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Thursday, January 21, 2010
With all of the bank failures and the refocus on our economy, I cant help but try to project where the banking industry is headed in the year ahead. The trend of bank closings leads me to believe that we are going to see a "super league" of banks emerge: Goldman Sachs, Chase, JP Morgan and Deutsche Bank. These are the "too big to fail" titans that every one is talking about. I also think Barclays will make a comeback and join them. I see private equity coming to an end and shifting towards older models of funding that were considered safer investment/funding options. Private wealth managers will overtake "supermarket banks" and it will offer private banking opportunities for the Swiss bank market, despite no let up from the American led campaign to undo Swiss confidentiality. The financial crisis has jump started corporate bonds to help companies refinance.
Governments will hedge against inflation.
Pension funds will hedge against longevity (very important in planning for an aging population).
Sensible risk management.