Regulation: Banking's next big hits

January 05, 2015

Regulation now utterly dominates the banking industry and will have an even bigger impact in 2015, not just on bank capital and returns but on the entire legal structure of the industry.

Banks still have much work to do to convince investors they are running the right business models capable of delivering returns as regulators turn the screw on leverage, risk weights and total loss absorbing capacity. Litigation costs remain a big uncertainty. Banks must upgrade their technology to survive even as more advanced disruptive challengers snap at their market share. But banks could still get it right, if they better manage risk, control costs and wait for business volumes to look up.

Regulators still calling the shots

If systemic risk in the banking system really has been reduced as much as chief executives say, why are regulators set to have an even greater impact in 2015?

Banks struggle to find the right model

Banks need new sources of revenue or will remain chained to the wheel of endless cost cutting as they face continuing uncertainty about how to best allocate their capital.