Political risk has replaced financial risk as the number one fear facing the global banking industry, according to the annual global Banking Banana Skins survey. Credit risk was the second- biggest concern among respondents and the biggest issue in emerging market economies.
The survey, which also polled six bankers in SA, is based on the responses of 443 bankers, regulators and observers across 49 countries. It is compiled by the Centre for the Study of Financial Innovation in London and sponsored by PricewaterhouseCoopers.
Respondents agree the dash by governments to rescue banks from near collapse in the financial crisis led to political interference taking the top spot on a list of 30 serious risks facing banks. PricewaterhouseCoopers SA f inancial s ervices and b anking l eader Tom Winterboer said there was not a “huge amount of political interference” in SA’s banking industry — local banks did not require government aid during the crisis.
Examples of local political pressures included measures to clamp down on the taxation of certain bank products and negotiations on the financial services charter.
Survey editor David Lascelles said there was “clearly a crisis in the relationship between banks and society, and it will take years to rebuild trust. Until it is, banks will operate under a financial handicap ”.
“The concern is that the global financial crisis has taken the banking industry’s future out of its own hands. Government’s efforts to rescue banks from disaster may have staved off a collapse of the system, but it left attitudes towards the bank industry deeply politicised,” said Winterboer.
He said the survey was a well- timed warning against over-regulation and that the cumulative effect of regulatory initiatives may have unintended consequences. The bulk of the respondents were pessimistic about the outlook, fearing a double-dip recession with a further wave of bad debts hitting the banks.
The mood was “particularly dark” in the Asia Pacific region, where respondents were worried that another asset bubble might burst, bringing about a collapse of confidence in credit markets.
Source: www.businessday.co.za, 20100224
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