gl presentation - nigeria_updated (2) - 201011
TRANSCRIPT
-
8/3/2019 GL Presentation - Nigeria_updated (2) - 201011
1/13
Published under permission from CIBN - 2010111
Chartered Institute of Bankers of Nigeria (CIBN)
George Lewis, Group Head, RBC Wealth ManagementOctober 20, 2011
-
8/3/2019 GL Presentation - Nigeria_updated (2) - 201011
2/13
Published under permission from CIBN - 2010112
Contents
RBC and Canada Evolution of Global Status in Financial Services
Universal Banking Definition and Context / Speaker Bias
Universal Banking History and Contribution vs. Monolines to MarketDisruption
Performance During Market Disruption Reasons for DifferencesBetween Countries/Markets
Client and Market Outcomes / Risks to Universal Banking Model
Concluding Thoughts for Financial Systems of Developing Economies
-
8/3/2019 GL Presentation - Nigeria_updated (2) - 201011
3/13
Published under permission from CIBN - 2010113
1. Source: Bloomberg, as at August 19, 2011.
Market Capitalization US$ billions (1)
50 100 150 200 250
RBC Among the Top 20 Largest Banks Globally
1 ICBC
2 China Construction Bank
3 HSBC
4 JP Morgan
5 Wells Fargo6 Bank of China
7 Citigroup
8 Commonwealth Bank of Aus.
9 Banco Santander
10 RBC
11 Banco Itau
12 Bank of America
13 TD
14 Mitsubishi UFJ Financial
15 Sberbank
16 Westpac Banking
17 Goldman Sachs
18 BNP Paribas
19 Banco Bradesco
20 Scotiabank
-
8/3/2019 GL Presentation - Nigeria_updated (2) - 201011
4/13
Published under permission from CIBN - 2010114
Universal bank in Canada with selective focus globally
Active in all banking areas in Canada with leading market positions / Canada rated#1 by WEF for four straight years for safety and soundness of banking
Global capabilities in capital markets and wealth management
Diversified model with the right mix of businesses and geographies
Able to generate significant returns throughout the economic cycle
Long-term strategic balance
75% retail banking, wealth management and insurance businesses
25% capital markets businesses
Canada and
other geographies Continuing to invest in our businesses while focusing on cost effectiveness
Robust capital position and senior debt ratings
Managing our company for long-term success
Who we are Universal bank with financial strength
-
8/3/2019 GL Presentation - Nigeria_updated (2) - 201011
5/13
-
8/3/2019 GL Presentation - Nigeria_updated (2) - 201011
6/13
Published under permission from CIBN - 2010116
-4.0%-5.0%
3.0%
10%
5%
10%11.0%
5.0%
7.0%
Strong Shareholder Returns
Global Peers 2RBC
Total Shareholder Return 1
S&P/TSX Bank Index
Strong earnings generation and consistent increase in shareholder value
$0.6
9
$0
.76
$0.8
6
$1.0
1
$1.1
8 $1.4
4
$1.8
2
$2.0
0
$2.0
0
$2.0
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
History of delivering stable andgrowing dividends
Announced dividend increase in Q22011 by 8% to $0.54 per share (per
quarter) .
1. Price appreciation plus dividends reinvested, as at August 19, 20112. See 2010 Annual Report for details on Global Peer group.
3-year 5-year 10-year
-
8/3/2019 GL Presentation - Nigeria_updated (2) - 201011
7/13
Published under permission from CIBN - 2010117
1. Universal Banking Definition and Context
Provision of a full range of financial services (deposits, investments,
brokerage/discretionary, trusts, mortgage lending, cards and payments,fx, business and corporate services, capital markets services, insurance)to a full range of client segments within one or across multiple geographicmarkets.
Distribution of all products/services is a necessary condition to bedefined as a universal bank. Manufacturing each one is a choice.
-
8/3/2019 GL Presentation - Nigeria_updated (2) - 201011
8/13
Published under permission from CIBN - 2010118
2. Universal Banking History and Contribution vs. Monolinesto Market Disruption
Europe/Asia/Latin America Historical Model (although with large, separate insurance sector)
U.K. / Commonwealth (eg Canada, Australia)
25 year history since Four Pillars (commercial banking, investmentbanking, trusts and insurance) could combine
United States
just beginning life as a universal banking market (will it be allowed to
last?)
-
8/3/2019 GL Presentation - Nigeria_updated (2) - 201011
9/13
Published under permission from CIBN - 2010119
Originate and Distribute monoline mortgage model in U.S. createdfeedstock for market disruption of 2008/2009 With Absolute Certainty
single product focus at client level versus multi-faceted relationship ata universal bank
Did the Complexity or Size of Universal Banks contribute to marketdisruption of 2008/2009? Less Clear
origin of contagion (US-based Investment Banks) not part of universalbanks at the time
confusion of market-making versus product-placement duties mayhave contributed
clear and correctable regulatory/public policy failures versus aninherent too big to fail/too many conflicts problem
2. Universal Banking History and Contribution vs. Monolinesto Market Disruption
-
8/3/2019 GL Presentation - Nigeria_updated (2) - 201011
10/13
Published under permission from CIBN - 20101110
3. Universal Banking Geographic Differences in Performance
Canada/Australia (+ve) versus U.K. (-ve)
ability to capture significant share of wealth management, capitalmarkets business diversifiers
smaller markets attract fewer global monoline competitors
alternative banking models (grocers, internet banks) present but not assuccessful with anti-bank positioning and encountered significantchallenges
public policy / regulatory differences
quantitative/rules-based differences e.g. absolute leverage limit
qualitative/principle differences industry/govt/CB/regulatorrelations
business strategy and execution
-
8/3/2019 GL Presentation - Nigeria_updated (2) - 201011
11/13
Published under permission from CIBN - 20101111
4. Universal Banking Client and Market Outcomes(Canada)
Efficiency, Stability, Choice
long-term decline in spreads in basic banking where universal bankingmodel prevalent ability to provide profitable additional services makes
basic banking more affordable diversification of earnings streams adds to stability of individual universal
banks and to system overall
mix of universal banks and global monolines can be desirable from client
choice and market efficiency perspective as long as there are no barriers touniversal banks choosing to provide both manufacturing and distribution ofproducts and services.
-
8/3/2019 GL Presentation - Nigeria_updated (2) - 201011
12/13
Published under permission from CIBN - 20101112
4. Universal Banking Risks to Universal Banking Model
Legislative Proposals to limit scope of activities based on incorrect
views that conflicts cant be managed, activities cant be properlyregulated and an insufficient appreciation for the benefits of efficiency,stability and choice that universal banking model can (and has) delivered.(eg. Dodd-Frank in the U.S. prohibition on proprietary trading)
Regulatory Proposals
Basel III Proposal which could create an unlevel playing fieldbetween universal banks and monoline/shadow-banking providersin some cases
UK Proposal (Vickers report) to ring-fence wholesale bankingactivities puts at risk the efficiency and client/shareholder benefits ofuniversal banking model in order to attain absolute protection oftaxpayers in terms of exposure to deposit guarantees not asurprising proposal/outcome given performance of UK banking
industry in last crisis (i.e., government capital required)
-
8/3/2019 GL Presentation - Nigeria_updated (2) - 201011
13/13
Published under permission from CIBN - 20101113
Concluding Thoughts For Developing Economies
Follow the developed Commonwealth colonies not theU.K in terms of public policy and financial servicesregulation
Encourage technological innovation (eg mobile access) to
strengthen branch-based universal banking and promoteuniversal access
Encourage mix of domestically-controlled universal bank(s)
and global providers of select services to select segments