What to monitor it is the risk not the size

The large European banks type fist on the table. Blow on blow in a few days, several patterns of financial institutions who have not received State aid during the crisis gave voice against Government plans to limit the risks considered institutions as too important to fail ("too big to fail").

While admitting the need for large banks to strengthen their own funds, Josef Ackermann, President of the Executive Board of Deutsche Bank, thus objected Monday, at a Conference in Frankfurt, the idea of reducing the size of the big global banks to limit the systemic risk in times of crisis. And fears that "the cumulative effect of the various regulatory changes expected might be underestimated".

Tuesday, Peter Sands, the patron of the British Bank Standard Chartered, is also mounted to the niche. Share a Governments "laugh" when they say that the cost of the hardening of the regulation will be absorbed by the financial institutions themselves and their shareholders, he told the "Financial Times". "The reality is that most of the additional costs will be simply sent to their customers, via an increase in rates."

"Risk, not the size."

"What to monitor it is the risk, not the size."Emilio Botin, Banco Santander pattern, also defended Tuesday in Frankfurt, the interest of maintaining "large international banks" stressing not only the role that they have previously in world economic development, but also recalling that many of them were able to save entities in difficulty "helping to reduce the systemic risk of the current crisis."

But, unlike his German counterpart, Emilio Botin asks what is not generalized announced hardening of solvency and liquidity criteria. Supported by Francisco Gonzalez, BBVA compatriot, it militates in fact openly so that a difference is made between the entities with significant investment bank activities and those focused on retail banking. The risk otherwise affect the cost and access to credit. "I agree on the idea that more risk means more capital," said the boss of Santander, considering that, in the matter, regulators should be based on income and the economic model of each.

Brandishing the threat of a new "credit crunch" and an increase in rates, large banks of the world will escape in a round of regulatory screw leading to a reduction in the size of their balance Nothing is less sure to judge by the latest initiative of Christine Lagarde, French Minister of economy and finance. In an interview Tuesday in the "Financial Times", she found that some financial institutions have become too powerful a market forced consolidation. "We must ensure that we create not financial institutions that have a competitive advantage", she said, asking the financial stability Board report to the g-20 of March 2010 on possible abuse of competition in the financial sector.

However, the Minister added that the danger does not necessarily lie in the size of a facility. "We must distinguish between"business models", the exhibition of the institutions and many other criteria requiring a balancing before drawing conclusions on the supervision and solvency size", it qualifies. A shade which should satisfy the giants of retail banking.