Thursday, March 7, 2013

Standard Chartered: estimates its cost of complying with new regulations at upwards of $800m/annually

As reported by the Guardian, Standard Chartered's chief executive Peter Sands said

new regulations including tougher liquidity and capital rules and a UK bank tax were costing it "well north" of $500m a year, and could be near $800m. [The bank reported its 10 consecutive year of record profits; 2012 pretax profit $6.9b.]
Many banks have said extra global regulations, brought in to make them safer after the 2008 financial crisis, are hurting profitability and could restrict their lending. But few have quantified the impact on their bottom line. 
Hoping to make the financial system less prone to a crisis, policymakers responded to the financial crisis with a significant increase in the combination of complex rules and regulatory oversight.

Rules and regulatory oversight that the banks helped to write so they can be easily gamed (see capital and liquidity) and that won't make the financial system safer.  A point that Mr. Sands drives home by focusing on the cost of the new rules and regulatory oversight.

If he saw the rules and additional regulatory oversight as valuable, he would not talk about the "cost" of compliance without mentioning all the benefits.
A European Union proposal to cap bankers' bonuses at double their salary was also a worry, the bank said. 
"We are concerned about it because we are a global bank and 97% of our staff are outside the EU and we are concerned about our ability to be competitive in attracting and retaining talent," chief executive Peter Sands said.
Again, the EU proposal to cap bankers' bonuses is just another rule to be gamed.

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