HSBC chairman calls for list of banks to face tougher rules

City A.M. Reporter
AT LEAST 80 banks should be deemed systemically important and subject to greater regulatory scrutiny and potentially higher capital levels to prevent competitive distortions, HSBC’s chairman said yesterday.

In a speech on regulatory changes, Douglas Flint also said the quality of supervision needs to improve and dropped a heavy hint his bank would consider leaving the UK if a commission forces banks to separately capitalise their investment banking operations. “As soon as that happens, obviously banks impacted will take decisions to protect their economic activity,” he said.

Regulators are considering a package of extra safeguards on systemically important financial institutions (SIFIs) to lessen the need for taxpayer bailouts should one of them get into trouble, which could see top banks hold an extra capital cushion of one to three percentage points.

There should be at least 80 SIFIs to avoid smaller banks gaining an advantage from holding less capital and to prevent another unintended consequence that the bigger banks are seen as safer, Flint said.

“I suspect the systemically important designated banks, if they are few in number, will see a flow of business to them,” he said.