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Home » Daily Briefing » Daily briefing - 11 March 2019

Daily briefing - 11 March 2019

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Young workers want benefits, not free ping pong

Being conservative is a good thing for a bank, but banks are generally so far behind the cultural curve that they usually have the opportunity to avoid the mistakes of other industries. Now that banks are establishing that their biggest threat comes from the big tech sector, they are reacting by — yes, you guessed it — copying the mistakes made by big tech companies, such as thinking that table football and free juice will attract millennial talent. "Seventy-seven percent of millennials say that the workspace is more important than salary," said chief operating officer Troels Bjerg at ISS, a top facility services firm whose customers include most of Europe's 25 biggest banks. Chief executives see attracting and retaining talent as their No. 1 challenge, according to data from ISS World, a Danish provider of facilities management, security, catering and other support services to companies globally. Bjerg tells Reuters that "retaining talent" has moved from being "on the janitor's agenda to the CEO's agenda". Why bank janitors were thinking deeply about retaining staff remains a mystery. What is clear, however is that "millennial talent" in fact appears to be attracted to things like healthcare and pension schemes, as evidence by Dan Lyons' Lab Rats. Are banks listening?

A problem at Mizuho, the Japanese banking giant, is a problem for the rest of banking. It's perhaps somewhere to watch in light of Germany's efforts to jam Deutsche and Commerzbank together. "Mizuho's root problem is that its vast retail banking business is essentially lossmaking," writes Patrick Jenkins for the FT. "In an ultra-low interest rate environment (the Bank of Japan's short-term base rate is minus 0.1 per cent), the combined cost of maintaining a large branch network, investing sufficiently in new technology and funding Japan's deposit insurance scheme outweigh the net interest margin it can make on its core business. According to Brian Waterhouse, a veteran banks analyst, Mizuho Bank -- the group's core banking subsidiary -- is now in its fifth lossmaking year in terms of net return on funds deployed, a key Japanese profit metric. Only by selling equity stakes and releasing loan-loss reserves in a period of ultra-low loan defaults has it been able to record a net profit."

Bloomberg reports that freshly re-elected Nigerian prime minister Mohamed Buhari is mulling a replacement for the governor of the country's central bank. "While Buhari has yet to make a final decision, he is mulling replacing Emefiele, a southerner, with a northerner, according to two people, who asked not to be identified as the matter is private," reports Anthony Osae-Brown. "Emefiele would want a second term if he is offered it, one of the people said. Since the end of military rule in 1999 no Nigerian central bank governor has served more than one term."

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