Banks Maintaining Prudent Balance Sheets After Financial Crisis

Lucas Gilmore, “Big 4″ observer
September 28, 2010 /

According to a new report by KPMG, banks around the world are stressing on new business models that lead to prudent balance sheet management. Banks in Europe and USA especially, are taking steps to better manage the aftermath of financial crisis. KPMG released its study entitled “Creating a new mould for banking”, which is based on interviews with senior executives from 25 of the word’s major banks. The study also revealed that banks in Asia, Africa and Latin America have been less hit by the financial crisis while developed countries like Europe and America have been the worst hit.

Banks in Europe and America are strategizing about undertaking fundamental reconsideration of their business models, according to the study. Banks in developing countries will be refining their existing strategies.

The shifting of focus from revenue generation by banks to prudent and stringent balance sheet management and good account- keeping is a cause of concern as the industry continues to suffer from a continued shortage of liquidity and capital.

The operating models of banks are being streamlined to make sure of better efficiencies and the scope for profit looks uncertain.

KPMG has predicted that the banking industry is going to witness a whole lot of acquisitions and divestments as the next stage of reconstruction in the aftermath of the financial crisis continues and that it will both be in response to policy-makers as well as voluntary.

KPMG also mentions in its study that nationalized banking institutions may return to the private sector in the near future and a wave of consolidation may grab the smaller institutions in USA.

Better balance sheet maintenance by banks is also going to mean good news for accounting firms in view of the agreement between US and EU over sharing of confidential audit papers.

 

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