In response to the 2008 financial crisis and the world recession that followed, central bankers, regulators and governments have drafted numerous regulatory reforms and measures designed to minimise risk and maximise consumer protection in the global financial system.

In order to investigate the potential impact of these new regulations on businesses, the Economist Intelligence Unit, on behalf of Lloyds Bank Wholesale Banking & Markets, surveyed over 450 senior executives from different companies and also conducted interviews with experts.

Key findings include:

• Companies are aware of and worried about regulatory changes—but are not prepared. One-half of respondents cite regulation as one of their main concerns, alongside the global economic crisis (58%) and the euro zone crisis(54%)—far ahead of other issues such as availability of finance. More than three-quarters (77%) of respondents believe that their boards are aware of the impact of changes in regulation on their company, but only 61% feel prepared.
• There is concern that new regulation will hinder growth and innovation. More than one-half (51%) are concerned that planned financial regulation will impact on growth in their industry, while 44% expect it to affect innovation. UK and US companies are somewhat more anxious (54 and 53% respectively) about the negative impact of the new regulations than either European or Asia-Pacific companies (46 and 48% respectively).
• Companies expect a significant impact on profitability. Overall, two-thirds (68%) of respondents anticipate a significant or fundamental impact on the profitability of their financing and risk management models, although some regulations cause notably more concern than others. Almost three-fifths (58%) expect at least significant effects as a result of Basel III, compared with only 35% as a consequence of the Vickers Report.
• The cost of compliance is the greatest worry. Almost three-fifths (59%) of respondents see the increased costs of complying with the new regulations as the biggest threat, but the rising costs of obtaining funding (39%) and implementing information technology systems(25%) are also concerns.
• Companies are contemplating a range of responses. The most popular plan, selected by 42% of respondents, is to change their company’s corporate finance or risk-management model. But significant numbers are also thinking of relocating or changing their legal structure (26%), looking for alternative funding (27%), reducing their use of derivatives (25%) or seeking alternative service providers (24%).