More Bank Regulation, Less Bank Profit


Increased banking regulation will lead to less profits for banks. That’s the findings of a JPMorgan study, the Financial Times reports.

The consequences of the regulatory overhaul will be fairly dramatic, cutting long-term profitability at US and European banks by a third, leading to more layoffs and bonus cuts.

From the FT: Its report forecasts that banks will be unwilling to operate at reduced profitability levels and will respond with massive restructuring, including further headcount reductions in some areas and swinging cuts in compensation across the board.

Morgan Stanley and Goldman Sachs will feel the most impact as well as the investment banking divisions of Deutsche Bank and Société Générale and BNP Paribas, while banks that focus on traditional lending will be less affected by the regulatory clampdown.


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