Old banking models might well stage a comeback

THE cracks in the banking system have once again been ripped open. Twice in the past decade, banks all over the world have slid considerably on all parameters. The 2008 crisis brought down many banks, nationalised many others, changed the metrics for their measurement and ushered in new adequacy and stress norms. This regime is not even 10 years old - a small period in industrial cycles - and we are already in the middle of the next tsunami, and not only because of Brexit.

The Chinese banks are not the only ones to show severe stress. Global banks such as Citi, HSBC, Standard Chartered and Deutsche Bank have had more bad news in recent weeks than they have had over the past five years. These and others have been scurrying for remedies that include massive layoffs, sale of significant parts of the businesses or geographies and reorientation of the business itself.

None of these banks have secured any assurance from the regulators or the retail investors that they have a good plan. Even the better-run banks in Singapore, for instance, have shown some vulnerability of late, arising from serious issues in areas such as oil and gas and the property sector.