BANKS across the globe are concerned about the current economic climate caused by the eurozone debt crisis.
In 2008 the collapse of the major banks in the US resulted in a global recession. Since the recession banks have been working on their ability to manage their risks.
A survey released yesterday was conducted by the Centre for the Study of Financial Innovation in association (CSFI) with PricewaterhouseCoopers on the risks faced by the banking sector.
A total of 710 respondents from 58 countries were involved in the survey.
The respondents were asked to describe main concerns facing the banking sector over the next two to three years. Respondents were asked to score a list of potential risks or Banana Skins selected by a PwC and CSFI panel.
They were then asked to rate the preparedness of financial institutions to handle the risk they identified.
In this study, named the Banking Banana Skins Survey, seven respondents were from South Africa.
PwC placed macro-economic risk and credit losses at the top of the list of 30 possible risks to banks globally.
The survey showed that one of the concerns facing South African banking was the sector's growing dependence on technology. This was not surprising given the rise of electronic and online banking channels coupled with banks replacing legacy systems.
On the one hand the industry was trying to use technology to become more efficient, but that has had to be balanced against their concerns about fraud and huge costs involved in fighting crime.
"Banks are doing a lot of work around the exposures to the European Union," said Johannes Grosskopf, director at PwC.
"On the credit risk, a lot of work is being done around risk appetite, who you lend to and the values of the loans, and sectors that you lend to. The banks have seen where they were exposed in 2008 and replacing themselves for the future," Grosskopf said.
Tom Winterboer, another director at PwC, said there was something that South African consumers ought to do in the light of the uncertainty in the global economy.
"It is critical for consumers to reduce their debt and focus on the things they cannot go without opposed to the things they think they need," Winterboer said.
Winterboer said the local banks were positioned to deal with the credit risk but the challenge was on consumers to pay their debt.
Banks 'CAN deal with credit risk'
BANKS across the globe are concerned about the current economic climate caused by the eurozone debt crisis.
In 2008 the collapse of the major banks in the US resulted in a global recession. Since the recession banks have been working on their ability to manage their risks.
A survey released yesterday was conducted by the Centre for the Study of Financial Innovation in association (CSFI) with PricewaterhouseCoopers on the risks faced by the banking sector.
A total of 710 respondents from 58 countries were involved in the survey.
The respondents were asked to describe main concerns facing the banking sector over the next two to three years. Respondents were asked to score a list of potential risks or Banana Skins selected by a PwC and CSFI panel.
They were then asked to rate the preparedness of financial institutions to handle the risk they identified.
In this study, named the Banking Banana Skins Survey, seven respondents were from South Africa.
PwC placed macro-economic risk and credit losses at the top of the list of 30 possible risks to banks globally.
The survey showed that one of the concerns facing South African banking was the sector's growing dependence on technology. This was not surprising given the rise of electronic and online banking channels coupled with banks replacing legacy systems.
On the one hand the industry was trying to use technology to become more efficient, but that has had to be balanced against their concerns about fraud and huge costs involved in fighting crime.
"Banks are doing a lot of work around the exposures to the European Union," said Johannes Grosskopf, director at PwC.
"On the credit risk, a lot of work is being done around risk appetite, who you lend to and the values of the loans, and sectors that you lend to. The banks have seen where they were exposed in 2008 and replacing themselves for the future," Grosskopf said.
Tom Winterboer, another director at PwC, said there was something that South African consumers ought to do in the light of the uncertainty in the global economy.
"It is critical for consumers to reduce their debt and focus on the things they cannot go without opposed to the things they think they need," Winterboer said.
Winterboer said the local banks were positioned to deal with the credit risk but the challenge was on consumers to pay their debt.