This month McKinsey Quarterly published a standout paper on the regulatory squeeze of the European banks with the concluding remarks that the new rules will lower returns, but banks may be able to regain some lost ground.

The analysis was based on the 2010 financial-year data, assumes that the cumulative regulatory impact expected over the next several years will be realized immediately. The Basel III and new regional and national regulations will help reduce retail banking’s average return on equity (ROE) in Europe’s four largest markets to 6 percent, from about 10—a 41 percent decline.

Interesting to see that fall on ROE in four markets :- Continue reading