If Manfred Knof, CEO of Commerzbank, complains about what he sees as strict banking regulation, then something must really be wrong. “Even now in the crisis”, “the regulatory train continues unabated”, said the bank manager this week at a conference in Frankfurt. “New requirements and new bureaucratic obstacles” would be created. “Just as if nothing had happened. It can’t go on like this.” Aha. Just like nothing happened? Has the Commerzbank boss forgotten that the general public had to save the bank with many billions during the financial crisis? That the money house that he has been running for almost two years would presumably no longer exist without the taxpayers? And that banking regulation has to be strict for precisely this reason, so that something like this doesn’t happen again? Especially in a crisis?
While Knof’s comment is particularly irritating, it’s just one of several to be heard from the banking industry this week. It almost seems as if the managers are on the move in concert: It came out that Lorenzo Bini Smaghi, Chairman of the French Société Générale, had written a letter of complaint to the ECB that it was getting too involved in day-to-day business. Then it became known that the Italian Unicredit was arguing with the regulator about the amount of the dividend. And finally seconded James von Moltkechief financial officer at Deutsche Bank, but seriously by saying that regulators “are not letting the banking industry do what it should, be an engine of the economy.”
The overseers should take the criticism as praise
One can only ask oneself: How oblivious to history and self-important can one actually be on the upper floors of the bank towers? During the financial crisis, taxpayers had to bail out a number of financial institutions with many billions. Even in the Corona crisis and in part the gas crisis, the state and central banks saved the financial markets from major losses through their courageous intervention.
The fact that Europe’s banks are doing relatively well and seem to have their risk management better under control than before the financial crisis is also due to the supposedly annoying ECB supervisors. This should therefore let the criticism of the financial institutions roll off itself, even take it as praise that they are doing a lot of things right.
Paradoxically, many banks conclude from their currently acceptable business figures that supervisors should exercise restraint. Otherwise they would be prevented from being the “engine of the economy,” they claim. At its core, however, it is about bonuses and dividends. The ECB is not banning distributions as it was during the pandemic, but warns banks against giving too much to employees and shareholders. After all, the supervisors know that if a large bank gets into trouble because it is operating with too little equity, taxpayers usually have to step in. Therefore, banks may operate as stock corporations and be listed on the stock exchange, but they are still not purely private pleasure. The state issues licenses to conduct business. And he can withdraw them again.
One more thing is also important: Not everything is perfect on Wall Street either, but supervision there is stricter and more unyielding. Not only are US banks significantly more adequately capitalized, they are also considered to be better managed. Clearly, strong financial supervision is not a locational disadvantage, but an advantage. If Wirecard has already been forgotten, the bankrupt company from Aschheim, which was up to mischief under the eyes of the German supervisory authorities and embarrassed the whole country, it is currently also worth taking a look at Zurich, where Credit Suisse is only surviving thanks to state aid from Qatar and Saudi Arabia could. In Switzerland, risk management was left to slide. Apparently, the supervisors just looked on and let the bank be the “engine of the economy”.