The new BVR report on the impact of regulation shows disproportionate strain on small and medium-sized co-operative banks.The average regulatory costs in small and medium-sized banks are often many times higher than in large institutions. Reporting and investor protection are the biggest drain on resources.
At very small banks, the estimated costs for the investor protection documentation in fact exceed the gross profit that they make from the securities investment advice transaction. The boards of managing directors in smaller banks now spend a significant proportion of their time on regulatory matters. These were the findings of a report by Professor Roman Inderst and Andreas Hackethal of Goethe University Frankfurt on behalf of the Bundesverband der Deutschen Volksbanken und Raiffeisenbanken (BVR) [National Association of German Cooperative Banks], which used the example of the German cooperative banks to look at the impact of regulation on small and medium-sized banks.
To read the full study (German only), please click here
To read the Executive Summary (English), please download the pdf below.