The results of a study into the impact of EU regulation in the wake of the financial crisis have been published. New rules introduced since the 2007/09 financial crisis required banks to hold more capital for trading activities, making these areas less profitable and prompting cuts to trading desks. This has led investment banks' balance sheets supporting trading markets to decrease by 20% since 2010, and by 40% in risk-weighted asset teams. It is estimated that European investment banks will shrink by another 14% on aggregate in the next two years.
The report also said that "for banks, the diminishing returns on capital from market-making call for more and fast structural change," and estimated that for banks to improve their return on equity to above 10%, they would need to deliver 2 to 3 percentage points of return on equity improvement from restructuring.
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