EU's Barnier warns U.S. of tit-for-tat action over banks

Thu Oct 17, 2013 12:26pm EDT
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By Huw Jones

LONDON (Reuters) - The European Union's financial services chief warned of tit-for-tat action if the United States pushes ahead with plans to impose extra capital requirements on foreign banks.

In December, Federal Reserve Board Governor Daniel Tarullo said foreign banks should be required to hold as much capital as their U.S. counterparts, regardless of how their overseas parent companies are funded.

The EU fears this will fragment global capital markets and its financial services commissioner Michel Barnier said big European banks were as well capitalized as American banks.

"I don't want to be forced to do the same as the Americans," Barnier told reporters on the sidelines of a British Bankers' Association conference in London.

"My objective is to find agreement with the Americans on foreign banks. My mindset is not one of threats but my objective is to find a free and fair banking relationship. If we don't find such an agreement, we will end up having to do the same thing," Barnier added.

In a speech to the conference, Barnier defended the bloc's new law to cap bankers' bonuses from 2014, saying it would ensure lenders manage risks properly.

Britain is challenging the cap in the European Court of Justice, arguing that limiting a bonus to no more than fixed pay from 2014 - or twice that amount with shareholder approval - will make banks riskier by pushing up fixed pay.   Continued...

European Commissioner for Internal Market and Services Michel Barnier addresses the European Parliament during a debate on the European Banking Union and the banks supervision in Strasbourg, September 12, 2013. REUTERS/Vincent Kessler