Regulation will force long-term IB downsizing, says S&P
Tough rules on capital and leverage will push banks to reassess their business models not just in 2013 but over several years, as they adjust to a new regulatory paradigm and focus on key markets, Standard & Poor’s says. But even as banks strive to exit businesses that no longer fit their new strategies, legacy portfolios could hamper their progress, Nomura analysis has found.
With cost cutting and deleveraging set to continue for several years once regulatory uncertainty dissipates, larger flow monster institutions could be left with bigger market shares and better margins, said S&P.
"Above all, tougher regulatory requirements for capital and leverage are set to lower the industry's return on equity
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