Are big banks more profitable?

Author: Lizzie Meager | Published: 2 Dec 2016

Size may well be an advantage for financial institutions in today’s intense regulatory climate, according to a prominent asset manager.

Speaking at the FT Banking Summit in London last week, Eric Knight, CEO of Knight Vinke said this is because banks are much less profitable than they used to be.

US regulators were quicker to deal with banks' problems than their EU counterparts"Just look at derivatives, where the margin has gone from 60bp to three…the idea that banks might find a way out of the impasse by shrinking their balance sheets seems to me to be missing the point," he said.But others are unsure of its relevance. Cass Business School senior fellow Simon Samuels said there’s little evidence that it was ever an advantage, even in a pre-crisis world. "In our research we found that size and CEO compensation have always been more reliably aligned than size and advantage,"...