The remorseless rise in regulation has become the greatest risk facing the banking sector according to the latest Banana Skins survey conducted by the CSFI, and sponsored by PricewaterhouseCoopers.   The report finds that regulatory overkill saps bank resources, reduces risk diversification and creates a false sense of security.  

This finding is based on responses from 440 bankers and close observers of the banking scene in 54 countries, but the threat is perceived to be particularly strong in the EU and North America.   Many senior bankers described regulation as “out of control”.

The CSFI’s Banana Skins survey, now in its 10th year, ranks banking risks by their perceived severity and analyses their potential impact on the industry.   Other fast-rising risks identified in this year’s poll are hedge funds (5th) and electronic fraud (6th), as well as currency risk (7th) due to the shaky US dollar.