CBA Chairman Adds Voice To Growing Chorus Against Over Regulation

Post by Sharat on November 12, 2009 · Under Australian Economy, Business News, Company News, banking, news · Comment

The chairman of Commonwealth Bank of Australia (CBA), John Shubert, has added his voice to the growing chorus that is warning against excessive banking regulations.

Mr. Schubert says that a tightening of capital requirements, which he says are already conservative, could risk a broad recovery in the Australian economy, resulting in upward pressure on costs for consumers.

Currently the Australian Prudential Regulation Authority (APRA) is looking at various proposals for further regulating the banking industry. Proposals include stricter capital and liquidity requirements, although nothing firm has been established yet.

Mr. Schubert, who was speaking during the CBA annual general meeting on Wednesday, said that regulator reaction was not surprising given the financial crisis, but he added the relative robustness of the Australian banking system should also be considered.

“While it is clear that work needs to be done, it is important that we do not follow a global ‘one size fits all’ approach to the regulation of Australian financial services organisations which, unlike their global peers, have not failed. To overlay too much on top of our already relatively conservative settings to comply with every global initiative may not be helpful and could in fact have a negative impact on the economy and employment, particularly if it were to significantly increase costs or restrict the ability for Australian banks to support their customers and shareholders,” he said.

Australia’s Big Four banking groups have taken an opposition stance to the set of reforms proposed by the G20.

Earlier in the week, David Morgan, former Westpac chief executive, and Stephen Green, Group chairman for HSBC, both urged regulators to resist the urge to shackle the banking industry with too much regulation.

Mr. Morgan in particular said that Australia did not require excessive regulation considering how well the domestic financial system weathered the financial crisis.

Compare Australian Credit Card Deals