Financial Regulatory Forum

Is the medicine for financial services turning out to be worse than the disease?

By Susannah Hammond

LONDON/NEW YORK , Sept. 9 (Thomson Reuters Accelus) – Almost three years on from the fall of Lehman Brothers and the widespread public bail-out of financial services the world is looking grim. In the white heat of the crisis itself jurisdictions, policymakers and governments moved together to resolve the worst of the immediate issues and bought global financial services time to heal. While some recovery and mending of balance sheets has certainly taken place, global financial services continue to suffer at the hands of divergent policymakers, international recessions and sovereign debt crises.

The medium-term aftermath of the financial crisis may well turn out to be more damaging to financial services than the crisis itself. Quite how severe the current state of affairs has become was highlighted by the new head of the International Monetary Fund, Christine Lagarde, who¬†stated that “there remains a road to recovery, yet, we do not have the luxury of time”. The risks to any recovery are increased by “a growing sense that policymakers do not have the conviction, or are simply not willing, to take the decisions that are needed”.¬† (more…)

ANALYSIS-Europe’s banks loath to jettison cash ballast for returns

By Steve Slater

LONDON, Aug 13 (Reuters) – Some of Europe’s banks are faced with the unusual problem of holding too much cash as they try to lift sluggish returns, and few will dare to eat into capital until well into 2011 amid an uncertain regulatory outlook.

A jump in profits may have prompted banks like HSBC and Barclays to talk about improving returns for investors, but the financial crisis is too fresh in the memory for regulators and bank bosses.

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