Global

Details

  • Industry: Financial Services, Capital Markets, Banking
  • Type: Benchmarking study, Survey report, White paper
  • Date: 7/16/2012

Core businesses and cost control 

The future for banks is likely to be characterized by a series of one-off events, and any given year can be dominated by such an event. In 2011, we have seen sovereign debt crises, payment protection insurance mis-selling payouts and goodwill writeoffs.

Core Business Figure1

On the horizon, there could be major litigation, increased capital costs, new legislation, potential transaction taxes and the increasing financial crisis in Spain. The US and UK authorities LIBOR fixing investigation has recently seen Barclays fined $450 million with more than 20 other banks currently under investigation. With the constant impact of single events with significant financial ramifications, many investors may be questioning just what ‘normal’ banking performance should look like.


These banks, therefore, should ensure they have the capacity to manage or avoid these events. Such capacity will become a significant success factor of the future.


At the same time, the evolving regulatory reform agenda is driving a fundamental overhaul in the way banks do business. In particular, the combination of

tough capital and liquidity standards, along with international recovery and resolution planning requirements, are forcing many banks to restructure business and operating models.


In fact, it could be argued that in the future some parts of banks may have to operate more like businesses in other highly regulated industries, such as utilities.

 

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