FS Foresight – March 2012
Welcome to the latest edition of Booz & Company’s FS Foresight which is written for decision makers and corporate strategists who are looking for forward-thinking ideas related to the financial services industry. In our first featured article, “Managing Liquidity in a New Regulatory Era”, we look beyond understanding the details of the new regulations and instead ask a more fundamental question - will the new liquidity regime threaten existing business models as banks move from being asset-driven to more liability-driven? The viewpoint urges banks to fundamentally review which parts of their business they can continue to fund - and with which types of finance - and where they should consider “de-leveraging”. For past articles on the topic of cash and liquidity management please click on the links below. Our second featured viewpoint, “The Capabilities Premium in M&A”, compliments our recommendations in the Liquidity viewpoint in providing guidelines for successful M&A activity. Essentially, a Booz study has found that deals made to enhance or leverage the things that companies do well consistently outperform others. For the financial services industry, the topic is both highly relevant to those banks who are identifying where to “de-leverage” and to those banks and private equity firms with the right funding mechanisms in place who are looking for growth opportunities. We welcome your feedback on these featured articles or any other of our viewpoints, please forward your comments to FS-Foresight@booz.com. Regards, Alan Gemes
Senior Vice President
Booz & Company
Featured articles
 Managing Liquidity in a New Regulatory Era: The Tactical and Strategic Challenges for Banksby Philipp Wackerbeck, Peter Gassmann, and Robert Fiedler During their meeting in Seoul in November 2010, to strengthen the resilience of the global financial industry, the G-20 countries approved the new rules for banking regulation known as Basel III. The provisions governing bank funding and liquidity management will have a more fundamental impact on banks’ business models than many executives expect. Those banks that fail to develop alternative sources of funding will need to adjust their business models significantly. On both the tactical and strategic fronts, Booz & Company proposes several options for banks to consider.download (1.5mb, PDF) > |
 The Capabilities Premium in M&Aby Gerald Adolph, Cesare Mainardi, and J. Neely A new study of inorganic growth shows that deals made to enhance or leverage the things that companies do well consistently outperform others.read more > |
Past cash and liquidity management articles
 The Road to Resilience: Basel III Challenges Require Immediate Actionby Peter Gassmann, Philipp Wackerbeck, and Daniel Weber The new capital and liquidity requirements imposed by Basel III, coupled with the investments needed to comply with the regulation, will significantly lower banks’ return on equity (ROE). Even as banks study how the rules will impact various lines of business, they must take concrete steps immediately to comply with Basel III. Those that delay implementation will be perceived as less sophisticated and also riskier than those that embrace the changes early on.download (1.0mb, PDF) > |
 Managing Cash for Less: Improving the Efficiency of Banks' Cash Operationsby Victor Koss, Christiaan Lageweg, Greg Lavery, and Marijn Struben Banks currently pay 80 percent of the bill to provide cash, and cashless payments are forcing up the cost per cash transaction. In response, there are three waves of cost reduction that banks around the world are taking to reduce their cash costs.download (396kb, PDF) > |
