Wholesale & Investment Banking Outlook - Euromoney
March 20, 2014BLUE PAPERMORGAN ST ANLEY RESEARCHGlobalHuw van Steenis1 44 (0)20 7425 9747Betsey Graseck2 1 212 761 84731Hubert Lam 44 (0)20 7425 3734Michael Cyprys2 1 212 761 7619Bruce Hamilton1 44 (0)20 7425 7597Ted Moynihan 44 (0)20 7852 7555Wholesale & Investment Banking OutlookMis-allocated Resources: Why Banks Need toOptimise NowJames Davis 44 (0)20 7852 7631Maria Blanco 1 646 364 8428Matthew Austen 44 (0)20 7852 7539Christopher Rigby 44 (0)20 7852 7731Fixing mis-allocated resources presents an immediate opportunity for the industry.Greater visibility on constraining regulations, another poor year for FICC, large changes inmarket structure and shifting client needs will mean banks need to take tough decisions inthe next 12 months. Banks who step up to the challenge could add 1-3% points to RoE(up to 20% improvement in returns) from making much tighter portfolio decisions, tradingoff leverage, risk capital, funding and where they have an edge.Our proprietary client survey for this report underscores the need for re-allocation.Our interviews highlight that margins are likely to deteriorate further and that clients planto polarize spend, paying partner banks and specialists but squeezing the rest. Banksneed to pull back another 6-8% of capacity while redeploying resources to areas whereclient demand is growing or needs are unmet, such as serving multi-asset investors,solutions for financial services, or channeling credit to long-term assets or SMEs.Winning business models will be more diverse as banks optimise where they havea real advantage. Balkansation will challenge returns and drive even starker regionalchoices, pushing more firms to focus more domestically/regionally, and putting pressureon global flowmonsters. US firms have the opportunity to benefit from home marketadvantages and their progress on leverage. We see outsized returns for banks who focuson where they have real advantage and scale. We estimate 20-30bn of value could leakto a growing range of non-bank specialists.Oliver Wyman is a global leader in managementconsulting. For more information, visitwww.oliverwyman.com.Oliver Wyman is not authorized or regulated by thePRA or the FCA and is not providing investmentadvice. Oliver Wyman authors are not researchanalysts and are neither FCA nor FINRAregistered. Oliver Wyman authors have onlycontributed their expertise on business strategywithin the report. Oliver Wyman’s views are clearlydelineated. The securities and valuation sectionsof report are the work of Morgan Stanley only andnot Oliver Wyman.For disclosures specifically pertaining to OliverWyman please see the Disclosure Section locatedat the end of this report.12Morgan Stanley & Co. International plc Morgan Stanley & Co. IncorporatedMorgan Stanley Blue Papers focus on criticalinvestment themes that require coordinatedperspectives across industry sectors, regions,or asset classes.Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm mayhave a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factorin making their investment decision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report. Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to NASD/NYSErestrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
March 20, 2014Wholesale & Investment BankingTable of ContentsExecutive Summary .31. The case for optimisation, and why now .82. Likely evolution of business models .143. Winners and losers and capturing new value.272
March 20, 2014Wholesale & Investment BankingExecutive SummaryWe think the market under-estimates the scope forwholesale banks to increase returns over the next 12-24months, as they are forced to focus on businessoptimisation and to make much sharper resourceallocation decisions. We think resources are mis-allocatedtoday, which presents a significant opportunity – we estimatebanks could add 1-3% points to RoE as they adapt and areforced to trade off leverage, risk capital, funding, and wherethey have an edge.We believe the conditions are set for this change in 2014and 2015. First, banks are gaining much more visibility on theshape of regulation – and over the next 12-24 months manyof the remaining post crisis rules will be finalised. In particularbanks need to respond to game-changing higher leveragecaps. We think these are likely to settle at 4-5% – higher thanmany European banks have assumed, forcing a tougher reevaluation of where THE balance sheet is deployed. Second,we forecast lacklustre industry revenues with cyclicalimprovement in Equities and IBD being offset by another pooryear in FICC. Whilst we see some potential for new forms ofcredit, central bank action to reduce volatility is hitting macroproducts hard. Third, there is too much capital and cost tiedup in areas where client payback will be low