New supervisory rules in the US handicap European banks
“The final rule regulating foreign banks approved by the US Federal Reserve Board yesterday means undue deterioration of the operating conditions for European banks in the US,” Michael Kemmer, General Manager of the Association of German Banks, criticised today. Particularly the requirement to set up an intermediate holding company in the US and to meet additional capital and liquidity standards at this level would make it more difficult and more expensive for the big European banks to operate in the US, he said.
“This is a considerable competitive handicap for European banks, as their US competitors are not subject to any equivalent requirements in the EU,” Mr Kemmer added. Even though the Fed cited pressure for supervision and financial crisis experience in its defence, the rule remained unreasonable. Better cross-border cooperation with foreign banks’ home authorities would be much more helpful.
After all, one of the crucial lessons from the financial crisis was that supervisors should respond in an internationally coordinated manner whenever an international bank gets into trouble. “For this, we need agreements and mechanisms that work. Instead, all foreign banks whose US operations exceed a certain threshold will now be squeezed into a straitjacket that puts them at a disadvantage in global competition and fails to make the financial markets more stable,” Mr Kemmer stressed.
Association of German Banks
Tel: +49 30 1663-1250
Fax: +49 30 1663-1272
» press office