For Financials, Europe Is an Opportunity—Not a Threat: Analyst
Most financial-services companies see the European sovereign debt crisis as an opportunity instead of as a threat, one Goldman Sachs analyst said.
During the Goldman Sachs financial-services conference, Richard Ramsden, a financial-sector analyst at the firm, said he noticed three interesting things among attendees as 2012 draws closer.
Ramsden said management is more realistic going into 2012 than the beginning of this year, when they expected that the environment was going to bail them out. He added that the financials are focused on what they can do from a business and expense standpoint to drive profitability.
Rather than viewing Europe as a threat most financial services companies see it as an opportunity.
"They see opportunities to pick up clients," he said. "They see opportunities to pick up businesses. They see opportunities to pick up portfolios from European banks that are being forced to sell."
Compared to this year's third quarter, banks are relatively stable, despite the negative headlines. They have also talked about a pick-up in loan demand.
"In some ways, the message coming out of the conference was reassuring — especially when you think about that a number of these banks we do think will be in a position to return more capital next year than they have done this year," he said."
Banks are currently weighing returning additional capital against purchasing these businesses ahead of the Federal Reserve's stress tests of U.S. banks. He added that a few banks are in a good position to pick up some of these assets due to their global nature including Citigroup , JPMorgan and Wells Fargo .
He projects that most banks will pass the stress tests and if they do, it could increase confidence in the U.S. banking system.
In the last 12 months, Citigroup, JPMorgan and Wells Fargo received investment banking, non-securities services and non-investment banking services from Goldman Sachs, Richard Ramsden's employer.
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