Yet while Commerzbank says it cannot quantify the impact of the latest rule book, French lender Société Générale says it can assess some (but not all) of the new rules. Dutch bank ABN Amro states that its capital requirements might jump by more than one-third. In the meantime, US banks seem to be spared any impact.
No serious organisation can possibly make an informed business decision when the most important question — how much will it cost — remains so uncertain. Yet that is what banks have been asked to do in the decade since the financial crisis and, incredibly, are still being asked to do today. A manufacturing company would not be expected to operate without knowing its cost of production. Not knowing how much capital is needed to lend money is the banking equivalent.
Clearly the words “bankers” and “sympathy” are strange bedfellows in any sentence. Nobody would seriously question the need for the rule book to be tightened — dramatically — in the wake of the financial crisis. But the plea from banks is not for sympathy or for leniency. What banks want is certainty. In that regard the regulators have totally failed both the industry and, ultimately, their customers (all of us).
Published at the tail-end of last year, the latest Basel pronouncements contained 36 “national discretion” caveats. No wonder banks are unable to work out what the new rules mean. Defenders will cite the complex process; the disagreements between banks from different countries; the vested interests that individual banks want to defend. Some may even claim that getting to this stage is a testament to the skill of Basel in bringing warring factions together. Yet a decade after starting their mission we surely should expect more from the global bank regulator.
The problem is that Basel is not a regulator at all. It has no real authority. All it can do is make recommendations, and use its status and influence to encourage central banks to follow its proposals.
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