United Kingdom

Details

  • Service: Advisory, Transactions & Restructuring, Transaction Services
  • Industry: Financial Services, Banking
  • Type: Business and industry issue, Survey report
  • Date: 04/08/2011

Bruised but not broken: The global banking growth agenda 

Banks around the world are eagerly eyeing opportunities in the emerging markets, according to a recent survey of banking executives by KPMG International. But while emerging market institutions will likely see continued strong growth in domestic markets, western banks will find success in these markets to be a slow and cumbersome process.

 

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The KPMG study, entitled Bruised but not broken: the global banking growth agenda, finds that many banks based banks based in relatively mature and saturated western markets are increasingly looking at the emerging markets for their growth plans.

 

According to the report, regulation is increasingly impacting the growth agenda of banks in the West. Operating model changes driven by regulatory considerations are yet to play out in full, and therefore some larger players report continued focus on non-core disposals or portfolio shuffles in order to build scale in key jurisdictions.

 

Indeed, many banks are now dealing with greater capital and liquidity requirements, reduced profitability and rising costs of regulatory compliance. Global banks would appear to be at an advantage if they can maintain scale at a country level, as sharing platforms across countries can contribute significant cost savings. But regulatory trends look likely to disadvantage banks that are present in multiple jurisdictions. Basel III, for example, may penalise banks that are unable to secure local funding, which may impact more the multi-national banks if an individual country operation lacks critical mass.