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Short sell ban hurts push to unify rules: banks assn
FRANKFURT (Reuters) - Germany's short selling ban undermines efforts to coordinate international banking rules at a time when bank profits are under threat from a wave of new regulations, the association of German banks said on Thursday.
"You cannot ask for international solidarity if you tend to go it alone," the lobby group's head, Andreas Schmitz, told Reuters in an interview on Thursday.
"Coordination of binding international rules for financial markets is complicated by such behavior," he added.
With regulation taking a firmer grip on financial institutions, Germany's banks are likely to face declining earnings, Schmitz said.
"We are definitely not about to see a renaissance of German banking. As we will have to increase core capital ratios, I expect that we will have lower earnings in the future," Schmitz, who heads HSBC's German operations, elaborated.
"Germany has the strongest industry in Europe, but for sure not the strongest banking system," he added.
Schmitz echoed criticism voiced by bankers and analysts of Germany's single-handed move to curb speculation.
"Policy makers should not do unilateral moves any more," Clemens Boersig, Chairman of Germany's biggest lender Deutsche Bank, said late Wednesday.
Germany banned naked short-selling of shares in its 10 top financial institutions, naked short sales of euro zone government bonds, and naked transactions in credit default swaps (CDS), which are used to insure against debt defaults.
In naked short-selling, a trader sells an instrument short, betting on its price to fall, without first borrowing the instrument or ensuring it can be borrowed, as would be done in a conventional short sale. Naked trade in CDS does not hedge an underlying asset.
But the ban, in Schmitz's view, does not meet its aim.
"If you close a market, another one will open elsewhere," Schmitz said.
Merkel has been under pressure from within her conservative party to act, as the Greek bailout and a $1 trillion safety net for vulnerable euro zone states, to which Berlin is a major contributor, are deeply unpopular with German voters.
The German parliament is due to vote on the safety net on Friday and the opposition Social Democrats have made their support contingent on a financial markets tax.
(Reporting by Arno Schuetze, Patricia Uhlig and Philipp Halstrick)
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