European bankers attack regulation "overkill"

City A.M. Reporter
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.

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.