BOE/PRA out with a paper on bank risk controls
– Says it will likely mean increased operational costs for banks
– Costs likely to be a one off 5% of operational costs and raise ongoing costs by 3% a year
The key in all this is the cost issue. If banks deem those too high then they’ll probably look to get shot of the area that will cost them. We’re already seeing a flood of banks getting out of their direct commodities businesses due to the slump in that market, and it won’t take much for them to shed other areas