Then and now: global banks in the post-crisis era

18 September 2018
17:30  - 19:00

James von Moltke, Chief Financial Officer, Deutsche Bank AG

 

Report

On the 18th September 2018, the Center for Financial Studies welcomed James von Moltke, the Chief Financial Officer at Deutsche Bank AG. The title of the CFS-Colloqium “Then and now: global banks in the post-crisis era” held at Goethe University Frankfurt already reveals the topic of this event, however, Mister von Moltke put the specific angle on global systematically important banks (G-SIBs). In his speech, James von Moltke pointed out the revelations resulting from the crisis, the requirements and responds, but also the challenges which global banks are currently facing as well as their strategic advantages.

According to von Moltke, the crisis revealed the too small liquidity and at the same time the too high leverage of banks, as well as the lack of “conduct and controls“. The Deutsche Bank-CFO describes the interconnectedness of Lehman Brothers as the “defining moment for industry”. During the next ten years to follow, “regulators and banks built new safeguards”, so von Moltke. New capital requirements have been established, “liquidity has been addressed”, new accounting standards and restrictions were implemented as von Moltke points out. According to the Deutsche Bank-CFO, resolution planning plays a critical part in “understanding legal entity structures”.

James von Motke underlines that the five criteria for “the world´s riskiest banks” – size, cross-jurisdictional activity, interconnectedness, substitutability and complexity – reflect “only importance, not the riskiness” of G-SIBs. For example, interconnectedness ensures the “efficient working of markets” through “access to global capital markets”, especially regarding securities and derivatives.

According to von Moltke, banks are currently facing financial and strategic challenges. The shrinking revenues and the rising cost savings due to investments in internal control, technology and compliance lead to lower net income. But also cyber crime and the entrance of new competitors, e.g. technological giants such as Facebook, pose challenges to banks.

Finally, James von Moltke points out that banks reactions to the crisis consist of rise of new equity and capital ratios, cut of total assets as well as analyses of different risk types. Nevertheless, G-SIBs also “enjoy some strategic advantages” through their unique position and responsibility. According to von Moltke, they create “superior intellectual property” through their client relationships, mitigation of risks as well as their knowledge in many countries.

Eugenia Baal (CFS)

 

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