The global financial crisis and its aftermath of economic and regulatory change present major challenges to the traditional operating models of banks in developed countries and are undermining the sector’s ability to deliver a sustainable level of returns to shareholders.
A new McKinsey report, The state of global banking—in search of a sustainable model, shows that despite a strong global profit performance in 2010 and the first half of 2011, the return on equity (ROE) of banks in Europe and the United States has still not recovered to the point where it covers their cost of equity. The gap is set to widen in the wake of new regulatory requirements....