* BNP, Socgen heads say regulators
should proceed cautiously
* European economies more reliant on banks, Pebereau says
* Oudea seeks 'time to adjust'
(Adds background, comments from SocGen CEO, releads)
By Christian Plumb
PARIS, July 5 The heads of France's two biggest
banks told regulators on Tuesday that tougher capital rules
could slam the brakes on growth in a region that still depends
on banks to provide most of its credit.
Global banking regulators decided last month to slap an
extra capital charge on the world's biggest banks to make them
safer, a move that could hit BNP Paribas and Societe
Generale if they are deemed to be "systemically
That requirement would come on top of a new 7 percent
minimum core capital requirement which all banks across the
world will have to hold under new Basel III rules being phased
in over six years from 2013.
"What we are questioning at the end of the day is the amount
of pain we can suffer and for how long and then whether or not
it will really be paradise," Societe General's chief executive,
Frederic Oudea, said, referring to assurances that short-term
sacrifice to meet the capital rules would be worth it in terms
of greater safety.
Larger rival BNP Paribas's chairman, Michel Pebereau,
sounded a similar note, urging banking regulators to proceed
with caution because of the danger that new capital rules could
stifle economic growth.
"We need to be quite cautious now with new regulations,"
Pebereau said at a conference in Paris, adding that he was
optimistic that Europe would show in the coming month its
capacity to deal with the Greek crisis.
UNEVEN PLAYING FIELD?
Pebereau called for final decisions regarding which banks
are considered "too big to fail", and therefore require an
additional capital cushion, to be postponed until 2015 given
that under the current regulatory framework such banks would
only need to raise capital between 2016 and 2019.
"It would be wise to seriously assess the overall impact of
those regulations on the economy," said Pebereau, who is
scheduled to retire as chairman of France's largest bank later
He noted that 70 percent of European economies' financing
needs are still provided by banks, as compared with the United
States, where traditional lenders provide just 30 percent, with
the balance coming from the financial markets.
Earlier the Bank of France's governor Christian Noyer said
policymakers were fully aware of the macroeconomic impact of
tougher regulations and said such rules should "neither derail
financial systems nor favour some particular business models
But Oudea said he worried that the new wave of regulation
could result both in an uneven playing field -- as U.S. banks
may not be held to the same standards as European ones -- and
needless complication as regulations become fragmented
"We all agree that things need to change, that we need to
have more capital, that liquidity requirements need to change,"
he said. What we want make sure (is that) we can still finance
the economy on a reasonable level, that we have enough time to
(Additional reporting by Leigh Thomas; Editing by Greg Mahlich)