For the banking group as a whole, costs of doing business may be lower under the branch structure than under the subsidiary structure. Maintaining greater self- sufficiency of affiliates in a subsidiary structure requires that each affiliate hold higher capital and liquidity buffers to limit the likelihood of failure. This results in higher levels of capital and funding for the banking group as a whole than under the branch structure. Moreover, stricter firewalls between the affiliates and the parent in a subsidiary structure, while reducing the risk of contagion, also limit shifting of funds within the group to take advantage of.
