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Breakingviews: Basel rethink boosts bank shares

Monday, January 07, 2013 - 03:25

Jan. 7 - Bank stocks gain on news that global regulators are watering down new capital requirements.

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Right so with breaking -- side would have us this morning gonna talk about this out this ball remove what it actually means for the pranks. Banking shares Iraq but so long to some. How good is this Ed -- com. -- headline in the quick easy you to and so signal from bank sheds. YE if ultimately this will promote growth well. If it promotes growth it's a good thing and then that would be good but the way that investors are thinking is look. These banks can keep more of their high yielding assets. They might even be able to use. -- to have. Less severe need for very low yielding assets they can win more. So that's one drag on bank earnings and take in a way and the stocks are quite sharply this morning. The way we're looking at it is look. The regulator looks at the banking situation this is the -- Basel committee. And they say you banks are really in trouble this new growth. We've got to concede TU. I'm a little bit of ground because otherwise the economy that could -- to a -- Noise pianist but apparently legitimate and reasonable way to do this the right -- that -- exactly. At every what is it that's really what you're -- -- -- it's definitely -- is worried -- Don't global growth Tom -- question because -- regulators started out this process with a very aggressive. You banks have just been reckless you have got to get a lot more truly safe assets on your balance sheet. In case of a crisis we don't want have to call on central banks to to rescue all the time whenever there's a crisis. And they giving it up basically they've made it pretty big you turn. And the reason is entirely macroeconomic that. This is not the time to push banks. So how safety so how long do we wait then before beat them but the positive part of this kicks it. IE. -- start lending again the system starts moving again. And GDP benefits from a well let's hope that it comes around pretty soon -- mean -- -- -- implicit in the idea that banks are doing better in the in the markets ideas -- you that this is gonna have some economic effects news. But the main story of the last four years macroeconomic point of view is you keep easing policy and heat policy it pretty extreme levels and not that much happens in the economy soon. This looks like more of the same give into the financial system for the sake of the economy and hope for the best. Vivica poll arm about you -- -- you bring up central banks from. Which Central Bank is going to be the first stop you. Well the Fed looks like considered. Fading a little and its confidence immunity in the most aggressive but the left the meeting minutes on Thursday suggested that at least some of the numbers there. Are really getting antsy about the possible negative effects outweighing positive. So -- him the benefit I think that that is the most likely to -- whether that's in the leader in global central bank and for years and remains. All right Andrew. Many thanks so that -- you can read that piece of course on the banks. The reaction. To decide this Basel move on the breaking news web science. If you were watch our US show that comes on every day 12:30 eastern 1730 GMT. -- the problem sources.

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Breakingviews: Basel rethink boosts bank shares

Monday, January 07, 2013 - 03:25

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