Major global banks split on regulation fight

Fri Jan 29, 2010 2:20pm EST
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By Lisa Jucca and Martin Howell

DAVOS, Switzerland (Reuters) - The world's top bankers are at odds about how to fight back against a global push for tougher financial regulation, with commercial and investment banks struggling to reach agreement.

Top executives from leading U.S. and European banks held behind-the-scenes talks on their response, people attending the talks said. But a deal has proved elusive.

Regulators and policymakers, meanwhile, appeared to have struck some common ground at the World Economic Forum, agreeing on the need to ensure changes to the rulebook -- from banker pay to lenders' activities -- are global, and not unilateral.

The annual forum in the Swiss mountain resort of Davos has reverberated with U.S. President Barack Obama's plans to curb the activities of major banks, particularly betting in financial markets with their own money, sparking a fierce debate on the necessary overhaul and the risks of excessive correction.

"We had a global problem ... we have to find a global solution," European Central Bank President Jean-Claude Trichet said on Friday. "We are bound to succeed. But it has to be done very, very carefully, seriously at the global level."

Ministers and officials from G20 nations, the International Monetary Fund and the Financial Stability Board held informal talks at Davos on Friday, which Canadian Finance Minister Jim Flaherty said centered on mutual assessment of financial systems.

"There was unanimity that we ought to go ahead ... and use the work of the FSB and the G20 and try to get the implementation done this year, 2010," he told Reuters.

"When we're dealing with (bank) capitalization rules, liquidity rules, leveraging, I'm hopeful ... that we all get those rules right and agree on those. On executive remuneration there may be some divergence of opinion," Flaherty said.   Continued...

<p>China's Vice-Premier Li Keqiang attends a session at the World Economic Forum (WEF) in Davos, January 28, 2010. REUTERS/Christian Hartmann</p>