Donald Robertson and Fadi Massih of the Securities and Exchanges team size up the implications that the recent social media-powered short squeeze has for US retail brokers, market makers, clearinghouses and exchanges. Plus, Swen Metzler spotlights German banks’ pressing need to rein in costs, and Alka Anbarasu tells us which Indian banks will win the race to go digital.Inside this episode:Swen Metzler spotlights German banks’ pressing need to rein in costs, and Alka Anbarasu tells us which Indian banks will win the race to go digital (begins at 3:01).Donald Robertson and Fadi Massih of the Securities and Exchanges team size up the implications that the recent social media-powered short squeeze has for US retail brokers, market makers, clearinghouses and exchanges (begins at 12:04). Related content:Banks – Germany: Large cost cuts are needed to stay profitable - German banks' high costs make them among the least profitable in Europe. That will need to change in face of further declining revenues.Banks – India: SBI, large private sector banks stand to gain from digitalization accelerated by pandemic - As social distancing measures boost demand for digital financial services, large banks capable of accelerating digitalization are well positioned to benefit.Securities & Exchanges – US: Retail trader short-squeeze has substantial market infrastructure implications - Recent market events and volatility have opened the prospect that authorities may propose changes to the US financial market infrastructure. We explore some possible proposals. 

A dwindling number of workers in developed economies will support a growing share of retirees, and growth and profitability are declining for banks, insurers and asset managers. Young Kim of the Insurance team and Tomoya Suzuki of the Banking team examine how South Korea’s insurers and Japan’s regional banks are turning demographics into opportunities, while Dean Ungar of the Asset Management team zeroes in on US asset managers’ future.Inside this episode:Young Kim of the Insurance team and Tomoya Suzuki of the Banking team examine how South Korea’s insurers and Japan’s regional banks are turning demographics into opportunities. (begins at 2:35)Dean Ungar of the Asset Management team zeroes in on US asset managers’ future. (begins at 11:35)Related content:Insurers – South Korea: Aging population a key challenge despite some opportunities - Insurers face rising risks from a growing weakness in mainstream products, along with higher competition in longevity products, which could weaken their underwriting discipline.Regional banks – Japan: Population aging and coronavirus-driven digitization can create opportunities - Banks can benefit from growing demand for services related to population aging, while increasing adoption of digital banking services will enable banks to cut costs by using technology.Sovereigns – Global: Ageing-related credit pressure to rise in 2030s in advanced economies- Absent measures that raise productivity growth or reduce spending, the fastest-ageing economies face a weakening in economic and fiscal strength. Asset Managers — US: Demographic trends point to future struggle to grow assets under management - Working-age population growth is slowing dramatically, the elderly population will grow significantly and live longer, and younger generations will be less wealthy.  

Lan Wang of the Banking team and Lillian Li of the Credit Strategy & Research team discuss why China’s move to open up its domestic financial markets to foreign securities firms potentially benefits all parties, despite operational hurdles. Plus, Marina Cremonese of the Asset Management team joins Lan to talk about the future for asset managers seeking to grow their businesses in China. Inside this episode:Lan Wang of the Banking team and Lillian Li of the Credit Strategy & Research team discuss why China’s move to open up its domestic financial markets to foreign securities firms potentially benefits all parties, despite operational hurdles. (begins at 1:48)Marina Cremonese of the Asset Management team joins Lan to talk about the future for asset managers seeking to grow their businesses in China. (begins at 9:54)Related content:Securities & Exchanges – China: Market opening to foreign companies is good news, but constraints remain - Removal of foreign ownership limit is a significant move for industry liberalization and will create new opportunities for foreign firms, but there remains substantial hurdles for entrants.Credit Conditions – Global: COVID-19 will quicken shift to tripolar economy, with widespread negative  - The continued move toward a tripolar economy with the US, China and the EU as its pillars will have credit ramifications for a broad range of industries and countries.Asset Management – Cross Region: Foreign asset managers will need to play long game to succeed in China - Foreign asset managers entering the Chinese market will need to invest significantly and accept that it will take time to achieve profitable growth.      

