05/07/2012
European banks need to reduce costs further
The 25 major European bakns need to find at least EUR40bn in savings in order to return to profitability of near 10% in the next three years, which would at least allow them to compensate the average cost of their capital, says Roland Berger, Les Echos reports. In case economic and fiscal conditions deteriorate, Berger estimates that the banks would need to reduce their costs by EUR68bn to compensate for increased pressure on their revenues. This is the concrete realisation of their declared objective of reducing their average operating ratio from 61% to 55% by 2016. Such a reduction would represent a tripling of annual productivity gains compared with the past 15 years. No profession will be spared, as cost reduction efforts are estimated at 10% to 15% in asset management.
