What’s next for the restructuring of Europe’s banks? | McKinsey & Company

29 August 2013 --

I am, generally speaking, a fan of McKinsey & Co.  Sure, they are expensive and everyone I know can cite a McKinsey piece of advice or project that went dramatically sour.  But they have charming, intelligent, and hard-working boys and girls, and they do seriously interesting research.  It is a company that thrives on the muddy trench warfare of corporate strife, failed strategies, and traction-less execution.  But like the balloonists of early modern warfare, they allow staff who are so inclined to float above the entrenched battle-lines and produce interesting and often stimulating research.

Against this background, my disappointment was exceptional and severe upon reading a recent McKinsey post to do with restructuring in European banks.  The article's centrepiece was a meaningless and impenetrable table purporting to summarise the numbers of businesses up for sale by Euro financial institutions. There followed a litany of platitudes about why banks need to (or are forced to) dispose of various things in the current context. Some poor junior evidently did a trawl of Dealogic and other databases and came up, lo and behold, with rather a lot of potential disposals, down-sizings, right-sizings, and other potty training exercises driven by regulators and the evangelical capital crack-down currently driven by Basel III.  This is summarised in a silly graphic:

... which tells us what, exactly?  That European banks have a lot of dead wood lying about, and that McKinsey would be delighted to assist buyers with identifying the most intriguing pieces of driftwood and seeing if they fit someone's summer collage project.   We can happily whittle these bits of driftwood into square pegs to fit someone's square holes.

Perhaps I am overly cynical, or perhaps my impression is that the banks' current summer clearance sale is driven by a seasonal itch to destroy yet further shareholder value; not sure about this.

In any case, one hopes that the return of bad autumn weather will encourage a refocusing of the minds on more useful bits of financial sector research.

-- Jan Cherim

Here is the link to the article:
What’s next for the restructuring of Europe’s banks? | McKinsey & Company