Prior to the economic downturn, financial
services companies primarily employed high financial leverage to increase
profitability. However, these companies have now been pressured to deleverage
and seek alternative sources of profit by the changed economic picture, a rise
in regulatory mediation, and competitive issues. In this altered environment, a
new operating model is needed, one rooted in attaining the primary relationship
– or at least one of the main relationships – with the customer, recreating
trust, and forging active customer relationships. However, the global financial
institutions continue to face numerous tests to bring stability back in the
financial system and win customer trust.
Basel III regulations aim to overcome the
shortcomings of the Basel II regime, which failed to effectively address risk
exposures in the banking industry. The new regime proposes stricter capital and
liquidity requirements for banks to ensure they remain resilient to financial
shocks. It has also upgraded internal risk assessment processes and disclosure
requirements to bring more transparency in banks’ functioning. However, given
the weak condition of banks due to rising regulatory pressures, operating costs
and falling profit margins in several key economies such as the US and members
of the European Union (EU), the timing of implementation remains uncertain,
with migration to minimum capital requirements already delayed until the end of
2018.
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In Europe, which remains heavily in debt
after the financial crisis of 2008 and the eurozone crisis, regulators have
taken an aggressive stance. The 2013 banking regulations such as Capital
Requirements Regulation (CRR) and revised Capital Requirements Directive (CRD
4), combined with the Liikanen proposal to ring-fence retail depositors’ funds,
are expected to overhaul the banking industry in the region. On the other hand,
the Asia-Pacific, Middle East and African regions show relatively low activity
in bringing in new regulations compared to their Western counterparts.
Money laundering, terrorist financing and
tax evasion are major ongoing issues faced by the banking industry, leading to
various regulatory reforms worldwide. In the US, the Foreign Account Tax
Compliance Act (FATCA) was enacted in 2010 to address tax evasion by US
citizens via foreign financial institutions and some non-foreign financial
entities (NFFEs).
The report provides a detailed overview of
regulatory initiatives taken by governments and regulatory bodies across the
world in the past few years. It also provides
an insight into emerging regulations such as Basel III, FATCA and Dodd-Frank,
and their impacts on the retail banking industry.
The report provides a regional analysis of
retail banking regulations and their impacts on banks operating in their
respective regions. Along with meaningful insights into the impact of
regulatory developments on banks’ key business lines and corporate structures,
this report provides an overview of the level of regulatory enforcement in the
banking industry across various regions.
The report covers major companies like Capital
One Bank, Discover Bank, American Express, Citibank Indonesia, Barclays, Bank
of America, JPMorgan Chase, Citigroup, Deutsche Bank, Credit Suisse, Royal Bank
of Scotland (RBS), UBS AG and Rabobank in analysis.
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