The New Business Model in the Banking Sector and its Challenges

The financial crisis exposed a number of caveats of the business model in the banking sector among which the most visible one was the relation between leverage and multiplied losses. The new Basel capital and liquidity requirements will force some costly changes on the banking sector daily management. These costs will trigger a reform of banking in all its aspects: maturity transformation, assets portfolio restructuring, client and regional priorityzation, operations costs, corporate governance, innovation, mentality and culture. This paper analyses the main elements driving the change of the banks.' business model in order to capture its challenges and threats confronting the stakeholders on the medium and long term run. These analyses are meant to point out the impact of international banking sector transformation on the Romanian economy, on its short, medium and long term financing, as well as on its banking community, which consists mainly of subsidiaries of foreign banks (a number of which are systemically important financial institutions for both home and host sides).