PARIS, July 6 (Reuters) - The chairman of BNP Paribas , France’s largest bank, on Saturday said U.S. proposals for tighter banking rules, which would bring stricter rules on how much equity foreign lenders must hold, could put European banks at a disadvantage.
A plan by U.S. Federal Reserve board member Dan Tarullo would force foreign banks to group all their subsidiaries under a holding company, subject to the same capital standards as U.S. holding companies. The biggest banks would also need to hold liquidity buffers.
“Americans... are in the process of pushing things too far and this could put European banks at a disadvantage,” Baudouin Prot told an economists’ conference in the south of France.
Banks complain equity is the most expensive way to fund their business, but it is the safest from a taxpayer’s or a regulator’s perspective because shareholders are the first to lose their money in case of bankruptcy.
The EU has warned Tarullo that his plan will fragment the world’s capitals market and make it less efficient in financing trade and help sluggish economies revive.
Asked about the impact of these regulation plans on BNP’s U.S. business, Prot said it was too early to say.
Germany’s Deutsche Bank will not need to transfer capital holdings to its U.S. subsidiary to meet the U.S.’s stricter regulatory requirements, Boersen-Zeitung reported on Saturday, citing an interview with finance chief Stefan Krause.
Prot also complained that a European move to tax financial transactions could hinder market activities, saying there was a “complete contradiction” between the will to strengthen taxation of market activities and the search for more financing of the economy. “We need to make a choice,” he said.