Each global regulatory initiative is designed to enhance financial stability, protect investors and consumers, and make it easier to deal with failing banks. However, the law of unintended consequences will kick in and they could also have significant negative impacts on banks and their business models and in turn on banks’ customers and the real economy.
In discussions with banks they consistently highlighted four major areas of concern:
- Time and resources – the amount of senior management time spent on dealing with the regulatory agenda.
- Impact on business models – the second wave is forcing consideration of changes to business models.
- The speed of change – banks are making rapid adjustments, due to market and regulatory pressures.
- Irregular implementation – local supervisory judgements may generate uneven implementation.