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UPDATE 2-Systemic banks too hard to define - lobby chairman
March 23, 2011 / 4:06 PM / in 7 years

UPDATE 2-Systemic banks too hard to define - lobby chairman

* Any SIFI list would be based on spurious criteria-Ackermann

* SIFIs are moving targets - Ackermann

* SIFIs surcharge should cut bank levy -Ackermann

(Adds details, background)

FRANKFURT, March 23 (Reuters) - Current efforts to identify banks that pose the greatest threat to financial stability are inherently flawed, Deutsche Bank (DBKGn.DE) Chief Executive Josef Ackermann, who also chairs a bank lobby group, said.

The criteria for defining a systemically important financial institutions (SIFI) are likely to be “spurious” which creates an incentive to manipulate any such list for political reasons, the chairman of the Institute of International Finance, said at a conference on Wednesday.

“We have already seen this in the efforts of many supervisors to flat out declare their respective domestic champions as being not systemically important,” he said.

Ackermann also stressed that banks identified as SIFIs should as a compensation be asked to pay lower taxes.

“Should the regulatory community nevertheless decide to impose a surcharge on systemically important financial institutions, a strong case could be made to roll the bank levy and SIFI surcharge into one, so that contributions under a levy are credited under a SIFI surcharge and vice versa,” he said.

SIFIs are a moving target, he said, adding that current efforts to define SIFIs have underlined the difficulty of finding the right criteria.

“A list of SIFIs threatens to deflect supervisors attention from institutions that are not on that list at a certain point in time,” Ackermann said.

Global supervisors are hammering out a package of measures designed to make big, complex banks safer and less of a burden on taxpayers in case of future crises. It could force them to hold an extra capital cushion, possibly of 2 percentage points.

International banking supervisors have agreed on the methodology for identifying banks that might pose a threat to the financial system, German financial watchdog BaFin recently said. [ID:nLDE72D1HT]

The so-called Basel Committee of banking supervisors, which is working to develop new rules to avoid future financial crises, agreed on five criteria to be used in drawing up a list of SIFIs: size, inter-connectedness, global reach, complexity and substitutability.


Ackermann also repeated his criticism of a tax on financial transactions, that European leaders are calling for to recoup some of the money spent for bailing out banks. [ID:nLDE7260LI]

A tax that would cover transactions such as derivatives would reduce speculation and public deficits, its supporters say.

A 0.05 percent tax would bring in nearly 200 billion euros in the EU, rising to 650 billion at the global level.

France and Germany have already pushed for a global transaction tax at the Group of 20 (G20) level, but faced opposition from the United States and Canada.

“Introducing a financial transaction tax in the Euro area would be disastrous, since it would severely undermine competitiveness and attractiveness of the Euro area as a location for financial services,” Ackermann said.

“Business would likely locate to locations outside the euro area.”

The IIF represents more than 430 financial institutions including Deutsche Bank (DBKGn.DE), HSBC (HSBA.L), Citigroup (C.N), JPMorgan (JPM.N) and UBS UBSN.VX. (Reporting by Edward Taylor; writing by Arno Schuetze; Editing by Jon Loades-Carter)

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