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European bank deleveraging

Capital gain, asset loss

 

Background

Welcome to The Deloitte Bank Survey 2012. It focuses on deleveraging because it is the biggest challenge - among many - facing European banks. Deloitte UK undertook primary research alongside DTTL member firms across Europe, surveying 18 European financial institutions, representing €11 trillion of assets, about their experience and expectations of deleveraging. The survey was reinforced by one-on-one interviews.

Key findings

The Survey’s findings make challenging reading. Among the key findings are the following:

  • Deleveraging is a regulatory imperative – bankers told us that boosting regulatory capital is the key driver.
  • European banks are allowing loans to run off as their key means of deleveraging.
  • Because banks are deleveraging through run-off more than through divestments, deleveraging will be slow.
  • The scale of bank deleveraging is modest relative to past crises and the preceding credit boom.
  • Deleveraging is reversing the Single Market in financial services, with plans centred on Western Europe.
  • Private equity, investment firms and non-European banks are expected to be the main buyers of bank assets. Price agreement represents the main barrier to sales.
  • Commercial real estate loans are next on the block, and are also expected to be trickiest to sell.

Watch the video

In this video Margaret Doyle, Director in the Deloitte Financial Services Insights team in the UK, interviews Zahir Bokhari, UK Banking Leader, Vivian Pereira, Partner in our Banking and Capital Markets team, and David Edmonds, Partner in Deloitte’s Portfolio Lead Advisory team, to discuss our intentions behind carrying out this survey and some of the key findings.

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The Deloitte Bank Survey 2012 (PDF)

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