Global Banks: Good or Good-Bye?

Abstract

The reform program outlined by regulators and supervisors after the financial crisis implicitly aims to create a new model for banks, one where they are small(er), simple(r) and separable. The drive toward “separability” threatens to diminish the scale and scope economies that global banks have enjoyed and opens the door to new entrants using new technology. If global banks have to be managed as a collection of “independent” subsidiaries, will this mean goodbye to global banks? Not necessarily: this article outlines how organization structures could evolve to suit both the new regulation and the new technology.

Keywords: banks, banking structure, unit banking, private equity, limited liability partnerships

JEL Classification: G01, G21, G24, G28