and banks arestill working on old assumptions about cross-sell and crosssubsidies that may no longer hold. Finally, client demand ischanging rapidly. Our proprietary client interviews withinvestors and corporate treasurers suggest that margins arelikely to deteriorate further, and that clients plan to polarisespend, paying partner banks and specialists but squeezingthe rest. Against this backdrop there remains over-competitionin areas where banks have no edge.This is not to say banks have not already done a lot,having stripped out non-core operations. But there ismore to be done. In the last four years, 20% of industrycapacity has been withdrawn through strategic decisions onparticipation and through the focus on reducing Basel 3RWAs. But the challenge now is to optimise the core. Banksmust pull back another 6-8% of capacity while redeployingresources to the areas where client demand is growing andneeds are unmet. Achieving this will require new operatingmodels, embracing different market structures, which will leadto different winners and losers, and fundamentally shift wherevalue in the industry is captured. We expect to see a muchmore varied industry structure, as banks reshape themselvesaccording to their strengths and financial resources ratherthan mimicking the market leaders.Exhibit 1Evolution of industry RoE2013-2016E, %2013 fully loaded returnsFines6% 3%Non-core drag2013 core perimeter 2%11%Remaining regulatory drag 3%FICC1.5 - 2.5%OptimisationEquities 1%IBD1 - 1.5%Tech & Sourcing2016 base2016 bear / bullCurrent implied valuation *0.5 - 1%12 - 14%8 / 15%9 - 11%Source. Oliver Wyman analysis* Morgan Stanley analysisWhy we anticipate significant further optimisationnow Mis-allocation of resource relative to client demand.For this report we have engaged with a wide range ofsenior individuals within key investor and large corporateclients of the banks. Our findings suggest somesignificant areas of under- and over-provision and add toour conviction that banks can re-allocate and optimise. Inmany cases this is the result of models of cross-subsidythat made sense in prior cycles but can no longer besustained. We estimate 6-8% more cost can be pulled outacross the business, with areas such as multi-layeredsales and coverage, research, duplicative infrastructureand overseas operations in focus. We see a further 8%or 1 trillion of balance sheet across the business (evenafter mitigating actions) that is poorly directed and shouldbe pulled out. Key areas include Repo, Short-TermCorporate Credit and OTC market structures. Beyondthese reductions more needs to be done to shiftresources towards growth areas. Muted growth and unmet needs. Given the need tocompensate for falling revenues in large businesses,such as Rates and Commodities, getting an edge on keygrowth segments will be critical to outperformance. Morethan two-thirds of the investors we spoke with expect3
March 20, 2014Wholesale & Investment Bankingtrading volumes and resource usage to increase, butbuying patterns are shifting, skewing the benefits. Ourresearch underscores the opportunities from multi-assetinvesting, a 3.5trn segment today that we estimate couldgrow 10-15% pa. Our interviews suggest few banks areserving these clients well. We also see huge potentialfrom the credit and risk intermediation needs in the widereconomy that today’s service and product structures donot meet – for example, long-term financing, pension derisking, healthcare, SME lending, and alternative credit. Regulation and leverage. In the last 6-12 months thebid-ask has narrowed substantially on many keyregulations, and there is more visibility on the outstandingrules and their impact on valuation of different activities.The leverage ratio is a key new constraint that must befed in to the pricing of capital. US regulators have alreadymoved to a 5% ratio for the largest institutions and wethink the odds of a 4% leverage ratio for some or all ofEurope’s largest banks are growing. This particularlyimpacts the economics of Flow Rates and Credit,Corporate Lending, Repo and Prime. But importantly italso changes the economics of cross-subsidy modelswhereby cheap financing is used to support the sale ofhigher margin products, and the banks’ portfolio mix.Banks will need to look afresh at how much leverage theycan sustain in their models and where best to use thisscarce resource – as well as look to re-price wherepossible. The winners will move faster to understand andact on the dynamic trade-offs across multiple constraints.Bandwidth and conduct risk. Finally there is somemanagement bandwidth to tackle optimisation, a scarcecommodity over the last few years of crisis management,repositioning and regulatory reform. Coupled with this,repeated misconduct issues have brought a starkerrealisation that more electronic, cleared and