Outlook for Global Wholesale and Investment Banking - BlackRock ...

March 16, 2010BanksExhibit 26We have analysed five scenarios, of which we see only three as plausible outcomesRegulatory scenariosEconomic scenarios1. Bull2. Base case3. G10stagnation4. DisorderlyunwindA. PunitiveB. MeasuredC. Incremental(RoE impact: -8%)(RoE impact: -4.5%)(RoE impact: -2%)1“Punish the Banks”4“Bull case”• Co-ordinated and harshregulations targeted atrecovering banks• Returns: ~11%• Wide performance skewsdriven by extent of businessmodel evolution and bank-levelbalance sheet health• Strong growth with limitedregulation• Returns: >17%, reduced skews2“Base Case”• Modest revenue shrinkage,measured regulatory response• Returns: ~15%, achievablewith managed compensationrestructuring and moderatebusiness model evolution5 “Negative feedback loop”3“Regulatory fragmentation”• • Weak economy accentuated bypenal regulationReturns: 17%3.3%2238%Negativefeedback loop