Canada bankers, policymakers warn on rule changes

Thu Apr 22, 2010 4:47pm EDT
 
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By Andrea Hopkins

TORONTO (Reuters) - With global regulators poised to rewrite banking rules, Canada's bankers and policy-makers are warning against proposed changes to capital and leverage requirements, arguing their country's success proves what works best.

In a rare display of solidarity, the heads of Canada's big six banks wrote an opinion piece for the Financial Times newspaper, arguing global decision-makers should take a page from Canada's rule book rather than get bogged down in details that didn't cause the financial crisis in the first place.

"At the risk of sounding parochial, (regulators should) adopt a capital regime similar to the Canadian system," the chief executives of Toronto-Dominion Bank, Royal Bank of Canada, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce, and National Bank of Canada said in the article.

While global regulators have said they want to have final changes to banking rules approved by the end of 2010 and implemented by 2012, Canadian banks are frustrated that the talks -- now sidetracked by an IMF call for a global bank tax -- seem to be going nowhere fast.

"If we have a big concern, it's that we see this drifting on and on and nothing happening. So in fact you won't reform the financial system because you won't tackle what the core issues are," TD Chief Executive Ed Clark said in an interview.

Canadian banks have emerged from the financial crisis in good shape relative to global peers, having accepted no bailouts and remaining mostly profitable throughout.

Canadian banks also boast Tier 1 capital levels far in excess of both regulatory minimums and what most global rivals have set aside. But executives have said regulatory uncertainty is preventing them from making acquisitions or raising dividends at a time when they would like to take advantage of the weakness of rivals.

Also on Thursday, Canada's top regulator, Superintendent of Financial Institutions Julie Dickson, said Canada's success during the financial crisis should give it a bigger voice at the discussion table.   Continued...