Nothing stays the same.
UniCredit’s Jean Pierre Mustier, a 26-year veteran of European investment banking, sees lenders reworking their business models on 1980s lines as regulatory demands for higher capital levels force retrenchment.
Bloomberg reports that Mustier who runs Unicredit's corporate - and investment-banking unit of the lender said, 'Capital requirements will probably keep increasing, specifically for markets. This will push banks to simplify further their activities, going back to a business model from the 1980s focusing mostly on lending, transaction banking and some intermediation'.
As regulators shift their focus to leverage to prevent a repeat of the taxpayer-funded bank rescues of 2008, universal banks, which combine investment, commercial and retail banking, are likely to farm out more of their activities, Mustier said in an interview. Mustier, who joined Milan-based UniCredit in 2011 after working at Societe Generale, has exited most European stockbroking and is concentrating on debt markets.
An industry transformation 'isn’t going to happen overnight - it’s a five-to-10-year scenario', the 52-year-old said.
His vision of a banking world from times past shows the challenges banks face as they grapple with rules that keep getting tougher. Mustier, who ran the first equity derivatives trading business at Paris-based Societe Generale after he joined in 1987, sees banks abandoning activities that soak up capital, in particular derivatives that don’t clear through central counterparties.
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