Banking Banana Skins 2008

Banking Banana Skins 2008 - an industry in turmoil

This report surveys perceptions of risks in the banking industry in early 2008 - a time of unprecedented turmoil. The overall level of risk in the market is at an all-time high, as measured by the Banana Skins Index which goes back to 1998.

The most severe risk facing the industry is seen to be liquidity, or the lack of it. With many markets at a standstill since the collapse of the US sub-prime market in mid- 2007, banks are immobilised by funding shortages and an inability to value and dispose of assets. The expectation is that these difficulties will persist and have serious knock-on effects in other markets.

Areas covered in the survey include:

  • Liquidity
  • Credit spreads
  • Macro-economy
  • Risk management techniques
  • Equity markets
  • Rogue trader
  • Management incentives

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