Regulation and political interference topped the list of risks among the global banking industry (No.1 and No.2 respectively) - replacing 2012's leading threat, the macro-economic environment, according to the Banking Banana Skins 2014 (http://www.pwc.com/bbs2014) survey released today.
The CSFI's biennial Banking Banana Skins (http://www.pwc.com/bbs2014) survey, produced in association with
Political interference was also specified by respondents as causing more costs and constraints to the banking sector. Some of the strongest concerns around political interference come from
However, the survey also shows that anxiety about the outlook for banks has started to decline for the first time in seven years, suggesting that the operating climate for banks is finally turning.
The poll shows that concerns expressed in earlier surveys about capital availability, liquidity, credit quality and exotic products in the banking system have begun to ease. Although confidence about the macro-economic outlook has also strengthened, the survey reveals strong ongoing concern about the stability of the Eurozone, and rising worries about emerging markets, particularly
A fast-rising risk in the Banana Skins ranking is technology risk, which has risen from No. 18 to No. 4, largely on the back of strengthening concern about cybercrime. This is a problem which, as one respondent said: "can only get bigger" and cost banks heavily both financially and reputationally. Technology concerns also centre on back office systems which are seen to be ageing but also a low priority for investment.
A breakdown of responses shows that all major respondent types (bankers, observers and risk managers) are strongly concerned about regulatory excess and political interference, as well as the state of the global economy. However non-bankers are more worried about institutional risks in banks such as the quality of governance and management; bankers play these risks down.
By region, the responses show concern about regulation and politics to be strongest in
"Although there are encouraging signs in this survey, respondents' concerns around over regulation need to be taken seriously. It would be ironic if new banking rules ended up snuffing out the recovery," said
Global Financial Services Risk Leader,
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