It surprises me that there aren't more topics on this, with all the new measures that are being proposed in the EU. It seems like these regulations will change banking as we know it.
How will the 1:1 pay to bonus cap, which will affect all branches of European banks, and the financial transaction tax of 0.1% on equity and debt transactions, and a 0.01% charge on derivatives transactions, affect banking?
Is banking in London really a sinking ship, and will the focus shift to NYC, Hong Kong or Singapore?
With all the "NYC or suicide" type mentalities here, EU banking not being discussed should be expected.
Yeah, I understand that mentality, but ignoring Europe isn't exactly smart, as what happens in the EU will certainly affect NYC.
It's not like Patrick Bateman chainsawed people in Paris. Duh.
Classic
the bonus cap will be interesting, well guess youll just see more business shift to the shadow system, more funds moving to switzerland etc.
can you just circumvent bonus cap by messing with fixed comp? i.e. guy is meant to get a 5m bonus has 1m fixed, gets a 6m fixed the next year?
If they actually go through with the transaction tax, they are indeed fucked.
the 1:1 pay to bonus cap can easily be gotten around if they just raise base salaries...not saying this will occur, but with our genius financial minds we should be able to figure at least that one out.
I'm more concerned with how the impact of Basel III's capital requirements and the changing of the definitions thereof will affect bank lending and profitability...seems like we will definitely see a permanent incremental rise in interest rates just out of that alone.
I am primarily concerned about the rising costs and the sinking profitability due to regulation (Think of FATCA, Basel III and the ongoing tax dispute). The regulators are influencing the business model of the banks indirectly through the different weightings of capital requirements for several business divisons / activity.
Another big question mark for me are the conditions of several system relevant banks in Spain, Greece, Italy etc.!
I don't know if their regulatory situation is that much worse than the USA's (excl. the transaction tax and pay/bonus issues).
Switzerland and Singapore could be the new finance hubs. How's Canada's regulatory climate?
They have the so called Swiss Finish for Basel III where the capital requirements are higher for UBS and CS than for other big banks. Switzerland is also having trouble with bilateral tax disputes with several countries. The Swiss banking secrecy is history. And if that's not enough: The Swiss banks are facing trouble because of kick-backs...
I don't think that Switzerland will be THE financial hub in Europe in the future.
I think a part of the business will shift away to other continents, but London is still representing a timezone and continent. And in that continent and timezone there will always be a need for financial services. If London is going down totally, it should mean that elsewhere in Europe a new hub will come.
Please tell me that new hub won't be Frankfurt. If so, is there any way of lateralling to NYC or Asia after a BB internship in London?
Switzerland will have limited influence as it agreed to disclose the details of bank accounts of UK residents (and when we're talking about European IB, it's mostly London).
Paradeplatz post just appeared, he pretty much nailed it.
Do you want to be in a new hub or you want to make big money? Higher pay may be outside the main hub... :)
Let's just say it's not one of Europe's most interesting cities.
And where would that be?
Zurich?
I'm starting college next year and have decided to study in the UK in order to get some (more) international exposure (I'm an American who has spent summers in Europe with German family). I've done enough networking to probably come back to NYC (living in Greater NYC area), but obviously options in London would be nice. The City still has an attractive time zone and a (slightly) better regulatory environment than continental Europe, but even that won't be enough to keep it competitive. Frankfurt could become a new hub, but only if things fall apart politically in the EU.
Transaction tax won't apply in the UK. Their gov't and regulators are some of the most vocal opponents.
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