Technology may deliver better returns than regulatory incentives in the drive to stimulate lending to small and medium-sized enterprises.
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Europe’s equity capital markets picked up in 2013 after three years of declining volumes. Equity bankers are confident that this year will be just as busy, even if supply from Europe’s banks – traditionally the biggest issuers – wanes.
The Russian government is pushing hard for more financing to find its way to the small and medium-sized enterprise sector, but opaque accounts and a shortage of management skills are deterring banks and private equity funds alike.
The exposure of Cypriot banks to the Greek economy has prompted rating downgrades for the country. But with some of the island's banks boasting high liquidity and interest from foreign investors, the long-term prospects look brighter.
The combined and cumulative effects of new regulations and a hostile market environment means banks are fighting to build both capital and liquidity. Many questions remain about banks' ability to do both, and the effects of doing either on economic growth.
Few will deny that bank boards were as culpable as their senior management in failing to spot the dangerous levels of risk building within the banks in the lead-up to the financial crisis. There is clear recognition that things need to change. But changing risk structures, and more importantly, risk cultures, is easier said than done.
Recent events show that the desire to put in place a global recovery and resolution regime to prevent the kind of government intervention that was required during the financial crisis is very much a work in progress. For banks it requires a tremendous amount of work and unprecedented transparency about their operations. For national regulators, it means forging agreements that bring together disparate insolvency regimes.
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