Barnier warns US of tit-for-tat action on banks

THE EU’s financial services boss yesterday warned of tit-for-tat action if the US pushes ahead with plans to impose extra capital requirements on foreign banks.

In December, Federal Reserve board governor Daniel Tarullo said foreign banks should be required to hold as much capital as their US counterparts, regardless of how their overseas parent companies are funded.

The EU fears this will fragment global capital markets and its financial services commissioner Michel Barnier said big European banks were as well capitalised as American banks.

“I don’t want to be forced to do the same as the Americans,” Barnier said on the sidelines of the British Bankers’ Association conference in London.

“My objective is to find agreement with the Americans on foreign banks. My mindset is not one of threats but my objective is to find a free and fair banking relationship. If we don’t find such an agreement, we will end up having to do the same thing,” he added.

In a speech to the conference, Barnier defended the bloc’s new law to cap bankers’ bonuses from 2014, saying it would ensure lenders manage risks properly.