Patient must be brought out of
induced coma

New financial structure 

“The global financial structure has been put into an induced “coma” by government assistance packages. When these expire, the sector will have to stand on its own two feet and face new demands on capital adequacy and authorities looking more closely over the industry’s shoulder”,  says Jens Peter Neergaard, Executive Vice President, Danske Markets, TFM Global Risk & DCM.

 “There is no doubt that we will see dramatic changes to the global financial structure in the coming years. It is a process that we in the banks are already addressing, but rising demands from politicians and consumers will reinforce the process,” says Jens Peter Neergaard.

“The banks were placed in a respirator, metaphorically speaking, in September 2008. This had two effects: First, it gave us the chance to reconstruct ourselves from the inside; second, it gave the doctors – the central banks and supervisory authorities – time to come up with new courses of treatment. The sector was suffering from an unknown and virulent disease that required fast and effective action – therefore it made sense to place the banks in a respirator. However, while the sector is lying in a respirator, it is not lying still. The financial sector long ago started to strengthen its capital base and reduce its vulnerability to liquidity shortages in the markets – the banks are reconstructing. The treatment has been experimental – record low interest rates and quantitative easing – but there is no doubt we are approaching the point where the respirator can slowly and carefully be turned off,” says Jens Peter Neergaard.

Read the full feature article below in PDF format – elaborating also on the implications of increased financial sector regulation to come.

 Patient must be brought out of coma