HSBC Chief Warns Against Over Regulation

Post by Sharat on November 11, 2009 · Under Business News, Company News, banking · Comment

Stephen Green, Group Chairman of global banking giant HSBC, has warned that despite public confidence in the banking sector needing to be restored, governments run the risk of over regulating the industry in their response to the financial crisis.

Mr. Green admitted that lenders globally had become too complacent in the way their capital was managed in the build up to the global financial crisis.

“Public confidence in the banks is fundamental and it broke down. There was a large breakdown in trust in the system. Trust can break down very quickly and it takes a long time to rebuild.”

Mr. Green also advises British Prime Minister Gordon Brown, and is chairman of the British Bankers Association, spent the last two days inspecting the Australian operations of the global banking giant, and met with key executives including HSBC Australia chief Paulo Maia, who assumed the role two months ago.

HSBC, with its large depositor base, managed to weather the financial crisis far better than most of its international rivals, is expected to focus on rolling out and extending its reach across Asia going forward.

Two months ago, HSBC moved its global chief executive Michael Geoghegan, from London to Hong Kong, in a move it said reflected the growing importance of the region, and its desire to expand further in China, a key market for the group.

Mr. Green has generally been supportive of the current regulatory trend towards building bank liquidity and capital buffers, but has warned of the risk of over regulating the industry.

“It’s inevitable there will be an enhanced and appropriate focus on liquidity,”

“There is no doubt in my mind that there was not enough attention paid to bank liquidity in the go-go years,

“Questions were not asked about bank liquidity on their balance sheets and the assumptions were pervasive in that you could always rely on securitisation.

“But we are bound to see much regulation of liquidity and capital buffers that should be built up in the good years … banks do need to focus on capital and liquidity.” Mr. Green was quoted as saying in The Australian

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