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INVESTMENT BANKING, TRADE FINANCE | Staff Reporter, Singapore
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Weekly Global News Wrap Up: Global transaction banking revenues up 4% to US$13.8b; Bank fees face 'secular downward' pressure

And Deutsche Bank CEO says automation will take a lot of jobs over the next 10 years.

From Reuters: Global transaction banking revenues rose 4% to US$13.8bn in the first half of this year from a year ago, led by a jump in cash management income in the Americas and Asia, analysis firm Coalition said. Cash management revenues were US$11bn in the first six months of this year, up 7% from a year ago and the highest level since 2011 when Coalition started compiling data. The growth was due to higher volumes as banks accumulated deposits and increased their deposit productivity, Coalition said.

From Reuters: Bank’s services fees face “secular downward” pressure in the long run, which will drive lenders back toward credit transactions whose margins are resilient to competition and new technologies, a senior executive at management consultants Accenture Plc said. Banks have relied in recent years on sales of insurance, credit/debit cards, asset management and other products as a way to offset narrowing margins on lending-related activities and higher capital requirements. Return on equity in those so-called fee segments can be three or four times bigger than in lending.

From CNBC: Technology threatens jobs in many industries, but one bank chief is already predicting that "a lot of people" in his industry will see their roles taken by automation in the next five to 10 years. Deutsche Bank CEO John Cryan has made headlines before for his prediction that technology will end many banking jobs, but he offered more insight into exactly how the financial world will change in an interview with CNBC on the sidelines of the Singapore Summit. The banking sector, he said unequivocally, will see many of its current roles automated. In fact, Cryan said, "it would be inappropriate not to say that's the case — it's not specific to our bank, in fact it's a sector-wide phenomenon."

From Bloomberg: Wall Street banks can’t stop telling investors to buy shares in Wall Street banks. It’s not been the best advice. Financial shares have the third-worst performance among 11 S&P 500 Index groups in 2017, and are on track for the poorest year relative to the market since 2011. Yet of the 10 equity strategists surveyed by Bloomberg, nine give banks and insurers the highest recommendation and only one holds a neutral view. 

From Reuters: EU state aid regulators formally approved on Monday a British plan allowing bailed-out lender Royal Bank of Scotland (RBS.L) to fund about 835 million pounds ($1.1 billion) to boost competition by helping challenger banks. The British government had reached an agreement in principle with the European Commission on July 26 after RBS failed to sell a business banking unit Williams & Glyn as one of the conditions of its 45-billion-pound rescue.

From Bloomberg: Jefferies Group, like its Wall Street competitors, is leaning on investment banking to weather a trading slump. The firm’s revenue from trading dropped in the three months through August to the lowest in six quarters, a sign that an industrywide decline in transactions is worsening. The quarter was saved by investment banking, where fees surged 61 percent to a record $475.7 million.

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