This month we report on a number of important regulatory developments that will reshape the financial services landscape, including the UK’s newly minted Banking Reform Act and the US Volcker Rule. The year started with the launch of the fourth iteration of the Capital Requirements Directive (CRD IV), the new prudential regime for over 8,300 EU banks and large investment management firms.
Other developments include:
Our feature article focuses on global efforts to restructure the banking industry. US regulators issued the final version of the Volcker Rule on 10 December 2013 and in the UK, the Banking Reform Act received Royal Assent on 18 December 2013. We expect the EU’s further proposals to implement the Liikanen report shortly, which will give us a better picture of how banks will need to adapt their business models to meet the new rules. Having very different approaches from US, UK and EU regulators is likely to prove particularly challenging for the global banks over the next few years. Many are already starting to scrutinise their existing structures and business lines with a view to making changes early.
In 2013 both firms and regulators struggled to meet implementation deadlines, such as CRD IV – we expect to see this trend continue over the next several years. 2014 is the year that implementation gets seriously challenging. Global firms will confront more variations in local legal and regulatory regimes – and feel more enforcement pressure from regulators to be fully compliant.