transparentmarket micro-structures will, over time, bring broad-basedbenefits and have to be embraced more quickly. Weestimate if fines taken over 2011-13 were allocated backto the core wholesale business, returns would have been3% lower in those years.the structurally shrinking Rates business towards new formsof credit provision. Industry-wide returns were below hurdle in 2013 and wesee little relief ahead. We estimate revenues will be down5-10% in 2014 in our base case, with the turning ratecycle, central banks seeking to keep a lid on volatility andderivative reforms all headwinds. New leverage ratio constraints increase the heat onRates books in particular. Rates revenues have nowdropped 60% since their 2009 highs, but we estimate 3040% of Basel 3 FICC assets are still tied up in OTC ratesmarkets and deliver only single-digit returns. We estimatethe industry as a whole needs to take up to 15-20 billionmore capital out of the business, and to strip out costsfrom areas such as voice sales and manual trading, butwill need to embrace structural reform faster to achievethis.Exhibit 2Leverage constraints shift product return dynamicsCapital supported minus capital required1, BN150100500-50-100Earnings lessthan requiredcapital-150Rates andrepoFX EMCommCredit &SecuritisedRisk capital (RWA) viewEquitiesBankingLeverage capital (B/S) view1. Risk capital (RWA) view defined as available risk capital vs. earnings based on 10% CT1ratio, Leverage capital (B/S) view defined as available BS capital vs. earnings based on 4%leverage requirementSource. Oliver Wyman analysis The lack of liquidity in credit markets was a top concernof most of the investors we spoke with for this report,while many banks cannot make money in flow credit.Right now, those banks able to commit risk and balancesheet are cleaning up. Others are being pushed to aprimary-oriented or specialist models. The strongest firms are pressing their advantage. Weestimate the top beneficiaries have already captured 12% share each in FICC over 2010-13, adding 2% pointson wholesale RoE. We think this trend will continue.The likely evolution of business modelsThe case for significant optimisation is strongest in FixedIncome given the disruptive forces at work including vastchanges in market structure, new leverage rules biting andrevenues that are likely to disappoint again in 2014. Weexpect returns will remain challenged for many banks unlessthey grasp the benefits of market structure change, cutcapacity further and re-allocate capital faster, primarily fromEarnings greaterthan requiredcapital4
March 20, 2014Wholesale & Investment BankingExperience from Equities and FX suggests disruptiveshare gain is possible and that scale players win out. Butthe breadth and complexity of Fixed Income marketsmean a greater variety of models can be viable.In Equities it is now clear that client activity is not goingback to prior structural levels, while cost to serve remainspunitively high for many banks with many of their clients. Wethink RoEs could be boosted 1% from Equities as the cycleturns, but to achieve this will require significant optimisation ofthe model, even for the advantaged scale players. Equities presents a stark resource optimisation challenge– costs are the binding constraint for Cash Equities, asrisk capital is for derivatives and leverage is for primebrokerage. Optimisation will mean looking at theeconomics of prime brokerage through a new lens: ifleverage capital costs were fully charged to the business,returns for many Equities businesses would halve. Someleading banks are already starting to ration their balancesheet and seeking to re-price, but there is a need for amuch broader challenge.The Equities service model – ‘give the client everythingup front and hope they pay you’ – was developed in anera of rapid growth and has not yet adjusted to theprofound shifts in client demand. We estimate that evenat today’s volumes, the Cash Equities business doesn’tmeet the cost of capital for all but a handful of players.Distribution and research are two of the biggestchallenges. Investors we met highlighted that qualitycontent and senior coverage were amongst the topdifferentiators between banks or boutiques that theyused. But this said, many clients felt awash with researchand distribution – some of which was of little value. Wethink as investors skew how they pay even more, an evenhigher share of the value will go to the most differentiatedcontent with integrated coverage, whilst value will fallsharply elsewhere. We think up to 1-2 billion or 7-14%of Equities costs could be cut through tighter tailoring andtiering, investments in client analytics, and removal ofcoverage overlaps in distribution.Scale players and specialists are likely to remainadvantaged: we estimate this will be worth an incremental1-2% points on