Whilst banks have reassessed their balance sheets, compliance procedures and control mechanisms following the financial crisis nearly a decade ago, market reforms and economic uncertainties are ensuring that banks are faced with a future mixed with both unique opportunities and challenges.
The macro environment is increasingly challenging for banks – global banking profits remain subdued. The nominal growth/interest rate environment has resulted in increased risks and limited upside potential. In many parts of the world, most notably Europe, banking has settled into a challenging new reality.
Whilst banks continue to require market-leading advisory support for critical issues, transactional markets remain, at best, turbulent and the industry faces a delicate balance between profit and loss.
Regulatory reform continues to consume huge amounts of resource and management time as banks get to grips with the detail of how best to comply with new and toughened regulations faced by the sector. The pressure from regulators and supervisors remains intense. As conduct-based regulations evolve, fines and penalties, along with related legal and litigation expenses, will remain a cost of doing business. We are seeing an increase in class actions, group litigation and collective redress procedures due to greater access to litigation funding and increased regulatory challenges among other impacts. Managing these costs and implementing mechanisms to prevent the reoccurrence of problems will continue to be a major focus for banks.
Many banks are beginning to retrench from a universal/global presence and towards more focused bank models, certainly in the UK/Europe while the main US banks seem to be emerging strongly. Banks are tackling the major process of redefining the clients they want to serve, their product specific offerings and the geographic footprint of their organisations.
In response, many large banks are considering how they will compete effectively by investing in innovation and technology. Under increasingly disruptive pressures from FinTech start-ups and other technology companies, it is the time for banks to understand ways in which they can leverage technology to become more agile and transform how they do business.
Geopolitical developments and crises continue to threaten the stability of the international markets: in particular, the high level of uncertainty following the UK’s vote to leave the EU referendum and the outcome of the 2016 US presidential election. ‘Brexit’ without doubt presents clear challenges to the EU banking industry and the uninterrupted supply of banking services around the EU. Brexit is likely to result in a significant transformational activity as banks, clients, market infrastructure and regulators simultaneously carry out their plans to prepare for the UK’s departure from the EU.
We advise banks across the world and in relation to every aspect of their business. We bring pragmatic, commercial advice and unrivalled insight to some of the world’s most demanding and innovative bank projects. Our bank clients are core to our business.
With balanced strength in our corporate, finance, regulatory and other specialist divisions, we can bring together integrated teams across all the key jurisdictions and business lines in which our clients operate, advising banks not only on their own operations but also on the work that they do for their clients. Whether it be M&A, capital markets activity or negotiating the post-crisis regulatory reform agenda, our expertise is broad and deep and covers the full range of a bank’s business, from complex strategic activity to day-to-day transactional matters. We advise on everything from the complex tax, employment and antitrust issues or the issue of innovative capital instruments, to helping banks assess how best to separate out or ring-fence elements of their business. It is this experience which we can bring to bear in helping clients adapt to the exceptional rate of regulatory and market change and favourably position themselves in the financial markets of the future.