Banking industry

Situation

The unsteady credit and stock markets have negatively affected the performance of financial institutions throughout the world. The global credit crunch and overall uncertainty have impacted the Russian banking system as well. Last autumn, market players had to deal with the liquidity crisis, while this year the situation turned out to be far worse. Consequently, companies had to revise their trade, loan and business development strategies as well as valuation and compensation criteria. Stock market downturn, collapse of indices, outflow of foreign capital, low volume of trading and its regular suspension all these factors provoked credibility crisis that in its turn led to a new period of instability in the Russian market — a crisis of assets.

It is still impossible to say what impact the crisis will have upon the global and Russian economies, how badly it will effect situation on the markets and how long they will last, and what are the possible outcomes of this situation. However financial institutions are already facing such issues as capitalization downfall, need for cost reduction and raise of investment appeal. Many companies believe that they can resolve these problems by means of selling non-core assets or merging with other companies. In the same time investors are elaborately choosing new targets, intensively studying the provided data.

Measures of success

For many financial companies, the following issues are of high priority:

• Analysis and development of a new business strategy ensuring sustainable position and further growth
• Search for options to improve performance of financial structures and increase investment attractiveness of the company
• Opportunities to reduce expenses via strategic cost reduction
• Corporate reporting improvement requires optimisation of companies’ development processes for the short-term and long-term periods

Banking Banana Skins 2008

According to the 9^th Banana Skins Banking Risk Survey carried out by the Centre for the Study of Financial Innovation (CSFI) and PricewaterhouseCoopers (PwC), the turmoil on financial markets has brought a dramatic change in risk structure. The risks that seem to be on the rise according to Russian respondents reflect the current global concern about the global market situation and economic implications.

Customer experience index 2008

PricewaterhouseCoopers and Senteo present a joint study of the Russian retail banking industry. The survey offers unique insight into Russia’s competitive retail banking landscape to help banks measure and benchmark performance, improve the overall customer experience, and understand how to use customer experience as a business approach to create a more loyal and satisfied customer base.

Accounting for change: Transparency in the midst of turmoil
A survey of banks’ 2007 annual reports

The turmoil in the credit markets over the last year has raised many questions as to the effectiveness of the current accounting and disclosure frameworks. In our second Banking survey, we have investigated the extent to which the current model has delivered consistency and transparency in financial reporting in the banking industry.

Operational risk: An alternative challenge
The regulation, taxation and distribution of hedge funds around the globe

At the time of publishing this whitepaper, the world financial turmoil was just beginning with the fall of Lehmans and bail out of AIG.

It is widely predicted that the financial turmoil will lead to a contraction of assets allocated to hedge fund strategies in the short term. This is likely to be caused by investor led redemptions but also to a wind down of funds were the investment strategy or size of fund becomes uneconomic.