overall wholesale RoE over the next 2-3years for those who grasp the opportunity.The corporate franchise should be a key growth driverover the next 2-3 years, but returns are resolutely low sofar. The extension of cheap credit will have to become muchmore selective and most banks will have to optimise aroundservice corridors where they can generate economic profit. Corporates are bullish on growth prospects and weforecast 5-7% per annum growth for the 65 billionsector. But lending and coverage over-supply and newleverage and funding constraints mean returns will bebelow hurdle for many banks. We estimate up to 10billion of economic profit destruction for the banks drivenby these factors. The large corporates we spoke with areawash with under-priced credit, and have simply toomany banks pursuing the same debt-derivatives solutionsoffering relative to their needs and available wallet. It’s unlikely that the model of sub-priced credit forancillary benefits is going to unbundle, so to improvereturns most banks must find narrower corridors wherethey compete and monetise, be that around clusters ofunderlying client need in terms of geography, sector andasset class.Exhibit 3Break-even economics for the wholesale corporatebanking franchiseEstimated industry pre-tax economic profit of wholesalecorporate banking franchise - 2013, BNPlus transaction bankingeconomicsCore wholesale corporate franchise economicsM&A &ECM30287Debt &hedgingrevenues35Product sales& executioncosts1Product capitalcosts2Relationshipcoverage costs3NIM, operating cost,risk cost and cost ofcapital41514Basel III andleverage impacton derivativesand cprofit1511Core transactionbankingeconomicprofit612% Cost ofcapital breakeven-10RevenuesOperating costs &cost of capitalNewregulatorycostsEconomic profit1. Includes all product origination headcount, sales and trading headcount, infrastructure costs2. Includes all capital and leverage costs3. Includes all relationship management coverage costs4. Includes all franchise lending costs, losses and cost of franchise lending capitalSource. Dealogic, Oliver Wyman analysisThe industry has started to embrace new supply chainstructures, and we believe there is significant furtheropportunity here. We also see considerable upside frommore strategic investment in technology, as the focus ofchange initiatives starts to shift away from reactive regulatoryresponse. We estimate a 7-13% cut in infrastructure costs( 3-6 billion), and a bump of 0.5-1% points to RoE. The vast majority of IT, processing and support behindbanking services is delivered in-house with platforms thatare highly duplicative across players and offer very littleby way of competitive advantage. At the same time thebanks have suffered rising costs of infrastructure evenwhile their profits have been dropping.5
March 20, 2014Wholesale & Investment Banking We estimate up to 7-9 billion of industry costs could bepushed out into an external supply chain that can deliverscale economies. We are seeing an acceleration ofactivity in this space as the industry matures and banksbegin to overcome the competitive barriers tocollaborative action. We estimate 1-3 billion of annualcost savings are at stake for the sell-side by 2016, or 0.20.5% points of RoE.Technology investment has a critical role to play indelivering on the optimisation agenda, for example insupporting market structure change, and in tacklinglongstanding sources of inefficiency in bank processing.A shift in gear is required, away from reactive regulatoryremediation towards a more strategic infrastructurechange program, and we are already seeing the leadingbanks start to make this transition. We think this candeliver 2-3 billion of cost efficiencies (0.4-0.5% pointsRoE) over the 2016 time frame, as well as being vital forcapturing some key growth themes.Winners and losers and capturing new valueExhibit 4Consolidation with partners and specialists% of surveyed institutional investors1PartnersCore providersSpecialistsCounterparties60%Increasing # ofrelationships10%Decreasing # ofrelationships-50%Current 45%wallet share 35%-50% 10% 10%1. Net proportion of institutional investors expecting to increase or decrease the number ofbanks in each relationship categorySource: Oliver Wyman analysisBalkanisation remains the single biggest drag on returnsyet to be absorbed. Banks will optimise very differently,forcing tougher choices on overseas operations. We continueto see US and some EM players a
investment themes that require coordinated perspectives across industry sectors, regions, or asset classes. March 20, 2014 Wholesale & Investment Banking . Table of Contents . Executive Summary . 3 . 1. The case for optimisation, and why now . 8 . 2. Likely evolution of business models. 14 . 3. Winners and losers and capturing new value. 27 . 2. March 20, 2014 Wholesale .
