Consulting group McKinsey says the world’s leading global banks need to make significant changes, including merging operations (fixed income and equities trading) and cutting staff, if they want to avoid a decline in profitability, according to a report by Bloomberg.
The firm says they should ruthlessly prioritise staff – weeding out the non-profitable ones, cut the number of products, continue to reduce headcount and try to determine the true profit a trader generates.
McKinsey says the return on equity was 8% last year at the 13 largest investment banks and may drop to 4% by 2019 without remedies.
Jiang Jianqing, chairman of Industrial and Commercial Bank of China, the country’s biggest bank, has warned that bad loans will inevitably rise and weaker lenders will be wiped out as the government relaxes its grip on the economy.
Former Commonwealth Bank of Australia chief David Murray will head a “root and branch” review of Australia’s financial system, reports the Sydney Morning Herald.
The inquiry has been given a mandate to make recommendations to foster an efficient, competitive and flexible financial system, consistent with financial stability, prudence, integrity and fairness.
Job advertisements in New Zealand for October rose at the strongest rate in more than two years, according to a survey the ANZ bank and reported by Singapore’s Business Times.
“The economic expansion in the second half of this year is looking assured, but a strengthening labour market, not just a booming house market, is required to make the upturn sustainable,” said ANZ senior economist Sharon Zoellner. “This data suggests the unemployment rate will continue to decline over coming quarters.”
The Asian Development Bank (ADB) plans to set up an Asia Pacific Infrastructure Fund to cater to the infrastructure financing needs of member countries in the Asia Pacific region, India’s newspaper The Hindu reports.
Over the next decade, the infrastructure financing needs of Asia-Pacific region are estimated at about $8 trillion.