A vintage year for banks
A number of respected analysts and economists reckon that 2017 will be a vintage year for banking. The wine analogy may be a bit of a stretch, but it is intended to illustrate the big challenges facing French and foreign banks this year. Some commentators are saying that 2017 will be a busy and intense year, while others are predicting excitement, suspense and risk. At any rate, it is not going to be boring. As financial centres focus their attention on the tough negotiations that are about to get underway between Europe and the United Kingdom, Jan Hatzius, chief economist of Goldman Sachs, recently adjusted his view on 2017, saying in Figaro Economie, “I do not expect London-based banks to relocate quickly. London is set to remain a global financial centre, especially in forex.
What’s more, there is no clear alternative between Paris, Frankfurt or Dublin for these banks, which already have European offices. Everything will hinge on the talks between the UK and Europe, and on the banks’ own business activities”. Even so, changes are already afoot in the banking sector, with HSBC announcing that it will move 1,000 global investment banking jobs from London to Paris. Will HSBC’s decision have a knock-on effect for Paris? Marie-Anne Barbat-Layani, head of France’s Banking Federation, thinks so. “Foreign banks are looking ahead, seeing where they can put their people.
Many of them are conducting assessments right now”, she said recently, speaking to Les Echos, a financial daily. The real change is the new notion that financial centres might specialise, since no one capital can stake a claim to become a financial hub on a par with the City. This should make for an eventful year, not least in France, where the Macron Act is shaking up the banking sector. The financial press is calling it a big bang, because from 6 February, under the new legislation, it will be easier for people to transfer accounts from one bank to another. This raises the possibility of “uberisation” in the sector, which might hurt traditional banks. If all that were not enough, French banks are also facing the need to reinvent their vision of savings and investment management.
Returns on life insurance are dwindling with every passing year, and young working people, in particular, are turning away from these products. The Now Generation is keen to change its relationship with banks. Deutsche Bank employees may no longer allowed to send text messages at work, but Generation 3.0 is telling banks to rethink their customer relations. You can’t say we didn’t warn you – 2017 will not be a dull year. Christian Moguérou
Sources: Le Figaro Economie, Harvard Business Review, Financial Times, Le Monde, Les Echos