US Banks after the Financial Crisis: Forced to Adapt

US banks entered the 21st century with high rates of return but they were slashed in half, on an average annual basis, by the outbreak of the subprimes crisis in the summer of 2007. Less than four years after the worst of the financial crisis, US banks have swung back into profits more rapidly than expected, especially given the severity of the crisis. Yet the turnaround was largely due to the decline in the cost of risk, which by nature cannot be replicated, while revenues risk being handicapped over the long term by debt reduction in the non-financial sector, a less favorable interest rate configuration and a tighter regulatory framework. Deeply marked by the financial crisis, the new economic, financial and regulatory environment that is taking shape could put a lasting strain on the financial performances of US banks, and at least partially redefine the banking models that co-existed before the crisis.