117
107
107
109
104
100
100
96
97
101
101
101
59
59
64
61
55
56
64
65
67
68
70
71
87
85
81
82
80
78
68
66
70
81
82
77
45
47
47
50
47
47
46
50
51
52
51
52
53
110
105
99
105
102
98
87
86
90
95
91
90
135
139
140
133
130
131
140
141
141
142
143
145
Lending
Scenario 1: 'Recession'
Scenario 2: 'Tempered optimism'
Scenario 3: 'Bounce back'
Transaction
banking
Securities services
Equities
2016
522
525
530
531
540
549
545
562
577
497
480
489
2017
2018
2019(f)
2020(f)
2021(f)
2019(f)
2020(f)
2021(f)
2019(f)
2020(f)
2021(f)
IBD
FICC
Wholesale Banking industry revenue forecasts, 2016-2021(f), USD BN
Note: Only includes revenues from corporate clients with an annual turnover of over USD 1.5BN. FICC includes G10 Rates, G10 FX, Emerging markets, Commodities, Credit and Securitization. Equities include Cash, Equity derivatives and Prime services. IBD includes DCM, ECM and M&A. Transaction banking includes Trade finance and Cash management
Source: Oliver Wyman analysis, Coalition proprietary data
Cashflow impact
USD MM
Cumulative
Annual
Cumulative break even point vs. leave-as
Cashflow impact and break even point
Leave as-is and look to optimise
Close a short-dated (e.g. equities) business
Close a longer-dated (e.g. rates) business
500
400
300
200
100
-100
-200
-300
-400
-500
0
Yr1
Yr2
Yr3
Yr4
Yr5
Yr6
Yr7
Yr1
Yr2
Yr3
Yr4
Yr5
Yr6
Yr7
Yr1
Yr2
Yr3
Yr4
Yr5
Yr6
Yr7
1
1. Cashflow impact based on revenue minus cost of funding the balance sheet and other financial resources
Note: Assumes average cost of funding. Higher funding costs would bring forward the "break even" point as releasing balance sheet would be more impactful. Cost modelled with an industry-average split between variable front office, aligned support function, and fixed Group costs. Tax impacts not included.
Source: Oliver Wyman Analysis
J-curve impacts of closing whole business lines
Based on a business generating USD 500MM of revenues at 95% CIR
20%
15%
~13%
~11%
~14%
~15%
~6%
Minimum target RoE
US bank CIB RoE 2021(f)
European bank CIB RoE 2021(f)
US bank
CIBs 2018
'Recession'
'Recession'
'Tempered
optimism'
'Tempered
optimism'
'Bounce back'
'Bounce back'
European
bank
CIBs 2018
~5%
~8%
~9%
10%
5%
0%
RoE for US and European banks
Source: Oliver Wyman Analysis
CIB divisions only, based on forecasted market growth for our three revenue outlook scenarios (%) and already announced cost savings programs, 2018-2021(f)