Banking is one of the most highly regulated and protected industries in the world. Each country has its own set of regulations that foreign banks must adhere to in order to operate in that country. This barrier to entry is being challenged in most countries, but at differing rates. The 1990's will continue to be one of the most telling periods for the future of international banking. Most banks are entering 1997 with lower profitability levels than in prior years.
Profit margins are under siege due to intense industry competition.
Tighter monetary policies, deteriorating loan quality and macroeconomic considerations, such as interest rates and currency fluctuation, will effect the industry this year. In the short term, declining interest rates will cause interest rate spreads to narrow for most international banks. Credit costs should not be a burden for most international banks. Japanese banks and emerging markets are the exception. All banks seem to be undergoing a level of cost control and restructuring.