PWC NZ Logo
New Zealand

Menu
Sidebar

Banking Banana Skins 2014: Inching towards recovery

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.

The top-28 banking banana skins for 2014

  Australia and New Zealand World
1 Regulation  Regulation 
2 Pricing of risk  Political interference 
3 Political interference  Macro-economic environment 
4 Macro-economic environment  Technology risk
5 Sales and business practices  Profitability
6 Technology risk Pricing of risk
7 Social media  Credit risk 
8 Shadow banking  Corporate governance 
9 Interest rate markets Criminality 
10 Emerging markets  Capital availability 
11 Change management  Quality of risk management 
12 Criminality Interest rates 
13 Liquidity  Back office
14 Quality of risk management  Change management 
15 Back office Liquidity
16 Profitability  Sales and business practices
17 Reliance on third parties  Emerging markets 
18 Currency markets  Derivatives 
19 Derivatives  Social media
20 Corporate governance  Shadow banking
21 Management incentives  Management incentives
22 Commodity markets Currency 
23 Capital availability  Human resources
24 Human resources  Reliance on third parties
25 Credit risk Social sustainability
26 Sustainability Equity markets 
27 Business continuation  Commodity markets
28 Equity markets Business continuation

 

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.

Please Contact
Sam Shuttleworth

Sam Shuttleworth

Partner, Banking & Capital Markets Sector Leader | Auckland

View complete profile
 
Partner, Banking & Capital Markets Sector Leader | Auckland
Tel: +64 9 355 8119
Linkedin ProfileLinkedin | Email
899c7054-ee45-4a9f-9492-afb22b1721e4
  • Print