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  3. European banks’ fourth-quarter earnings, releases of which are clustered around early February, have been surprisingly optimisti

European banks’ fourth-quarter earnings, releases of which are clustered around early February, have been surprisingly optimisti

admin2022-11-01  85
问题     European banks’ fourth-quarter earnings, releases of which are clustered around early February, have been surprisingly optimistic. Yet the chronic illness that has dogged the industry for years remains. Interest rates are rock-bottom, compressing lending margins. Lenders must set aside lots of capital to reassure watchdogs, which depresses returns. And Europe has too many banks, which constrains scale and profits. UBS forecasts the European sector’s return on tangible equity (ROTE) will hit 8% by 2022—above last year’s 5.6%, but still below its cost of capital of 10%. Its price-to-book ratio hovers around 0.5, below its lowest point in 2009.
    Much of that has been outside bosses’ control. The current bosses, drafted in to restore lenders to health in the 2010s, has also managed to lift core capital ratios. But reviving profits and valuations requires a strategic rethink that "wartime" CEOs have shown little will or skill for. A growing chorus of investors and board members want fresh faces to embrace the mission.
    One problem is that the pool of candidates is drying up. When Mary-Caroline Tillman of Russell Reynolds Associates, a headhunter, worked on bank CEO searches ten years ago, her shortlists included 15-20 qualified candidates. Today she typically finds five or six. A lot of industry stars are now too old; a few others have lost their prime. Many suitable executives do not want the top job, which comes with more scrutiny from the press than elsewhere. It is also less richly rewarded. Last year James Gorman, who runs Morgan Stanley, an American bank, was paid $33m. ING faced public criticism in 2018 when it proposed raising its boss Ralph Hamers’s pay to €3m ($3.6m).
    Recruiting outsiders is also hard. Aspiring CEOs must be closely examined by European regulators, implying a ton of banking experience, says Elena Carletti of Bocconi University, who also sits on UniCredit’s board. In America Wells Fargo is the only big bank subject to such rules. Language can create barriers, too. After falling out with Jean Pierre Mustier, its French boss who is due to step down in April, UniCredit’s board is said to have favoured Italian-speakers.
    There is hope, however. Industry veterans praise a class of bankers climbing up the ranks. Headhunters, meanwhile, are considering bright executives in adjacent industries, such as payments or insurance.
    Whether they make it to the top or not largely depends on banks’ boards, many of which pay lip service to transformation but choose boring candidates. That partly reflects their own conservative position. To cure ailing banks, boards too need new blood.
The chronic illness in European banks mostly refers to__________.
选项 A、the failure to earn lasting profits
B、the complexity in lending process
C、too many banks in European countries
D、the severe hit from the financial crises
答案 A
解析 由题干关键词chronic illness in European banks定位至第一段第二句。第二句之后的三句说明了痼疾所指：“利率处于谷底，从而压缩了贷款利润率。放贷机构必须留出大量资金来安抚监管机构，而这又会压低回报率。欧洲银行数量太多，这种情况限制了规模和利润。”这几句话都表明痼疾在于利润太低，回报太少。选项[A]“未能获得持久利润”与此表述一致，故为正确答案。
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