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A good time to be in transaction banking?

With the major blue-chip US banks all lined up for earnings announcement over the next week or so, there’s been a lot of doom and gloom predicted. JPMorgan Chase, Citi, Bank of America and others are apparently facing further asset write downs, losses in consumer credit and mortgages, and shrinking income from investment banking, both fee-based – M&A advisory and underwriting – and from fixed income market activities.

Conspicuous in absence from these tales of woe are the banks’ corporate serving businesses, the transaction banking divisions. This got me thinking about something that Werner Steinmüller, head of global transaction banking at Deutsche Bank, said at the EBAday event in Helsinki a few weeks ago.

He claimed it was an excellent time to be in transaction banking – payments and cash management, trade services etc. As the rest of business lines in diversified global financial groups suffer, the transaction banking groups continue to be a strong income generator and provider of liquidity. Suddenly, boards and CEOs have become a lot more interested in transaction banking, and as a result Steinmüller said it has been a lot easier to get new projects for business improvement signed off. He’s even had colleagues from the investment banking side contacting him and asking about employment opportunities.

I suspect Deutsche Bank isn’t alone in this trend.

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Comments: (1)

John Bullard
John Bullard - BullardCo - London 15 July, 2008, 10:28Be the first to give this comment the thumbs up 0 likes

Indeed it is a good time for transaction banking (aka Operational Risk Management) when one looks at the traumatic conditions prevalent today in the two other Risk Management disciplines of a bank- namely Credit Risk and Capital/Trading Risk Management.

However for FI's which can take themselves beyond Transaction Banking into the wider field of Transaction Management, the future is brighter still.

By helping their clients manage the inherent Op Risk right the way along the transaction cycle (especially as ever more business is transacted electronically across multiple networks), leading banks are already reinventing their customer value proposition- and from this will come repetitive renewable & high quality revenue streams- exactly what bank shareholders now need/expect..... 

We are entering a time of great opportunity for those ready to grasp it

John G Bullard

IdenTrust, London

Elton Cane

Elton Cane

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This post is from a series of posts in the group:

Financial Supply Chain

In the world of international trade, the process of exchanging payments, information and documents between buyers, sellers, banks, and other involved parties is becoming increasingly important for financial institutions. This community aims at presenting views and innovative ideas related to this financial supply chain space.


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