The global credit crunch has forced Germany's wholesale banks to rethink their strategy, particularly regarding retail banking.
That is partly because the number of pure wholesale banks has gone down, but also because they face higher borrowing costs.
Higher charges, especially for trading, could cause global wholesale banks' risk-weighted assets to balloon by one-fifth on average, reckons Huw van Steenis of Morgan Stanley.
There is little justification for more than a couple of Landesbanks, which act as wholesale banks for the savings banks, let alone the nine groups that exist.
Retail banking has proved more resilient, which is why the wholesale banks want to get back in, having reduced their presence in favor of riskier businesses about a decade ago.
The FSA is doing this by putting pressure on wholesale banks, which it also regulates: those that lend to hedge funds against slim collateral will have their capital-adequacy requirements made more burdensome.
Such an infringement of their liberties might be justified, if the chancellor were to formally rule that retail banks are much more likely to be rescued by taxpayers than wholesale banks - because companies should invest their money on a caveat emptor basis, and should not benefit from taxpayer-provided insurance.
For years, some bankers have wanted to see a similar product traded wholesale by banks.
During the Bolshevik Revolution, Lenin declared class war against wicked capitalists, seizing privately-owned land, banks, wholesale and retail businesses.
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The Internet may not have brought about the wholesale cannibalisation of traditional banks' business, but it is still not good news for them.
This trend continued unabated until the credit crisis sparked a near closure of the RMBS market, and several large wholesale lenders were acquired by major banks.
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In order to support high levels of wholesale funding, UBS says, banks may need to demonstrate levels of core Tier one capital, which is effectively common equity, well in excess of the levels most Eurozone banks currently hold.
Banks' use of the three-year loans also means current holders of bank debt would stand behind the ECB in the line to collect if a borrower collapsed, so "it has become even more expensive for banks to fund in the wholesale bond market, " said Ben Bennett, credit strategist at Legal and General Investment Management.
Despite the considerable strengthening of capital positions compared to the levels of 2008-2009, European banks have recently experienced market funding difficulties resulting amongst others from stress on wholesale liquidity markets, high spreads in secondary markets, and, for some EU banks, growing difficulties in accessing funding from U.S. counterparties.
The notion that there could also be some downsides to a wholesale government takeover of America's big banks is given short shrift.
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They were the means the banks used to finance lending before the wholesale markets seized up.
This means pure retail banks lose out, but those with wholesale arms boost profits by taking firms to the bond market.
Indian banks rely on deposits, not fickle wholesale markets, to fund themselves.
We've seen many banks cut back on what they call wholesale lending, meaning the bank is funding mortgages that mortgage brokers are actually taking the paperwork for.
By their nature, banks borrow short (from depositors or the wholesale markets) and lend long.
But the merger of savings banks with Landesbanks would create larger banks with a flow of both retail and wholesale business.
Wholesale lenders competed aggressively for market share by undercutting the banks and creating sexy new mortgage products like home-equity, interest-only and low-documentation loans.
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The frailties of the Wall Street investment banks in particular, their exposure to wholesale markets for funding have become shockingly clear.
Banks have more capital and rely less on fickle wholesale funding than their European peers.
Supervisors on both sides of the Atlantic concluded that the bank's heavy reliance on wholesale markets (very short-term loans from companies and other banks) left it especially vulnerable to running out of money when confidence collapsed.
Stronger banks and cajas have also been able to borrow from the wholesale markets, even if only at high rates and, in some cases, using state guarantees.
True, included in that list of 50 are some major global banks who are unlikely to have much trouble borrowing on the wholesale market: Deutsche Bank, for example, and JP Morgan.
Thanks, in part, to the situation in the eurozone, banks and other lenders are finding it more expensive to borrow on wholesale markets, even if the government is not.
Ring-fenced banks would also be prohibited from carrying out a range of investment and wholesale banking activities, including the sale of complex derivatives, which are highly complicated contracts designed to hedge borrowers against certain risks but can lead to heavy losses if they go sour.
In aggregate, its retail banks lend out more than they gather in deposits, making them reliant on wholesale funding from the wider financial system.
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