Blog article
See all stories ยป

Too big to Retail....

The BIS released came out with a list of  'systemically important' banks.http://www.bis.org/publ/bcbs207.htm

So, we now officially acknowledge that whatever happens, even if some countries go down, these banks cannot afford to fail. It reallymeans that whatever these banks do, we have to accept with grace and humility. It doesn't help that many of these giant institutions are actually owned by the governments of their country.

I found a fascinating common theme across all these banks; they are all pruning down their retail banking business. Once would have thought that with the great credit crisis brought about by the investment banks would take these banks back to the basics of retail and conventional banking. But no, almost all of them are scaling back on retail banking! 

Biggest examples are HSBC, Barclays and RBS who are engaged in a fire sale of retail portfolios across the world.

Me thinks this is the worst trend in recent times and somehow the analyts don't seem to be getting it. Any slow down in retail banking only means less credit to the SMEs and consumers and only will prolong the recession.

I think it is time for the G 20 and BIS along with Central Banks of its member countries, to mandate minimum levels of growth in retail banking and retail lending/credit. Even better, should think of proportion of revenues that should be compulsorily coming out retail banking and not from investment banking.

Too big to fail cannot translate to Too big to Retail.......

3886

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 09 November, 2011, 12:56Be the first to give this comment the thumbs up 0 likes

I'm not surprised with this trend: After all, retail banking doesn't offer banks the chance to "privatize their gains and socialize their losses" the way investment banking does!

Sriram Natarajan

Sriram Natarajan

Risk Dog

Credit Risk Fraud Cards Professional

Member since

22 Nov 2007

Location

Gurgaon

Blog posts

74

Comments

29

More from Sriram

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

Finance 2.0

A community for discussing the application of Web 2.0 technologies to financial services.


See all