Half the World’s Banks Are Too Weak to Survive Downturn – McKinsey

• Half the World’s Banks Are Too Weak to Survive Downturn – McKinsey
  by https://www.rt.com/
  A new survey from consultancy McKinsey & Co has found that a majority of banks globally may not be economically viable because their returns on equity aren’t keeping pace with costs.
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  The study looked at 1,000 banks in developed and emerging countries and found that just over a third had made a return on capital of just 1.6 percent over the past three years. This compares to returns of just over 17 percent for top banks over the same period.
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  “Nearly 35 percent of banks globally are both sub-scale and suffer from operating in unfavorable markets”, as well as having flawed business models, said McKinsey.
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  It added that “to survive a downturn, merging with similar banks may be the only option, if a full reinvention is not feasible.”
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  According to the report, banks are not as well-prepared for a downturn as they were when the global financial crisis erupted in 2007 in terms of profitability.
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  “While the jury is still out on whether the current market uncertainty will result in an imminent recession or a prolonged period of slow growth, the fact is that growth has slowed,” McKinsey said.
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