Global Economy. Prospects for the global economy as a whole have continued to deteriorate in recent months. The crisis emanating from the financial markets has now also engulfed the real economy, with signs of a global downturn in economic growth. Economic research institutes anticipate that not only the U.S. but also large sections of the European economy will be hit by recession in 2009. The Asia-Pacific region is also expected to face a further slowdown in economic growth.

Developments in the Banking and Retail Industries. In the wake of the U.S. sub-prime mortgage crisis the banking industry was buffeted by severe turbulence during the quarter under review. In these conditions, the retail banking segment proved to be a relatively stable factor within an industry that has become extremely volatile in some areas. Operating within this environment, the majority of banks are preparing themselves for a protracted period of intense competition. Against this backdrop, “cost” has become a factor of increasing importance, a trend reflected in the growing drive towards process automation as well as efforts to standardize IT structures following company mergers and acquisitions. The retail industry is also characterized by relentless competition and capital expenditure directed at operational streamlining. In parallel, many retail groups are continuing to pursue strategies centered around corporate expansion. At the same time, there is evidence to suggest that the retail industry as a whole has become more sensitized to economic downturn.