HSBC Holdings Plc (HSBA) Chairman Douglas Flint said the European Union and the financial industry need a long-term plan to regain investor confidence once the region’s bank recapitalization is resolved.
“The immediate concern is addressing bank recapitalization where the markets believe that it’s necessary and doing it in a way that people are confident that it’s being done appropriately and fairly,” said Flint, speaking to reporters at a meeting of the Institute of International Finance Inc. in Copenhagen today.
Concern about Spain’s ailing banks pushed up the country’s funding costs to the most since November after Budget Minister Cristobal Montoro called on European institutions to help the nation shore up its lenders. The EU yesterday unveiled plans for more unified bank supervision, including mechanisms to assist ailing banks that should alleviate the future cost to taxpayers.
“There’s no simple single measure about what mechanism to use,” said Flint, who this week became chairman of the IIF, the industry lobby group that led private creditor negotiations in Greece’s debt restructuring. “The only thing that matters is that people feel it’s the right measure and it’s equitable.”
Urs Rohner, chairman of Credit Suisse Group AG (CSGN), said the EU’s banking plan proposed by Michel Barnier, the 27-nation bloc’s financial-services chief, is in line with changes backed by the IIF and prescribed by the Financial Stability Board. Rohner said he doesn’t favor a prefunded proposal to bail out failed lenders.
Under Barnier’s plans, national governments would impose annual levies on banks to ensure that a minimum amount of money, a so-called resolution fund, is available to stabilize a crisis- hit lender.
The IIF called on the FSB to force supervisors to work together to create a common framework for overseeing global banks and managing potential failures.
“The FSB should strengthen its approach to secure effective cross-border resolution of major firms,” said Rohner. The FSB “should mandate -- not just urge -- effective cooperation among jurisdictions on cross-border resolution.”
A plan for Europe is “indispensable,” Rohner said.
“In any crisis you have to stabilize the patient,” said Bank of Nova Scotia (BNS) Chief Executive Richard Waugh. “You have to then get to the long-term reforms. You have to do both to fix the economy.”
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