US bank regulations thaw while Europe freezes
In the US, regulators are opening up a dialogue with banks helping to foster growth, something their European counterparts can only look upon with envy, writes Brian Caplen.
Europe depends on banking lending for 90% of funding in some countries. In the US, capital markets account for about 75% of funding. But, ironically, it is the US under Donald Trump which, in contrast to trade policy, is taking a new pragmatic approach to bank regulation.
For the most part the rules are not being rolled back and US bankers do not in any case want to return to a pre-crisis rule book. But new appointments at the various regulatory agencies show a desire to have business-savvy executives in place. They are taking a perspective on how the new rules are interpreted (definitions of proprietary trading under Volcker can be vastly different) and enforced. They are opening up a dialogue with senior bankers which didn't happen under the Obama administration.
But in Europe the regulators are still pursuing a restrictive agenda, regardless of the concerns of bankers. Andreas Treichl, chairman and CEO of Austria's Erste Bank, complains
that Europe is moving too slowly in promoting both digital and capital markets growth. Speaking on an Institute of International Finance panel alongside the IMF annual meeting, Mr Treichl said: "In Brussels we have 'fantastic' regulators who have no respect for business people. We have no conversation going on [with business]."
Europe has been unable to create digital US giants such as Facebook and Google over the past decade. On present form, expect this trend to continue.
Brian Caplen is the editor of The Banker. Follow him on Twitter @BrianCaplen
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