Regulatory Change: Part of a Perfect Storm

Michael Grimwade

“A PERFECT STORM” OF INCREASED REGULATION AND REVENUE AND COST PRESSURES

“If capital requirements have trebled and revenues are still where they were in 2006, the only answer is much more automation to take out costs and ruthless focus.”

a banking analyst in May 2014.11“Barclays moves to cut 7,000 jobs in retreat from investment banking”, Financial Times, May 8, 2014.

The return on equity of banks is clearly not what it was prior to the global financial crisis and banks are responding in a variety of strategies. By way of illustration of the seriousness, in December 2015 the Financial Times published research that showed that 11 large European and US banks had announced during 2015 almost 100,000 job cuts (excluding headcount reductions from disposals of businesses), representing more than 10% of their total workforces. This was not an aberration, as 2016 began with further waves of headcount reductions within investment banks.22“Thousands more bank jobs under threat in fresh round of lay-offs”, Financial Times, December 14, 2015. These headcount reductions are a symptom of a number of economic and regulatory factors that have combined into a near-perfect financial storm

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