The CEO of Morgan Stanley speaks concerning the Unfolding Banking catastrophe
The latest healthcare crisis has had cascading effects on the economy. The chief executive officer of one of the country’s leading financial institutions has provided a few choice words on the effect this is beginning to have in the banking industry. Less than two decades ago the world was rocked by the financial disaster that was precipitated out of the financial sector of the US due to dangerous investment activities by commercial banks. Will the next few months look like a slow-motion replay of 2008 or something else this time around?
Crucial Statistics and Market Performance measurements in the Banking markets
There has been an effect on more than only one banking institution and in more than one economic activity. This is the most extensive disruption that the system has seen since the Great Depression by some reports. At the beginning of the year, banks around the world were regularly setting records on quarterly earnings and yearly profits. Today numerous banks are starting to question if there is a chance they could lose solvency without government help.
Present Trading Activities are quite encouraging
This is the one bright spot in the market for banks right now. After some of the recent government intervention and the quantitative easing by the Federal Reserve, there has been a boost to the stock values. The only major issue here is there is still quite some distance to go up before they return to past highs.
Wealth Management Activities are not as appealing as trading activities
Wealth management has grow to be an increasingly large part of most banking institution’s revenue sources over the last few decades. Morgan Stanley, for example, has stated roughly half of their yearly income comes from this division of their organization. This division also saw a decline of nearly 8% in the last quarter in this area.
Fourteen percent drop in Investment Management activity is reason for concern
Today it is not merely the wealthy who invest. More and more people from many socioeconomic groups have been able to access investments. This has resulted in a major share of the revenue stream for Morgan Stanley roughly one quarter what their wealth management generated for the company. This division fell by 14 percent in the last quarter as well.