For the third time, the members of the Luxembourg Bankers’ Association (ABBL) have been invited to participate in a survey to assess the cost of compliance to financial regulations. As in 2014 and 2016, the survey has been conducted by ABBL and EY.
Regulation: an important component for banks
In 2019, according to the results of the study, banks spent on a consolidated basis up to 548 million euros in order to comply with the various regulatory changes. Compliance costs increased by 16% per year between 2015 and 2020.
Regulatory investments represent on average 38% of bank investments. This figure could reach 52% for smaller banks. Budgets hit record highs in 2020.
The proportion of staff specialized in the regulatory field has also increased to 13.9% of jobs in the banking sector.
The regulation of SFDR is not part of this study, but many participants mentioned sustainable finance and associated regulatory requirements as the next priority.
“After a spike in regulatory investments and costs in 2017, it looks like we have reached a plateau, albeit at a high level. This is in line with what we planned in the previous edition of our survey ", emphasizes Olivier Maréchal, EY partner." It is also interesting to note that the two most reported regulations for banks are AML / KYC and MiFID "adds Maréchal.
While Camille Seillès, secretary general of the ABBL comments: "The results of this survey document the continued increase in the cost of compliance with regulations for banks, both in absolute and relative terms, in particular for small. The ABBL has long advocated for a more proportionate approach to banking regulation in order to maintain diversity within the banking sector, both in terms of size and business models, and to ensure a banking system more resilient. "
Survey available HERE
Press release by EY
Publié le 17 juin 2021