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HSBC group chairman warns banks must go back to basics

HSBC group chairman Stephen Green has told the banking industry it needs to go back to basics and realise the importance of retail deposits.

Speaking at the British Bankers’ Association’s annual conference in London today, Green said the highly leveraged model which has built up over the last five years has ended.

He said he did not believe this was just a cyclical phenomenon but that the model itself has disappeared.

“This isn’t just the end of a bubble, it’s the end of a business model”, Green told delegates.

He noted that banking institutions have been reminded of the risks involved with being overly reliant on the securitisation and wholesale markets. He stressed the importance for banks to focus on retail deposits.

Green said that banks must get back to some of the basics of the banking profession such as customer relationships and operational efficiency. He said banks have also been reminded of the importance of capital strength.

“This is a reminder of the basics which are so important.” Green said banks need to remember the “good old fashioned stuff”.

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