Focus on Culture Rather Than Capital

Focus on Culture Rather Than Capital

It is clear that US, UK and probably EU banking regulators are about to dilute the Basel capital adequacy requirements as we strive for growth in our economies. For those of us worried that the calamity of the Global Financial Crisis will repeat itself perhaps we need to look somewhere else. I suggest we look in the arena of culture. Lehmans, RBS, ABN Amro were all examples of cultural failures as was Credit Suisse. If we cannot have more capital, then maybe it’s time for regulators to ask banks to embrace behaviorial science and put behaviorial frameworks in place. You may enjoy my article.

Trump Executive Order Erodes Trust

That is the opinion of Vincent Mortier, CIO of Amundi, Europe’s largest asset manager. Trump signed an executive order requiring all regulators to submit their strategic plans and draft regulations to the White House for approval. Whilst this order will be challenged in court, Mortier ponders that this is one step too far which will erode trust in the US system of checks and balances.

Gilt Trading Fines

Four banks have agreed to pay fines totaling £100 million to the Competition Markets Authority. HSBC, Morgan Stanley, Citi and Royal Bank of Canada admitted to collaborating by sharing information regarding gilt auctions and their bidding positions. This cartel behaviour was disclosed by Deutsche Bank who was not fined given the extent of its own collaboration with the authorities.

Call for Securitization Relaxing

A consultation of EU rules relating to securitization has led to call from asset managers and insurers for a relaxation on rules. The current rulebook dates back to 2008 when these structures blew up the market. The Draghi report argues that relaxing restraints on this market is critical for EU growth. The EU saw Euro 254 billion in new issues last year compared to Euro 1.5 trillion in the US!