Banks globally have paid US$321 billion in fines since 2008 for an abundance of regulatory failings from money laundering to market manipulation and terrorist financing, data from Boston Consulting Group (BCG) showed.
That tally is set to increase in the coming years as European and Asian regulators catch up with their more aggressive US peers, who have levied the majority of charges to date, BCG said in its seventh annual study of the industry published yesterday.
Banks paid US$42 billion in fines in last year alone, a 68 percent rise on the previous year, the data showed.
“As conduct-based regulations evolve, fines and penalties, along with related legal and litigation expenses, will remain a cost of doing business,” analysts led by Gerold Grasshoff wrote. “Managing those costs will continue to be a major task for banks.”
The era of ever-increasing regulatory requirements is here to stay, BCG said, despite US President Donald Trump’s pledge to roll back the 2010 Dodd-Frank Act that reshaped US banking in the aftermath of the collapse of Lehman Brothers Holdings Inc.
The number of rule changes that banks must track on a daily basis has tripled since 2011, to an average of 200 revisions a day, the report said.
“Regulation must be considered a permanent rise in sea level — not just a flowing tide that will ebb or even a cresting tsunami that will recede,” the authors wrote. “We expect this theme to hold despite recent political developments in the US.”
Almost 10 years after the onset of the financial crisis, the banking industry still has not completely recovered from the losses it suffered by one measure, BCG said.
While finance firms created a so-called economic profit of 159 billion euros (US$167 billion) in 2015, a fifth annual increase, the industry remains 9 billion euros in the red on a cumulative basis from 2009 to 2015, the data showed.
BCG calculated economic profit by taking a bank’s operating results and incorporating its cost of capital.
European lenders have not posted an annual economic profit during that time, while US firms have been in the black for the past three years.
Banks in the Asia-Pacific, South America, and the Middle East and Africa have posted an economic profit every year.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Microsoft Corp yesterday said that it would create Thailand’s first data center region to boost cloud and artificial intelligence (AI) infrastructure, promising AI training to more than 100,000 people to develop tech. Bangkok is a key economic player in Southeast Asia, but it has lagged behind Indonesia and Singapore when it comes to the tech industry. Thailand has an “incredible opportunity to build a digital-first, AI-powered future,” Microsoft chairman and chief executive officer Satya Nadella said at an event in Bangkok. Data center regions are physical locations that store computing infrastructure, allowing secure and reliable access to cloud platforms. The global embrace of AI
Qualcomm Inc, the world’s biggest seller of smartphone processors, gave an upbeat forecast for sales and profit in the current period, suggesting demand for handsets is increasing after a two-year slump. Revenue in the three months ended in June will be US$8.8 billion to US$9.6 billion, the company said in a statement Wednesday. Excluding certain items, earnings will be US$2.15 to US$2.35 a share. Analysts had projected sales of US$9.08 billion and earnings of US$2.16 a share. The outlook signals that the smartphone market has begun to bounce back, tracking with Qualcomm’s forecast that demand would gradually recover this year. The San