An Inflection Point in Global Banking: Risk Report 2012–2013

By Ranu DayalGerold GrasshoffDouglas JacksonThomas PfuhlerPhilippe Morel, and Peter Neu

Five years after the onset of the financial crisis, the global banking industry in the Western world is still fragile, struggling to create sustainable value. Europe’s sovereign-debt crisis, the sustainability of U.S. debt levels, and global macroeconomic uncertainty are all factors. In addition, an avalanche of regulatory reforms looms ahead, led by G-20 commitments and, in many countries, complemented by domestic measures.

The pressure on value creation will not ease in the foreseeable future. Structural market changes driven by the shifting perspectives of equity investors, debt investors, and regulators are under way. These changes mark an inflection point that will lead the global banking industry to a “new new normal.” Given the prevailing uncertainty, investors may turn away from banks, prompting institutions both to reinvent themselves and to rework their current business and operating models.

Building on our last global risk report, the 2012 version covers 145 banks that account for nearly 75 percent of banking assets in Europe, the U.S., and Asia-Pacific. As we will demonstrate, banks must take action now on multiple fronts to ensure a prosperous future for themselves and their investors.