Rob McDonough Comments on Regulatory Compliance

European banks are behind their U.S. competitors in addressing a more regulated environment and, in some cases, are flailing around for answers.

Last week, Deutsche Bank shares hit an all-time low on worries that it won’t be able to buy back some bonds that can convert into equity. Deutsche regained some value after it outlined plans to repurchase $5.38 billion worth of other bonds, but investors’ concerns don’t seem to have been entirely assuaged.

Meanwhile, Barclays has come under pressure after a Bernstein analyst wrote an open letter on Feb. 5 imploring CEO Jes Staley to break up the bank.

Rob McDonough, who advises financial institutions on risk management at Angel Oak Consulting Group, says megabanks may have little choice but to get significantly smaller.

“It’s too expensive,” he said, “for banks to be big.”

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