Investment banks must take further actions to improve returns and more will follow firms like UBS and Royal Bank of Scotland that have exited businesses, McKinsey & Co. has said.
Bloomberg reports that only five or six companies will remain 'bulge bracket' firms that offer all investment banking and trading products worldwide, the consulting firm has said in a report titled After the Reckoning.
Others will step back from some businesses to focus on areas where they have a competitive advantage, according to the report.
'We have already seen a few early movers exit capital-intensive fixed-income businesses or scale-intensive cash equities businesses to focus on areas where they were better able to compete; we will see more such moves in the future', McKinsey analysts said in the report.
UBS, which has been the most aggressive in reducing costs and risk-weighted assets according to the report, said last year it was trimming 10,000 jobs and exiting many fixed-income businesses. RBS plans to close or sell its unprofitable cash equities, mergers advisory and equity capital markets divisions, the Edinburgh-based firm said last year.
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