Donald Robertson and Ana Arsov of the Banking team explain how the lessons global investment banks learned from the financial crisis better prepared them to withstand coronavirus stresses, and how strong capital markets revenue buffered the large loan-loss provisions they booked during 2020. Plus, Mark Wasden and Bruno Baretta of the Banking team explore how coronavirus effects are driving the negative outlook for most global finance companies.Inside this episode:Mark Wasden and Bruno Baretta of the Banking team explore how coronavirus effects are driving the negative outlook for most global finance companies (begins at 2:13).Donald Robertson and Ana Arsov of the Banking team explain how the lessons global investment banks learned from the financial crisis better prepared them to withstand coronavirus stresses, and how strong capital markets revenue buffered the large loan-loss provisions they booked during 2020 (begins at 9:19).Related content:Finance Companies - Global: 2021 outlook is negative (Slides) - Our outlook for finance companies globally is negative to reflect ongoing effects of the coronavirus pandemic, though several subsectors have been more resilient through adverse conditions.Asset Management Companies (AMCs) – China: AMCs' participation in bank restructuring reinforces their policy role but weakens standalone credit profile - Aside from acquiring and disposing bad loans, AMCs are performing a growing range of functions to facilitate the restructuring of distressed banks.Global Investment Banks: 2021 outlook stable as diverse businesses, strong capital, liquidity and funding ease pandemic-related asset quality pressure (Slides) - Diverse, profitable businesses along with strengthened capital and liquidity will shield the global investment banks against pandemic-related asset quality deterioration in 2021.

Laura Bazer and Dominic Simpson of the Insurance team and Greg Bauer and Sophia Lee of the Banking team discuss how a fragile economic recovery, low interest rates and uncertainty about renewal of government support measures are among the drivers of negative outlooks for global banks, life insurers and reinsurers (begins at 1:55). P&C insurers will benefit in the difficult operating environment from lower auto claims, strong capital, and the mandatory nature of certain products.Inside this episode:Life insurance, reinsurance and P&C insurance 2021 Outlook (begins at 1:55)Banking 2021 Outlook (begins at 11:20)Related content:Banks – Global 2021 Outlook - Global banks entered the coronavirus crisis with strong balance sheets but still face substantial risk in 2021. Ongoing low interest rates, digitalization and ESG compliance will continue toReinsurance – Global 2021 Outlook - Uncertainty around coronavirus-related losses, along with low interest rates, shrinking reserve releases and more expensive retrocessional coverage will weaken reinsurers’ profitability.P&C Insurance – Global 2021 Outlook - 2021 Outlook stable on strong capital, commercial prices (Slides)Life Insurance – Global 2021 Outlook - Ultralow interest rates underpin our negative outlook; Covid-19 mortality and related economic fallout have hurt profitability and investments less than we expected

Rokhaya Cisse and Marina Cremonese of the Asset Management team explore why the pandemic fallout has dimmed revenue prospects and made growth harder for asset managers. Plus, Celina Vansetti-Hutchins looks at how a difficult operating environment and elevated asset risk are driving our negative outlook for financial institutions in emerging markets.​​​ Inside this episode:Celina Vansetti-Hutchins looks at how a difficult operating environment and elevated asset risk are driving our negative outlook for financial institutions in emerging markets.​​​ (begins at 1:58)Rokhaya Cisse and Marina Cremonese of the Asset Management team explore why the pandemic fallout has dimmed revenue prospects and made growth harder for asset managers. (begins at 8:35) Related content:Asset Management - Global: 2021 outlook negative as coronavirus crisis intensifies long-term headwinds (Slides) - Increased market volatility, an uneven economic recovery and competitive environment in the ongoing pandemic will likely weaken global asset managers’ revenue and hamper growth amid an increased cost of doing business as regulators intensify their review of asset managers’ products and activities.Financial Institutions – Emerging Markets: 2021 outlook negative as operating environments heal from pandemic and asset risk remains a wild card  - Banks face challenging conditions and loomin​g asset risk, while pressures on insurers’ capital are rising despite lockdown-driven one-off gains from fewer claims having boosted profitability.  

