A simple benchmarking exercise suggests
that if proprietary asset managers were brought
up to the efficiency levels of their independent
competitors, earnings could improve by one-
quarter for bank-owned frms and two-fifths for
There is therefore sufficient scope to
improve profitability. To do that, proprietary firms
will need to decide whether to scale up or
become smaller and more specialised.
The irony is that from within the traditional
banking business, proprietary managers are not
seen as troubled at all but have in fact been fêted
for proftability in the post-crisis period.
For many European banks, proprietary asset managers are
the most proftable business they have,
generating 30 per cent pre-tax margins on
average. That is higher than retail banking at 29
per cent, universal banks at 26 per cent, and
investment banking 17 per cent.