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0 pointsMikeDelta2y ago0 comments

Banks have been trying to reduce their balance sheets and their risk-weighted assets, because of all the extra charges and reserves they need to keep. They cannot just get rid of a large of their customers like that and collapsing shareprice.

In some businesses there is also a benefit in scale (like in trading), and there you see the US banks leading because they've had it.

If you want the US banks to fully take over IB and corporate banking, definitely do tax the EU banks painfully more.

Or tax every financial counterpart painfully more, so then eventually the customers pay much more for their loans because the financial system has become so expensive.

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2 comments · 2 top-level

ABCLAW2y ago

This is misleading. Banks have capital sufficiency requirements following the implementation of the Basel 3 capital sufficiency framework. This has created an international growing market for bulk capital availability and reinsurance services.

In short, due to international capital sufficiency regulations, there's now a market for excess regulatory capital. The attempt to prune low performing assets is due to a market as an alternative to low return on capital investments.

It's not because of charges and overhead.

Banks aren't worried about bad assets more than usual, they just have another arena to make money in now.

thewildginger2y ago

Putting banks out of business? Woah weird conclusion but I like it. This whole windfall tax sounds even better than I thought!

The world of money existed before banks, it will exist after.

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