zeb coverage on globalbankingandfinance.com
As regulatory changes continue to impact on profitability in the global banking sector, it is imperative that banks re-evaluate their business models in order to weather the current international political uncertainty and ever-shifting operational landscape, says Bertrand Lavayssiere, managing partner at international financial management consultancy, zeb. Here he discusses the impact of regulations on banks’ Return on Equity and recommends three potential steps for banks to take over the next five years. If we look at the 50 largest banking groups in the UK and Europe we can see that the cost of equity has been below the Return on Equity (ROE) for the past eight years, while the market to book value is also below 0.9. The cost of equity is calculated at around 8%, whereas the ROE is around 6%.