April 5 (Bloomberg) -- Financial reforms including ones proposed by the Basel Committee on Banking Supervision may work against countries such as Canada, Bank of Nova Scotia Chief Executive Officer Richard Waugh said.
“The approach currently being taken is in danger of placing too much emphasis on overly prescriptive rules and requirements, which have never proven effective in preventing crises,” said Waugh, according to the text of a speech he will deliver today at the bank’s 179th annual meeting of shareholders in Halifax, Nova Scotia.
Waugh, head of Canada’s third-largest bank, said many industry reforms are reacting to previous crises rather than preventing new ones. Instead, he recommended banks adopt a “low to moderate risk appetite” while keeping sustainable profit levels.
“The next crisis isn’t likely to look like the last one, and it’s impossible to design rules for every scenario,” Waugh said. “That’s why the focus needs to be on strong principles of sound supervision and risk management, not rules.”
Canada’s banks didn’t require government bailouts during the financial crisis and have been ranked the world’s soundest for the past three years by the Geneva-based World Economic Forum.
Waugh said his Toronto-based bank is supportive of higher capital requirements, although it has “the potential to stifle economic growth.”
To contact the reporter on this story: Sean B. Pasternak in Toronto at email@example.com.