Bankers gather to assure industry is on right track

FRANKFURT (Reuters) - Top executives from some of the world's leading banks are due to gather for a conference in Frankfurt later this week as lenders seek to avoid what they see as overly harsh regulation following the global financial crisis.

Existing rules failed to ensure that banks held enough capital and liquidity to withstand the crisis, forcing governments to bail out lenders with taxpayer money.

Regulators have been moving to put banks on a shorter leash -- a set of rules called "Basel III" -- with decisions likely to be made by November.

But banking executives argue that a regulatory crackdown on banks could cut 3 percent off economic growth over the next five years in the United States, euro zone and Japan and cost almost 10 million jobs.

Two years after Lehman Brothers' collapse heralded the global financial system's breakdown, chief executives at Morgan Stanley , Unicredit and Commerzbank are expected to try and convince the audience at the "Banken im Umbruch" conference that they have done their work to stabilize their banks and should not be thrown back by new banking rules.

Banks' results have improved vastly this year, as provisions for bad loans dropped due to an improved global economy. But the sustainability of profits is still in doubt amidst some fears of a "double-dip" recession.

"We have reached a stall speed for the U.S. economy, where growth's going to be less than 1 pct. Even if it's not technically a double-dip recession, it's going to feel like a recession," U.S. economist Nouriel Roubini -- dubbed "Dr. Doom" for correctly predicting the financial crisis -- told Reuters Insider TV.

HIGH-PROFILE SPEAKERS

This year's conference, which comes ahead of a meeting of the Basel Committee's supervisory body on September 12 to decide new global financial rules, will see a number of high-profile speakers take the podium again.

Morgan Stanley's James Gorman, who took over as CEO at the start of the year, will speak on Wednesday. The manager, who first turned around the company's retail brokerage, has made progress putting the whole group back on track, as shown in strong second-quarter results.

In 2009, rival Goldman Sachs boasted of record profits while Morgan Stanley posted an $800 million loss -- but still increased its bonus payout pool by a third.

Also on Wednesday, UniCredit's chief executive, Alessandro Profumo, will look into "the future of European banking."

Profumo, who took the helm at the Italian lender in 1998, has created one of Europe's biggest banks, emerging from a group of savings banks through a flurry of acquisitions -- like that of German HypoVereinsbank five years ago.

On Thursday Commerzbank's chief executive, Martin Blessing, will outline his roadmap for recovery for Germany's second-biggest lender.

Commerzbank had to be bailed out in the financial crisis, and although returning to the black this year it remains unclear how it is to repay 18 billion euros in state money.

Defending the stance of regulators, German Finance Minister Wolfgang Schaeuble and Deutsche Bundesbank president Axel Weber will also speak at the conference.

ON THE WAY TO NORMAL

This year's motto of the conference is "On the way to 'new normal,'" but some part of the debate is expected to focus on the "old" debate of bonus payments.

Wolfgang Gerke, president of thinktank the Bavarian Financial Center and the opening speaker at the conference, is skeptical about whether the crisis has loosened the banking industry's attachment to a bonus-driven business culture.

"Goldman Sachs is now where it was before the crisis," Gerke said. "Investment bankers don't seem to have learned a lesson."

"That's why it is especially important that Basel III makes banks take precautions for new crises and we do not see losses being socialized while profits are privatized," he said.

The EU in July decided the world's toughest curbs on bank bonuses, which will come into force in January 2011.

But the debate on high payouts flared up again last week after Credit Suisse said managing directors would get a special September bonus.

Bank lobby group the Institute of International Finance (IIF) admitted that banks still needed to be more open about the size of their bonus pools and the methodology for paying star bankers.

Josef Ackermann, chief executive of Deutsche Bank and chairman of the IFF will not attend the conference.

But in words of welcome published in the conference program, he said: "Banks cannot operate in a parallel world, they need the acceptance of society."

(Reporting by Arno Schuetze; Editing by Greg Mahlich)

WhatsAppFacebookTwitterLinkedinBeloudBluesky