Our EMEA editors look at 2015 - Banking and Finance

LONDON, Dec 19 (Reuters) - A look at banking in the coming year from our Europe Middle East and Africa editors and chief correspondents. The opinions are their own.

1) TRADING

The financial trading industry has had a torrid year, hit by ongoing scandal, intensifying regulation, growing automation and low volatility amid overwhelming central bank intervention and liquidity provision.

The question is now whether global investment banks rethink macro trading as the cash cow it once was, whether further significant staff attrition is in the pipeline and whether dealing operations are further consolidated by bringing equities under the current fixed income, currencies and commodities banner.

This will have potentially big impacts on the armies of traders and analysts.

Is this overreaction, as it has been periodically in the past, or is there is a secular trend afoot that sees the downsizing of the entire financial trading - much of which was dubbed by UK policy grandee Adair Turner post crisis as "socially useless activity".

If banks are indeed rethinking their models in this regard, then the huge focus turns to asset managers and their power within world markets - something which changes the nature of financial markets considerably in terms of behaviour, regulation and information need.

2) BANKS

SHADOW BANKING

Are financial regulators really getting to grips with shadow banking or are the risks becoming more concentrated in firms outside their immediate field of vision? Asset managers and insurance companies are becoming the new "vampire squids" ruling global finance.

FINANCING EUROPE

Banks say that they are making loans available to corporates that want to borrow, yet the lending figures show that companies are simply not borrowing and are more likely to repay debt. This is the last thing the ECB wants.

Will the targetted long term loans of TLTRO have any more success in 2015? Will governments demand banks are more generous with their lending criteria in order to get companies borrowing again?

ALTERNATIVE LENDING

Technology and regulatory changes are enabling new entrants to lend directly to individuals and companies. Europe's reliance on bank lending hasn't changed dramatically since the financial crisis, but the alternative players are becoming a force to be reckoned with.

Europe is trying to launch a capital markets union which would allow companies to raise funding from the bond markets in the same way as they do in the U.S.

INVESTMENT BANKING - Will the industry finally shrink in the face of single digit returns? Revenues show no signs of improving in key trading markets and regulation has permanently moved the goal posts.

Banks are going to have to keep cutting back on costs, which will be made more difficult by EU rules on pay. Where will the axe fall?

Can Deutsche Bank hold its ground while others retreat from certain sectors or will it have to raise more capital? Will Barclays (LSE: BARC.L - news) be impacted by possible "ring-fencing" of its retail operations under UK plans?

REGULATION AND FINES

Fines on banks have been the gift that keeps on giving for cash-strapped governments, while regulators have been surprised that they have managed to keep the upper hand in imposing new rules, riding political support for their efforts.

Will they now crack in the face of the argument that regulation is reducing their ability to lend.

CYBERCRIME

There is a very real possibility that banks will be hit by a cyber attack, which the regulators have had them rehearsing for

GULF and NORTH AFRICA

Can the Gulf oil exporters keep growing in an era of cheaper oil? There are signs are that they will, having spent the last five years preparing for it.

The opening of the Saudi stock market to direct foreign investment gives access to a new $500 billion market, not an event that happens often.

An Iran nuclear deal, while some way off, would see the return of Iran to the global trading system and lift Dubai too.

Political stability would support the resurgence of North African economies as investment returns to Egypt and Tunisia, and Morocco develops as an export base for EMEA. (Edited by Jeremy Gaunt)