Center for Financial Studies (CFS) at the Goethe University Frankfurt
Center for Financial Studies (CFS) at the Goethe University Frankfurt: Financial sector further on the rise: CFS Financial Center Index up by 2.5 points
Center for Financial Studies (CFS) at the Goethe University Frankfurt / Key word(s): Miscellaneous Financial sector further on the rise: CFS Financial Center Index up by 2.5 points Service providers create jobs / Financial sector expects a stabilizing effect from Basel III / Banks estimate a decline in returns FRANKFURT, 26 October. The CFS Financial Center Index has moved up by 2.5 points compared to the last quarter and has reached a level of 112.9 points. Continuing the upward trend since April 2009, the index is now 13 points below its record high of 125.7 points that was registered in January 2007. The rise is reflected in both sub-indices 'performance' and 'projection', which have moved up in equal measure. The positive trend is recorded among all branch-specific groups of the survey (financial institutions and brokerage, financial sector service providers, supervisory and academic institutions, connected enterprises) and across all areas of value creation (revenue, profits, employment, investments). Most striking is the above-average growth (+ 4.2 points) in the group of financial sector service providers, whereas financial institutions comparatively underperform with a minor increase of 1.2 points. Service providers such as accountancy firms and consultancies have profited from an overall strong Q3 (7.2 points) with employment figures going up by 11.7 points. This rise, however, is not expected to continue. The financial institutions are less optimistic and remain especially reluctant in hiring new staff. The international importance of Germany as a financial center has increased by 6.0 points. But this figure has considerably fluctuated recently and its trend points rather downwards since the beginning of 2009. 'The results show that, in light of a strengthening economy, accountancy and consultancy firms, and other financial sector service providers have invested in new capacities. In contrast to this, banks have shown declining returns and employment figures, which seem to coincide with the regulatory reforms of Basel III', explains CFS Director Professor Dr. Jan Pieter Krahnen. Capital standards and transition period of Basel III earns approval With regard to the stricter capital standards under Basel III, the financial sector very much agrees on the consequences. The majority expects higher levels of stability, credit-tightening effects and lower returns, and a lower risk appetite of banks. The same question was posed to the panel a year ago and the results prove to be very similar. In fact, the results only reveal a difference in the opinion about the stabilizing effects that are expected to arise from Basel III (77% of today's panelists expect stabilizing effects compared to 67% last year). The survey showed no major discrepancies between the various groups. Most panelists think that the transition period of Basel III is appropriate. However, 10% of the panelists argue that the period is too short, while 10% say that it is too long. This last group claims that there are still imminent risks arising from systemic risk. The share of panelists who regard the amount of time as appropriate is comparatively higher among banks. Panelists who consider the credit supply being at peril argue that the transition periods are too short. Panel respondents argue that additional demand for regulatory action exists mainly in 3 areas (Figure 2): bank restructuring/'too-big-to-fail' problem (32%), derivatives/securitization (24%) and systemic risk (23%). The survey groups, however, differ in the way they prioritize those areas. Banks regard systemic risk as the most eminent issue to be dealt with (33%), while non-banks such as asset managers and insurance companies rather see the highest demand for regulatory action within the area of derivatives/securitization (31%). www.financialcenterindex.com – for graphs and further information. For any questions, please contact:
Florian Hense Tel.: +49 69 798-30090 Grüneburgplatz 1, HPF H5 www.financialcenterindex.com 60323 Frankfurt am Main
Josef Schießl Tel.: +49 69 94 41 80 26 Main Triangel Zum Laurenburger Hof 76 www.frankfurt-main-finance.com 60594 Frankfurt End of Corporate News 26.10.2010 Dissemination of a Corporate News, transmitted by DGAP – a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. DGAP’s Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de |
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