If unchecked, this rising trend has the potential to trigger phases of financial instability in the future, weighing on growth and undermining financial assets. In fact, in many cases the market valuations of these assets already appear elevated relative to long-run norms, which increases their vulnerability to any potential repricing of risk.
3 Consolidation and the ever-shrinking cake Let’s begin with consolidation. The gradual downsizing of branch networks and institutions is a clear signal that consolidation is already under way. But there is still some way to go yet. It would appear logical to press ahead with consolidation, particularly with a view to boosting the costincome ratio.