Financial Fiat

Banks Bemoan 'Tsunami' of Regulations

Drones over frankfurt DPA montage Christoph Schmid [M]
German regulators aim to keep a closer eye on banks in the country. 
  • Why it matters

    Why it matters

    If governments and regulators don’t listen to the warnings of bankers about the impact of ever-new regulations on their business, the crucial flow of credit to the real economy may decline.

  • Facts

    Facts

    • At Handelsblatt’s “Banks in Transition” congress in Frankfurt this week, bankers said the plethora of new rules was harming their business.
    • Bankers said the time has come for regulators to halt the flow of new regulations and examine the impact of the ones already introduced.
    • Policymakers showed some sympathy for the bankers’ demands, conceding that the institutes mustn’t be overstretched.
  • Audio

    Audio

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This is what a cry for help sounds like: “We’re dealing with a tsunami of regulations.”

Those were the words of Georg Fahrenschon, president of the German Savings Bank Association. They amount to the clearest articulation yet by a German banker of the exasperation being felt at the flood of new government regulations that have been washing over banks since the 2008-2009 financial crisis.

For years, bankers stayed silent, not surprisingly. It was their failings that led to the crisis, so they had little choice but to concede that their industry was in urgent need of reform.

They meekly swallowed the raft of ever more rigorous measures imposed on them by the regulators. For many of them, the measures triggered painful structural change and put the future of entire business divisions in doubt.

But now, it appears, the financial institutions have had enough. At this year’s Handelsblatt congress “Banks in Transition,” taking place through today in the German financial capital Frankfurt, bankers vented their frustration and warned it’s time to stop imposing new rules and to take stock.

“We are rushing towards a conclusion that is not consistent with the best outcome to support global growth,” said Samir Assaf, chief executive of global banking and markets and British bank HSBC.

Banks, for the most part, are well-regulated and well-capitalized, Mr. Assaf argued, the result of a wave of regulations since the 2008 financial crisis. “We need to pause, and take stock of what we have done,” he urged.

Banks are under pressure on a number of fronts. Chronically low interest rates are devouring their profit margins while an army of young financial technology firms are launching an all-out digital assault on their businesses.

As if that weren’t bad enough, the global quakes caused by China’s market turmoil are fanning fears of yet another financial crisis.

The entire sector is clamoring for a respite.

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