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UNI Finance's Oliver Roethig welcomed the report that goes back to an initiative taken by UNI Finance in 2006. While the financial crisis might be over, the fragility of the industry and financial markets certainly continue.



The European Foundation for the Improvement of Working and Living Conditions (EUROFOUND) commissioned this study on financial services in the post-crisis period. The report reviews recent economic trends in the banking and insurance industries and the debate on the regulation of financial markets. It looks in detail at the business models that are applied as a response to the crisis, and it develops scenarios for the potential adaptation process of the European financial services sector.



The study concludes that important adaptations have already taken place in European financial services: significant deleveraging, a ‘back to the core business’ restructuring, and the change of remuneration systems with a stronger emphasis on long-term incentives. Important challenges are nevertheless ahead: the naissance of a new regulatory framework for financial markets, the vulnerability of the economies to a second or third backslash of the crisis, and the new strength of Asian players.



Three scenarios have been developed for the next five to ten years:

• The past is the future – a high-risk status quo scenario:
  
  A fundamental restructuring of the financial services is prevented by the big players. The industry continues with short-term profit strategies with a strong shareholder-orientation.

• A new world order for financial markets – the end of the golden age:
  
  The effective regulation of financial market contributes to reorient the business towards sustainable business models an dries up high-risk financial markets.
• Divided economies – a worst case scenario:
  
  No consensus will be achieved on a new financial world order and the financial and economic crisis will run out of control. Destabilisation will divide Europe both economically and socially.

"Indeed," said Roethig, "behaviour of banks have not necessarily be changed. Many key players in the industry try to stop and even roll back the regulatory changes that are underway. Clearly, regulation has not reigned in on the role of investment banks. We must make sure that the high-risk scenario is not the future"



"Unions are concerned about the developing pattern that bankers from the investment side seem to take over the CEO positions in multinational banks. This certainly puts in question the viability of the universial bankin model. For UNI Finance, a universial bank must be in the first place a commercial and retail bank serving the real economy."



"For trade unions, the second scenario is the one we all should be striving for: effective regulation of the finance industry closely linked to the real economy."



"We also see the necessity to look much closer at internal operating procedures and their contribution to the crisis. Unions have the impression that companies are treated as black boxes. Regulators, supervisors and stakeholders have to change this approach."



The research was conducted by means of company-based case studies, an online survey and interviews with experts from companies, social partners, research institutions and public authorities.



For executive summary and full report as well as methodology and powerpoint presentation, see related files.



For the press release of the Dublin Foundation and case studies about Generali France and UK Building Societies, see Eurofound’s homepage: http://www.eurofound.europa.eu/press/releases/2010/101012.htm.



For the Eurofound's work on financial services, see: http://www.eurofound.europa.eu/emcc/content/source/eu10001a.htm.