Banking Banana Skins 2010

This report describes the risk outlook for the banking industry at the turn of the year 2010 – a time of unprecedented stress in the financial markets. The findings are based on responses from more than 400 bankers, regulators and close observers of the banking scene in 49 countries.

The dash by governments to rescue their banks from the financial crisis may have staved off a collapse of the system, but it has left the banking industry deeply politicised, a development which respondents to this survey find to be the greatest source of risk now facing the banking sector.




Big movers


RISING RISKS
Political interference: distorts commercial judgment, creates moral hazard. 
Too much regulation: over-reaction to the crisis.
Capital availability: huge demands, weakening investor appetite.
Corporate governance: will banks learn lessons from the crisis? Currencies: worries about US dollar volatility.

FALLING RISKS
Liquidity: not the problem it was a year ago.
Credit spreads, derivatives, equities, interest rates: markets getting back to normal.
Hedge funds: off the radar screen so far as risk is concerned.
Back office: has stood up well in the crisis. Fraud and rogue trader: fewer incidents than might be expected in a crisis period.