The global banking industry will contract during the next few years as firms sell businesses, Lazard Ltd. Vice Chairman Gary Parr said.
“There will be less companies competing in the global wholesale business, but it won’t be by mergers,” Parr said today in an interview on Bloomberg Television’s “Surveillance Midday” with Tom Keene from Davos, Switzerland, where he’s attending the World Economic Forum’s annual meeting. “It will be by a number of firms just departing the business. They’ll be shutting down, they may exit some lines or sell them.”
U.S. and European banks are selling businesses and cutting back amid capital requirements, regulation and investor concern of a global recession. Financial firms globally announced more than 200,000 job losses in 2011, up from about 58,000 in 2010, according to data compiled by Bloomberg. Parr said the world’s largest banks won’t get bigger than they are now.
“When you look at the capital charge and the regulatory things that get layered on when you get to a certain size, it is better to be smaller,” Parr said.
Parr, 54, has been a director of Hamilton, Bermuda-based Lazard, the world’s largest independent merger adviser, since 2010 and joined the firm in 2003. His strategic advice has focused on financial institutions, and he has guided the sale of Lehman Brothers Holdings Inc.’s North American investment-banking business to Barclays Plc and Bear Stearns Cos.’s sale to JPMorgan Chase & Co.
“The world needs global providers of capital, truly global providers, but it doesn’t need as many as it used to have,” Parr said. “So in the next few years, I think it will continue to concentrate, not consolidate by mergers, but basically concentrate to five to eight institutions that will be global.”