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Laxman Pai, Opalesque Asia: A study found wealth and asset managers generate 90% of overall economic profits in the capital markets industry (after tax and cost of equity), making them far more profitable than investment banks.
However, the study by by Accenture also found they are failing to achieve scale efficiencies and must prepare for down-market scenarios and shrinking margins.
The report, titled "Capital Markets Vision 2022," said that Investment banks, meanwhile, show a diverse picture: Only some institutions - both large and small - are earning 10 or more cents on the dollar in economic profit, while many others are not earning their cost of equity. And traditional market-infrastructure players' revenues are now rivaled by those of emerging cryptocurrency exchanges.
Capital markets firms collectively earn about $1tn in annual net revenue, which translates to more than $100bn in economic profit, according to Accenture analysis.
But as shareholders, regulators and customers continue to exert pressure on them to deliver higher value at lower cost and as quantitative easing tapers off, fee pressures will place an ever-greater burden on the industry to resolve its once-lucrative inefficiencies, the report shows.
Michael Spellacy, a senior managing director at Accenture who leads its Capital Markets practice globally and co-authored the report said: "Some expect the capital markets sector to normalize again and resemble itself before the financial ...................... To view our full article Click here
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