European bank opposition to regulatory push grows
FRANKFURT (Reuters) - European bankers are growing increasingly vocal in their opposition to what they view as regulatory overkill in response to the financial crisis.
They have largely swallowed the new Basel III framework, which is designed to ensure lenders have enough capital to withstand future downturns. But there are signs of rebellion as global banking supervisors plot other ways to tighten the regulation of those blamed for exacerbating the crisis.
Banks in Europe say too much red tape will prevent them from giving much-needed financing to companies, thereby killing off a nascent economic recovery.
"We can cope with Basel III, but we don't need the gold-plated rules that come on top right now," Klaus-Peter Mueller, supervisory board chairman of Germany's second-biggest lender Commerzbank said on Friday.
Earlier this week, Deutsche Bank's investment bank chief Anshu Jain accepted the industry shared some of the blame for the crisis. But he also stressed that investment banks provide crucial tools to help the economy and companies grow, including providing advice on credit risk, currency risk and commodity risks as well financing expansion.
His boss Josef Ackermann was more forthright, saying the onus was now on regulators and politicians to ensure that momentum didn't end up distorting competition or imperil a sustained economic recovery.
"The G20 consensus on a coordinated crisis response is showing signs of weakening, as lawmakers increasingly feel the domestic political pressures and want to be seen as 'doing something'. I regard these developments with concern," Ackermann said this week.
He said the competitiveness of the European financial market could be damaged by fragmented rule making.
Central bankers are already working on a new round of bank stress tests in Europe, shortly after agreeing on Basel III capital requirements. This comes in addition to new rules on bonus payments and bank levies, causing some bankers to squirm.
"Banks have to be doing business and not just fill in forms. There must be a right balance," said Guido Ravoet, secretary general of the European Banking Federation.
But supervisors appear to think the banks are crying wolf.
Bundesbank official Andreas Dombret signalled that Basel III rules alone would not scupper an economic recovery.
"Fears of dire consequences appear to be exaggerated," Dombret said, adding that it's too early to discuss the impact of supplementary rules, since they have not yet been formalised.
Deutsche Bank says Basel III rules will force lenders to book risky assets in such a way that so-called risk weighted assets for European investment banking businesses will rise by 77 percent.
This would mean that European banks need to raise well over 300 billion euros (261.7 billion pounds) of capital on top of the approximately 450 billion euros raised during the three years of the crisis in more benign market conditions, Deutsche said.
(Reporting by Edward Taylor; additional reporting by Arno Schuetze; Editing by Alexander Smith)
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