business model. The lessons of the crisis tell us there were good management teams and poor ones. Some banks failed. Others survived. Some of the failures were universal banks, some were retail, some were investment banks. Good management implements and executes the right strategy.
Jean Lemierre, chairman of our bank of the year BNP Paribas, tells us this month: “This bank has a CEO and a management team that understands the machinery of banking and of this institution very well. They are professional technicians that listen to the engine of the bank and that really know how the engine works.”
If you’re a bank chairman reading this, can you say the same about your own senior management team? If so, you could well be winning one of our big awards next year.