WEF: Global banks seek new strategy, without regulatory burden

Davos: World’s top banks including US-based JP Morgan and UBS of Switzerland today said there is a need for new strategy to chart the future growth path but warned that any regulatory over-burden would work against not only the banks but also the overall economy and the common people.

“Banks need to chart a new strategy as it is clear from the events in recent years that the current strategy has not worked,” UBS Chairman Alex Weber said here at the World Economic Forum’s Annual Meeting.

[caption id=“attachment_599699” align=“alignleft” width=“380”]  Weber said that UBS has already embarked on a new strategy. Reuters[/caption]

One of the co-chairs of the meeting, Weber said that UBS has already embarked on a new strategy. It urged other banks to do the same to address the needs of the economy and tap the growth potential in emerging markets and other places where recovery process is undergoing, albeit at a muted pace.

More from Economy

Inflation likely to be a big focus area for budget 2024, say sources Explained: Will the Bank of Japan break tradition and raise interest rates?

Speaking at a session on the Global Financial Context, JP Morgan Chief Jamie Dimon said the banks are still doing the right things, but there was lot of misinformation out there to present them as devils.

Asked whether there was a need for more regulations for banks, especially in the backdrop of trading business losses affecting other segments like deposit taking and lending, Dimon said it is not about more, or less, regulation, but rather about right regulations.

“The public perception about banks would also be governed by what the government and regulators do to tackle the issues faced by banks,” Weber said. The WEF meet is taking place amid concerns about slow growth and persisting risks in the global financial system. With most of the developed nations embracing easy money policy, fears are on the rise about high volatility in capital flows especially into the emerging markets, including India.

Russia’s VTB Bank Chairman and CEO Andrey Kostin said banks do take much risks but they do so because common people, who are their customers, can enjoy their life.“Yes, we should have better regulations, but that does not mean we should have more regulations,” he said.

“We can’t achieve economic growth unless we have a strong banking and financial sector,” Kostin said at the WEF meet, which is expected to host over 1,500 top business and political leaders, among others.

On suggestions about hedge funds being riskier for economy than banks, Elliott Management’s Principal Paul Singer said that no hedge fund supplied any risks in 2008 crisis and most of the funds are customers of the big banks.

“The 2008 crisis has shown that many large banks did not have their handle in right place to carry out the risk management. The disclosures given by the banks are very complex,” he said, adding that there should not be any discrimination against large banks.

While no institution should be too big to fail, the mere size of a bank should not be the criterion for tougher regulations, Singer added.Weber said that future of banks would be quite different and called for streamlining the global regulatory standards across the world, rather than having different yardsticks for different constituencies.

“We do need global standards like Basel III to make it better and simpler for the financial sector to work. But these standards should not make it more complex for banks globally,” he said.

PTI