EU Banks: Surprises for 2015

These are the main debates for 2015:

–       Possibility that the ECB will fall short with the “Credit Easing” measures through TLTROs, covered bonds and ABS purchases.

–       Possible disappointment with the UK banks’ dividends.

–       Impact on the intermediation margins of low interest rates, low demand and disintermediation, especially in the Spanish banks. Bank charges could positively surprise the markets.

–       Non-conventional measures might help wholesale banks and asset managers despite the structural problems within the fixed-income business.

–       Falls in commodities, strength of the Dollar and geopolitical tension between Russia and Ukraine might have an impact on the European banks that own franchises in the emerging countries.

–       2015 might surprise (positively) at the regulatory level, if there is enough transparency about the leverage ratio and the structural changes.

–       Banks will adopt new plans to cut costs so as to compensate for lower differentials.

–       Morgan Stanley forecasts domestic consolidations in both Italy and Spain while the cross-border transactions might not fulfil the expectations.

–       The multi-asset funds will excel the market expectations and will become the category with the higher growth level. They will also contribute to improve the margins of the asset managers.

Market watchers at Morgan Stanley recommend “the stories of restructuration, costs cuts and dividends.”