Published on February 4, 2014
Big crisis, hard data. Number crunching some tough times. © Copyright 2014 London Business School
From 2002 to 2007, the amount of credit in the United States went from $22trn to $37trn – a 70 per cent increase. Source: gov.uk BUSINESS STRATEGY REVIEW 2
The rise and rise of crowdfunding. From late 2010 to the second quarter of 2013, the three major peer-to-peer lenders in the UK – Zopa, Rate Setter, and Funding Circle – lent a total of £378m. In the US, the Lending Club, founded in 2007, has originated over $2bn in personal loans. Sources: lendingclub.com; theodi.org BUSINESS STRATEGY REVIEW 3
In 2013, the world’s largest reinsurer, Munich Re, predicted that from 2012 to 2020 the property-casualty insurance market would grow by 50 per cent to €1.85trn, and the life insurance market by two-thirds to €3.1trn. Giving a global insurance market pushing the €5trn mark. Source: munichre.com BUSINESS STRATEGY REVIEW 4
King of the Ponzi. On 11 December 2008, FBI agents arrested Bernie Madoff, financial adviser and investment manager. Madoff was charged with one count of securities fraud. The net amount lost due to fraud is estimated to be between $10bn and $17bn. On 29 June 2009, Madoff was sentenced to 150 years in prison. Source: justice.gov BUSINESS STRATEGY REVIEW 5
When the trillion-dollar global financial service industry misfires it causes a lot of damage. In an effort to keep the Eurozone together, and prop up the European banking system, the European Union and IMF have bailed out several nations, most notably Greece to the tune of €246bn, with a third tranche of funding still to come. Source: dallasfed.org BUSINESS STRATEGY REVIEW 6
On 27 June 2013 Barclays Bank was fined just over £290m by UK and US regulators for its involvement in the attempted manipulation of the Libor and Euribor interest rates. It was not just Barclays, either. Eighteen banks were on the panel for setting Libor. Of those banks UBS has also been fined, and other fines may follow as investigations continue. Sources: bbc.co.uk; bbalibor.com BUSINESS STRATEGY REVIEW 7
£109 billion In 2012 the financial and insurance services sector contributed £109bn to the UK economy (gross value added) and accounted for over 10 per cent of total UK tax receipts. Source: gov.uk BUSINESS STRATEGY REVIEW 8
SIX Hedge funds have had a huge impact on the investment world, enjoying vast growth in the 1990s. In June 2013, the total of funds under management was estimated at $2.4trn globally. Now regulators in Shanghai have agreed to allow six hedge funds from the US and the UK to raise $50m each from Chinese institutions to invest around the world, in a move that signals the continued opening up of the Chinese financial markets. Sources: dealbook.nytimes.com; towerswatson.com BUSINESS STRATEGY REVIEW 9
1,000,000,000,000,000 QUADRILLION That’s a one with a lot of zeros – 15 to be precise. Add a Yen currency sign and you have the Japanese debt milestone passed in August 2013. That’s over 200 per cent of Japan’s annual economic output, and has prompted a massive financial stimulus programme, dubbed Abenomics, aimed at reflating Japan’s economy and improving the country’s debt ratio. BUSINESS STRATEGY REVIEW 10
$920million Global financial services giant JP Morgan Chase agreed to pay four regulators in the UK and US, fines totalling $920m. The fines relate to oversight failings as the firm racked up $6bn plus derivative losses in 2012, known as the “London Whale” trades, after the nickname of a trader involved. Source: bbc.co.uk; occ.gov BUSINESS STRATEGY REVIEW 11
$14Trillion A report by the Federal Reserve Bank of Dallas estimates that the 2007-2009 financial crisis cost the US between $6trn and $14trn. Or, in figures easier to relate to, the equivalent of $50,000 to $120,000 for every American household. Source: dallasfed.org BUSINESS STRATEGY REVIEW 12
2019 The Third Basel Accord (Basel III) is a global regulatory standard on banking capital requirements, liquidity and leverage ratios, designed to avert a rerun of the recent banking crisis – assuming that it is implemented. Originally due by 2015, its full introduction has been pushed back until 2019. Source: bis.org BUSINESS STRATEGY REVIEW 13
1986 A package of financial services regulatory reforms came into effect in the UK in 1986, following changes to the London Stock Exchange’s rules on 27 October 1986. Known as the Big Bang, it transformed the global financial services industry and, some say, was one of the main catalysts of the financial crisis. BUSINESS STRATEGY REVIEW 14
The vital statistics from the financial crisis and beyond were first published in Business Strategy Review Volume 24, Issue 4, 2013. Interested in subscribing to Business Strategy Review? • Click here for personal subscriptions. • Click here for reprints / republishing and institutional subscriptions. BUSINESS STRATEGY REVIEW 15
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