Strategic and operational impacts of the Volcker Rule for banks operating outside the US

The banking industry has struggled to understand the business impact of the Volcker Rule, but clearly that impact will be significant for banking entities operating in and outside of the US. Even the regulators estimate that banks will have to spend nearly 6.6 million hours to implement the Volcker Rule, and 1.8 million hours annually to maintain compliance going forward.

Banks with businesses outside the US should be asking themselves:

  • How will the Volcker Rule impact our future strategy and targets?
  • Which activities will we have to stop doing in future, either because they will be prohibited or we will not be able to evidence them?
  • How 'close to the line' do we want to play between exempt and prohibited activity, for each of our different businesses, globally?
  • If some of our activities are exempt, how will we evidence that?
  • Should we continue to do business in the US, with US residents, to make investments in the US or to trade in US securities markets?
  • Will we need to restructure our model to segregate any trading that has any form of US involvement?
  • Which legal entities/jurisdictions do we want to use for our affected business lines going forward?
  • How will our cost base change as a result of the Volcker Rule?

PwC is helping banks to assess these issues and what the strategic and operational implications will be. Speak to Crispian, Laura or Munib to find out what the impact of the Volcker Rule will be for you.