4. Compliance – the New Power
Risk management and compliance at many company was nothing more than a smokescreen before the advent of the financial crisis. Today, no banker makes the slightest of move without having it signed off by a supervising body within the company. Countless compliance officers have been hired to prevent misdeeds. A mistake can be costly – UBS and Credit Suisse have countless stories to tell.
5. Shadow Banking – Unconstrained by Regulation
The latest figure available for shadow banking are from a survey in 2016: the Financial Stability Board, a body under joint control of the central banks, estimated the shadow banking industry to be worth $45 trillion. The growth rate: 7 percent to 8 percent. The reason for the brisk rates of growth of shadow banking are evident: free of the constraints of regulation, the firms involved transfer cash across the world wherever it is required.
Shadow banking has its pitfalls, given that it uses risky, unregistered and unregulated assets – at the pawnbroker’s, through peer-to-peer loans or at auctions, where clients provide loans to buy Picasso paintings.
6. Bonus Payments: A Divided Society
Before the financial crisis, cases of obscene bonus payments abounded: the apprentice at the big bank who received a bonus of 20,000 Swiss francs ($20,825) in his first year and the CEO, who was awarded a package with options and stakes worth a total 70 million francs. What’s changed? Today, the CEO still gets a spectacular remuneration package. The bankers who make the rank of managing director have made it. The lower ranks however are being left behind as the banks are trying to cut costs to make up for lower margins.
