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From Sagar Chakraverty, Opalesque Asia:
The 2008 crisis has shown policymakers that when financial institutions are let loose, they can assume a humongous size and start believing they are ‘too big to fail’. But if they do fail, it is the governments and hard-earned tax-payers money that come to their rescue. So the size of financial institutions does matter, and policymakers need to pay attention to that. Large size firms usually originate from consolidations of several smaller companies. However, could asset managers be impacted in an era when consolidation and global expansion overlap new regulatory and political challenges?
Regulations against the dangers of too-big-to-fail institutions are being worked on already. For example, Britain, Germany and France, and possibly the US, are moving towards implementing an international levy on banks to fund potential ‘bail-outs’ of the financial system in the event of another crisis in the future. In this way, governments want to ensure that banks make their way-out in the event of future crises, Canadian Underwriter said.
Some may argue that consolidations are necessary for survival because it helps in cost reductions and global reach, but as new regulatory measures could slow down the consolidation momentum, they could also push back growth.
How regulations impact consolidations?
Among regulations a...................... To view our full article Click here
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