ESBG and WSBI warn of danger to retail banks of one-size-fits-all regulation

13 September 2010

International representatives of savings and retail banks have warned of the potential harm that Basel III may do to non-quoted retail banks. Retail banks are some of the most resilient banking structures and they may be punished by the disproportionate increase in capital standards.

Though the European Savings Bank Group fully supports the objective of the rules to strengthen the resilience of the banking sector by applying stricter capital requirements where banks did not prove resilient during the crisis and whose operations pose systemic risk, the new Basel III framework poses the real danger that these stable and reliable banks will be obliged to significantly reduce lending to the real economy, or risk being put out of business.

Jose Antonio Olavarrieta, the President of WSBI claims that the new Basel III favours the banks organised as joint stock companies over all other ownershio structures. He warns that of the unacceptability of a one-size-fits-all regulatory approach that damages traditional banking structures despite their inherent stability which stems from their business model focused on proximity and relationshp banking.

© European Savings Banks Group