Edoardo Calandro, David Fanger and Daniel Yu of the Banking team zero in on the COVID-19 pandemic’s effects on bank loans in the UK, US and Australia. Plus, Shachar Gonen of the Insurance team and Keith Banhazl of the Structured Finance team look at how much the slowdown in commercial real estate will weaken US life insurers’ CMBS holdings.​ Inside this episode:Shachar Gonen of the Insurance team and Keith Banhazl of the Structured Finance team look at how much the slowdown in commercial real estate will weaken US life insurers’ CMBS holdings.​ (begins at 2:10)Edoardo Calandro, David Fanger and Daniel Yu of the Banking team zero in on the COVID-19 pandemic’s effects on bank loans in the UK, US and Australia. (begins at 7:48)Related content:Life Insurance – US: Credit deterioration picks up in CMBS holdings but capital is resilient. CMBS remains a moderate component in US life insurers’ investment portfolios. The industry’s CMBS credit quality remains strong and capital levels are robust to absorb deterioration.CMBS-US: Moody's DQT - New delinquencies suppressed by temporary relief of forbearance and loan modification agreements. Moody’s CMBS conduit loan Delinquency Tracker (DQT) decreased to 7.51% in September 2020, as forbearance and other loan modifications provide loan relief.Financial Institutions — Banks – Cross Region: Pandemic induced credit losses set to rise. The coronavirus pandemic has pushed many countries into recession, leading to a deterioration in credit conditions that will trigger a significant increase in bank loan losses.

Inside this episode:Banks will benefit from an increased customer base as accelerated digitalization makes financial services available to unbanked populations in emerging markets. But traditional banks face competition as big tech firms impinge on payment services and central banks explore creating their own digital currencies as a defensive move.​​​​​​​Related content:Banks – Emerging Markets: Technology is deepening financial inclusionBanks – China, Europe, and US: Digitalization is breaking banks' historical dominance in retail paymentsBanking – Global: Central bank digital currencies would compound digital disruption for banks 

Original publish date: October 21, 2020Inside this episode:Simon Ainsworth and James Eck of the Insurance team discuss the latest developments in global insurers’ efforts to assess and manage climate risk. ​​​​​(begins at 2:27)​​Stefan Kahandaliyanage of the Insurance team lays out the risks US health insurers face from a policy drive toward a public insurance option. (begins at 10:04)Related content:Health Insurance – US: Policy drive toward transformation of health insurance poses risks to profitability - Proposals to create a public health insurance option would likely reduce earnings at our rated companies to varying degrees, with more expansive options having a larger impact.P&C Insurance and Reinsurance – Global: Climate change risks outweigh opportunities for P&C (re)insurers - P&C (re)insurers have significant exposure to the economic consequences of climate change, including risks arising from catastrophe exposures, claims on liability policies, and investmentInsurance – Europe: Insurers increasingly engaged as ESG risks and opportunities come into focus - European insurers see environmental, social and governance (ESG) issues as an area of strategic focus, and expect them to have a moderately adverse impact on underwriting risk.Financial Institutions – Europe: BoE climate change stress tests will reinforce risk management for banks and insurers - Climate change stress tests are credit positive as they will help banks and insurers understand the consequences of climate change for their business, and support their risk management.Allianz, AXA, Swiss Re, Munich Re, Zurich: Retreat from coal reduces liability and stranded asset risk, a credit positive  - Major European (re)insurers are limiting their investment and underwriting exposure to coal. This protects them against climate change liability risk, and the risk of asset stranding.Moody’s Banking Series - ​​The Series digital program is free and offers exclusive interviews, thematic panel discussions and regional deep dives.​

Original publish date: October 7, 2020Inside this episode:Olivier Panis of the Banking team and Stefan Kahandaliyanage of the Asset Management team update financial institutions’ readiness for the transition away from Libor in 2021.​​​ (begins at 1:34)As policy rates continue to decline globally, Banking team member Laurie Mayers examines the effect on UK banks, while Shunsaku Sato does so for Japanese banks and Farooq Khan for Brazilian banks. (begins at 7:34)Related content:Financial Institutions – Global: IBOR phaseout 15 months away, but hurdles could stretch beyond finish line - We surveyed 85 banks and non-bank financial institutions to gauge their preparedness for the transition to overnight Alternative Reference Rates from IBOR-linked contracts.Banks – Japan: Low rates and slow cost-cutting amid excess capacity will keep profitability weak - Banks in Japan will continue to face ultralow rates as extremely accommodative monetary policy remains in place, while having difficulty in cutting costs due to structural rigidity.Banks – United Kingdom: Low for longer rates will exacerbate margin pressure for UK banks - With rates likely to stay low for longer than expected as a result of the coronavirus crisis, we expect pressure on UK banks' margins to intensify.Banks – Brazil: Net interest margins will be tested as rates stay low for longer - Brazilian banks will face margin pressure from higher funding costs and increased competition, despite a positively sloped yield curve amid record low rates and recovering economy .Moody’s Banking Series - ​​The Series digital program is free and offers exclusive interviews, thematic panel discussions and regional deep dives.​