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What risks do Australasia's banks face in the current climate and how are they prioritising them?
PwC and the Centre for the Study of Financial Innovation (CSFI) have once again joined forces to learn what our banking industry leaders see as their biggest threats. And we've found regulation, pricing of risk, political interference, the macro-economic environment, and sales and business practices place at the top of 28 risks for the New Zealand and Australian banking industry.
Based on responses from more than 650 bankers worldwide – including 16 from Australia and New Zealand – we warn new banking regulations introduced since the global financial crisis, and the accompanying global political backlash against banks, could damage the banking industry and hold back economic recovery.
Yet, in a positive sign, our poll also reveals that anxiety about the state of the global banking system has fallen for the first time in seven years, suggesting the financial crisis is finally over. While trans-Tasman banks' 'anxiety levels' were broadly consistent with their overseas counterparts, we found they had a higher level of perceived preparedness to handle the risks identified than the world average. This reflects the banking issues caused by the global financial crisis haven't been as severe in Australia and New Zealand as those experienced abroad.
See below to read the top-28 'banana skins' identified by the Australasian banking industry and download our global report Banking Banana Skins 2014: Inching towards recovery for further insight.
If you would like to discuss the findings, please do give our Financial Services team a call.
Anxiety level – The 'anxiety level' of the response from Australia and New Zealand was 3.01 on a scale of 1 to 5 (i.e. below the global level of 3.12).
Preparedness – We asked the question: 'How well prepared do you think banks are to handle the risks you have identified, on a scale where 5 = well and 1 = poorly?'.
Australia and New Zealand scored 3.53 (out of a possible 5), indicating a much higher level of perceived preparedness than the world average of 3.04.