Banks should hold more capital for risk -Santander

February 23, 2010

    LONDON, Feb 23 (Reuters) – Spain’s Santander <SAN.MC>, Europe’s second biggest bank, said forcing banks to hold more capital to cover riskier activities would be better than forcing the break-up of big lenders.
   “I would be in favour of extra requirements of capital for riskier activities, such as proprietary trading,” Alfredo Saenz, chief executive of Santander, said on Tuesday. “Rather than a separation, I would advocate for additional requirements of capital.”
   Saenz was being quizzed by UK lawmakers as part of a probe on whether banks are “too big to fail”.
   Santander had submitted a “living will” to the Bank of Spain last week, to outline how the bank would be wound down if it collapsed, to prevent a wider financial crisis, Saenz said. He said he thought it was the first bank in the world to submit such a plan.
   Saenz said Santander had “negligible” activity in so-called “prop trading”, which the United States wants banks to separate from other areas of banking.
   Proprietary trading is when the firm’s traders actively trade stocks, bonds, currencies, commodities, their derivatives or other financial instruments with its own money as opposed to its customers’ money to make a profit for itself.
   “I can’t see any benefit in this kind of break up of banking, the community and the customers would lose efficiency which means better prices and better services.
   Saenz and Executive Chairman Emilio Botin have steered Santander through the financial crisis thanks to a risk-averse model, a focus on retail banking and lucrative deals in Brazil and elsewhere. (Reporting by Steve Slater and Clara Ferreira-Marques; Editing by Jon Loades-Carter) ((; +44 207 542 4367; Reuters Messaging:
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 Tuesday, 23 February 2010 11:51:20RTRS [nLDE61M1AO] {EN}ENDS

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