McKinsey: Majority of Banks May Not Be Economically Viable

Management consulting firm McKinsey & Company has published a global banking review and found that a majority of banks worldwide may not be economically viable. More than half of them still do not generate their cost of equity 10 years after the crisis and may not survive an economic downturn.

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Majority of Banks ‘Destroy Value’

McKinsey & Company published its Global Banking Annual Review 2019 this week. The 58-page report highlights concerns over the health of the global banking sector. The firm groups banks worldwide into four broad categories, noting that “Every bank is uniquely bound by both the strength of its franchise and the constraints of its markets or business model.”

The first category is “market leaders” which are the top 20% of banks globally that capture almost 100% of the economic value added to the entire industry. The next is “resilients” which are…