The wave of banking and capital market reforms introduced following the financial crisis is creating fundamental changes in the global banking industry.
With new regulations such as Basel III stipulating higher capital requirements for certain portfolios, banks have been forced to revisit their business models. Many are faced with the tough choice of raising more capital against some of their assets or reducing their balance sheets by selling non-core or non-profitable assets.
The potential impact of these new regulations on global banking is far-reaching. Banks across the world, especially in the United States and Europe, are investing considerable resources in adapting their capital structure to the new regulatory environment. Many are resorting to downsizing business lines that, because of the new rules, are a strain on profitability.
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