Outlook 2013, Outlook 2016, or volume-licensed versions of Outlook 2019 Support for Outlook 2013, 2016, and volume-licensed versions of Outlook 2019 ends in December 2021. To continue using the Outlook integration after the end of 2021, make plans now to upgrade to the latest versions of Outlook and Windows. Outlook on the web
13 POINTS 3,600 wholesale 12 POINTS 3,000 wholesale 11 POINTS 2,400 wholesale 8 - 10 POINTS 1,800 wholesale 5 - 7 POINTS 1,200 wholesale 2 - 4 POINTS 600 wholesale 1,200 4 POINTS 800 - 1,199 3 POINTS 400 - 799 2 POINTS 100 - 399 1 POINT I am committed to attending success meetings each week. 3 POINTS I am committed to attending success meetings twice per .
Pitch book template for investment banks. Investment banking pitchbook pdf. Investment bank pitch book. Pitchbook example investment banking. Bankers like to complain about almost everything, but near the top of the complaint list is "investment banking pitch books."Some Analysts claim that you'll devote all your waking hours to creating these documents, while others say they're time .
o Microsoft Outlook 2000 o Microsoft Outlook 2002 o Microsoft Outlook 2003 o Microsoft Outlook 2007 o Microsoft Outlook 2010 o Microsoft Outlook 2013 o Microsoft Outlook 98 o Microsoft PowerPoint 2000 o Microsoft PowerPoint 2002 – Normal User o Microsoft PowerPoint 2002 – Power User o Microsoft PowerPoint 2002 – Whole Test
Outlook 2003 with Exchange 2010 still gives an excellent email experience and the improvements made in Outlook 2007, Outlook 2010 and Outlook 2013 are relatively minor. Outlook 2003 was the first version of Outlook capable of connecting to an Exchange server over the Internet, as opposed to an Exchange server located on the same LAN.
Outlook Integration with Salesforce Page 1 of 19 Outlook Integration with Salesforce This guide will help you set up the Outlook Integration add-in, which replaces the Salesforce for Outlook app you may be familiar with, within Outlook and Outlook on the Web to connect to Salesforce, and show you how to log emails, events and meetings to Salesforce.
Outlook 2016 Setup Instructions Page 1 of 18 How to Configure Outlook 2016 to connect to Exchange 2010 Currently Outlook 2016 is the version of Outlook supplied with Office 365. Outlook 2016 will install and work correctly on any version of Windows 7, Windows 8 or Windows 10. Outlook 2016 won't install on Windows XP or Vista.
Anatomy 2-5 Indications 5 Contra-indications 5 General preparation 6 Landmarks 6-7 Performing the block 7-8 Complications 8 Trouble shooting 9 Summary 9 References 10 Appendix 1 11. 6/10/2016 Fascia Iliaca Compartment Block: Landmark Approach 2 FASCIA ILIACA COMPARTMENT BLOCK: LANDMARK APPROACH INTRODUCTION Neck of femur fracture affect an estimated 65,000 patients per annum in England in .
