BANK of England policy maker Robert Jenkins has urged institutional investors to weigh in with their opinions on banking rule changes, or risk being left with unsatisfactory reform.
The Financial Policy Committee member said asset managers are the “missing piece” in making banks more robust.
“What stakeholder group other than the investment management industry has the combination of financial expertise, credibility and clout sufficient to counterbalance the banks and so better shape the outcome of the debate? None.
“Alas, no stakeholder group has been more silent,” he told the CFA UK’s annual chairman’s dinner in London last night.
He conceded that it was “rich” for a regulator to ask institutional investors for help, given the global crackdown on hedge funds and private equity in the wake of the crisis.
“Like a bar room brawl, some legislators lashed out at the fellow in the room they disliked the most rather than strike the one who had actually tagged them,” Jenkins said.
He praised the Investment Management Association for being vocal on the Vickers reforms and an ongoing shake-up of the audit market.
But he flagged up concerns that the proposed Basel III regulations are not yet stringent enough, particularly in the case of lending ratios.
“Given that the balance sheets of many banking behemoths exceed the GDP of their host countries I think that gearing of thirty-three times is sailing a bit too close to the wind,” he said.