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banking and finance


V. Shankar, ceo, Standard Chartered, EMEA ANd americas


2


011 has been a challenging year for the banking industry. Banks around the globe have had to contend with


changing economics, shifting political winds and a plethora of new banking regulations. The Eurozone turmoil, US sovereign downgrade, the Arab Spring and unprecedented market volatility were just a few of the challenges. Whereas the 2008 post-Lehman crisis was a genuine banking crisis, the current one is arguably a political and sovereign crisis that is stressing the banking system. And it is unclear where this will all end. Looking ahead, what is clear is that some fundamental shifts are taking place. The economic centre of gravity is shifting from West to East. While the West contends with an ageing population and high debt levels, the East has favourable demographics and growing financial reserves. South-South trade and investment flows are driving the global economy. A new Silk Road is being spun from Asia to Latin America. The Middle East is well placed to benefit from this shift as it has a favourable geographic position and trading in its DNA. This should help create millions of jobs. The Arab spring highlighted that a potential demographic dividend can become a debacle if we don’t create enough jobs for our young people. The Middle East needs to diversify away from its reliance on energy and ensure education puts a greater emphasis on employability..


In 2012, I expect the world to remain


‘interesting’. We live in an inter- connected world. If the developed West, which still accounts for two-thirds of the global GDP, grows at a low or negative rate, it will impact the developing world as well. The world will also keenly watch events in Egypt, Syria and Iran. Asia will continue to be the fastest growing region, driven by growing consumerism in China, India and Indonesia.


Once Basel III and the panoply of other banking regulations are implemented, the minimum capital requirement for banks will be almost four times as high as before the crisis. Many will respond by deleveraging their balance sheets and retreating to home markets. Banking sector profitability could be under pressure from reduced loan demand and hedging activity. Standard Chartered’s strategy in 2012


will be much the same as that we have pursued over the last decade. We will maintain our focus on our core growth markets in Asia, Africa and the Middle East. We will stand by our clients. We will continue to be disciplined on costs, capital usage, liquidity and risk management. These strategies are hardly novel. However, our sustained performance has proven that focusing on the basics of banking and being true to our brand promise of being here for good delivers results. So expect more of the same from us in 2012 and beyond. In banking it is good to be predictable and boring!


GULF BUSINESS / 53 fast facts


standard chartered bank is headquartered in london, uK, with over 85,000 staff in 70 countries and around 3,000 employees in the mena region.


- the bank paid $5.76 billion in salaries last year, a 17.3 per cent increase on 2009.


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