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KPMG: Community Banking Execs See Regulatory Requirements Stifling Growth

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Date: Nov 28, 2012 @ 07:16 AM
Filed Under: Banking News

In the 2012 KPMG Community Banking Outlook Survey, 47% of respondents identified regulatory and legislative pressures as the most significant barrier to growth over the next year, while 35% said regulatory compliance costs were having the greatest negative impact on financial performance.  Additionally, 27% said that bank management’s top initiative in the next two years will be navigating significant changes in the regulatory environment.

“The new regulatory environment in which community banks now operate is a game changer because the cost of building the necessary compliance systems and processes is high,” said John Depman, national leader of Regional and Community Banking for KPMG.  “As a result, many community banking executives are re-evaluating their business and operating models and growth strategies.”

Capital and liquidity requirements from various regulatory initiatives such as the Dodd-Frank Act and Basel III (34%) were identified as the government regulation having the most impact on community banks.  Thirty-seven percent of respondents said their community bank would need to raise more capital to meet these requirements, while 34% said they would not and 29% said they had not completed the analysis yet.

“Many community banks have strong balance sheets and adequate capital, but many others will need to raise capital so those who are late to the game may find the cost of capital much higher,” said Depman. 

Read the full 2012 KPMG Community Banking Outlook Survey press release.


   



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