TOP bankers took a swipe yesterday at US and British moves to tighten regulation of their activities and pay, saying one set of rules were needed to govern the global banking industry.
The Group of 20 leading nations have attempted to address the financial crisis through a common global approach, but policymakers came under fire from the industry’s leaders for potentially storing up problems for the future.
“We collectively underestimate the cost of complexity,” Peter Sands, chief executive of Asia-focused bank Standard Chartered told the World Economic Forum in Davos, Switzerland. “If we all do slightly different variants of everything... in every country in the world, it will create enormous amounts of complexity and the visibility of bank management and regulators... will be impeded.”
Regulators welcomed plans by US President Barack Obama to curb banks’ proprietary trading risks, with Bundesbank president Axel Weber lending cautious support. “We need to limit activity. We need to have more capital held against riskier activities,” he said, while indicating the US approach would not get wholesale backing in Europe. But Barclays president Bob Diamond said moves by British and US authorities – including a UK tax on bank bonuses and a US clampdown on big banks’ activities – could threaten supranational solutions.
He also noted domestic political imperatives coming to the fore. Both the UK and US governments face the ballot box this year. “This is a time when isolated actions in the United States and the UK are not beneficial,” Diamond said. “(There is the) opportunity to work constructively through the G20.”
Deutsche Bank’s Josef Ackermann agreed: “We are in a global financial market and we need a level playing-field. It would not be productive to have different regulatory frameworks.”
City A.M. Reporter