Big Banks Have Paid Out $321B In The Years Since The Financial Crisis

The almost decade since the Financial Crisis has been an expensive time to be a big bank — globally, banks have paid out $321 billion in fines since 2008.

Those fines have been levied for a variety of financial industry sins — money laundering, market manipulation and financing terrorists have been among the more colorful charges leveled, according to Boston Consulting Group.

And that tally is likely going up — not down — as European and Asian officials are coming now to the regulatory party and getting ready to throw their own Dodd-Frankesque aggressive rules against the world’s biggest banks. Thus far, the U.S. has been the driver behind the bulk of the fines and charges, according to BCG.  In 2016 alone banks paid out $42 billion in fines — a 68 percent uptick over 2015’s tally.

“As conduct-based regulations evolve, fines and penalties, along with related legal and litigation expenses, will remain a cost of doing business,” analysts led by Gerold Grasshoff wrote. “Managing those costs will continue to be a major task for banks.”

And according to BSG — President Donald Trump’s promises to roll back Dodd-Frank aside — the era of raised regulatory requirements is likely the shape of things to come. The number of rule changes that banks must track on a daily basis has tripled since 2011, to an average of 200 revisions a day, according to the report.

“Regulation must be considered a permanent rise in sea level — not just a flowing tide that will ebb or even a cresting tsunami that will recede,” the authors wrote. “We expect this theme to hold despite recent political developments in the U.S.”

The report also noted that banking has not quite recovered fully from the crisis or recession as of yet.  According to BSG, finance firms are running still running in the red on a cumulative basis from 2009 to 2015 by about $9.5 billion.  BCG calculated economic profit by taking a bank’s operating results and incorporating its cost of capital.

The difficulty, however is uneven.  European lenders have not posted annual economic profits at all during those years. U.S. finserve companies have been running in the black for the last three years while Asia-Pacific, South American Middle Eastern banks posted profit every year during that run.


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