Volcker Rule Leaves Market Making Ops Intact

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Dec. 11 (Bloomberg) -- Christopher Wheeler, Analyst of Banking at Mediobanca, discusses the Volcker Rule’s affect on banks outside the U.S. and an unexpected resignation from RBS. He speaks on Bloomberg Television's “The Pulse.” (Source: Bloomberg)

I think so.

As i said this morning, one of the key things here is banks have been making massive changes to their business.

Goldman sachs is a classic example.

Private equity funds, what you have actually got there, most of the work had been done.

The businesses have changed, no doubt about that.

In terms of implications moving forward, most of it has been put into practice and priced in.

What happens next?

It is a great market compliance office.

It just means that a lot of people are going to be sitting there putting together reports for regulators on how the banks have played it, how they have run their hedges to make sure they aren't going outside the volcker rule.

Outside of the u.s. isn't covered.

There is kind of overlap.

Talk to me -- when you go through a process like this, you discover loopholes.

They discovered some fairly big loopholes as they worked their way toward yesterday.

What is to say that there aren't further loopholes down the road?

Wilbanks observe the spirit of this but only sort of in a fairly fluid way?

I am wondering where the loopholes are likely to be found . are the banks going to go after them aggressively?

Ask my sense is that banks are not going to do that.

Everybody is living in a world of here.

I keep going back to the example of libor and foreign exchange scandals where clearly some of the e-mails, very dangerous and in some cases criminal.

Banks are aware of that now.

They are going to try and avoid finding loopholes.

In the excitement of the moment, when you have a big order from your client or a lot of activity around the stock, you are still going to be going after those traits to make money.

Hopefully, you're going to have controls and place to stop those from breaking rules.

It will be quite difficult.

Can i change this completely?

Nathan bostock has departed the royal bank of scotland.

I thought this was sort of frowned upon.

He has only been there two months.

I find it really surprising.

I have to believe santander must have said, can we talk to this executive at another bank weston mark is not normally what occurs.

I am a bit surprised they were given permission.

He tried to go to lloyd's last year.

I'm kind of shocked.

As i said, i am not sure we have heard the end of this.

What are the implications for santander?

He has been brought in to manage exits.

One would have to assume that looking at what is going on.

What are the implications for the business?

It was always inevitable that he was going to move to a more senior level.

That is fine.

They hired a gentleman that stephen jones at barclays who is now the ceo at santander.

By the way, known by the market, nathan looked incredibly uncomfortable when he was talking about the bad bank back in november.

I don't know whether already his mind was moving on at that stage.

When they go, it depends.

They command the highest undulation they can.

Probably a bit more price discovery next year.

At what point does the market to crowded out?

You look at the pipeline -- it is enormous.

What -- how do you manage that process?

I hate to say this as somebody who works in investment banking, but i am sure investment bankers are saying, don't worry about it.

Look what happened in the mid- 90's. it was fine.

I am not sure that is the case this time.

These are really different banks.

We have banks that are going to come to the market with very little in the way of legacy.

Still we have the legacy assets tracking down so many banks.

At least these banks will come in and say, we can command a higher valuation.

The problem is, banks like lloyd's, barclays and hsbc, there is an argument that you should value us more highly than those banks.

The question is, can you achieve that?

It all tends to come together.

Thank you very much indeed.


wheeler joining us from medio bangka.

What do we have coming up for you?

Miley cyrus and pope francis.

What do they have in common?

You don't see them found this very often but they are on the shortlist for time's person of the year.

We will tell you who else is in the running.

That is coming up next.


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