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Need for proportionality grows

Need for proportionality grows


​WSBI-ESBG Managing Director Chris De Noose explores 'News & Views' August 2018 ​edition


>> Read now: News & Views August 2018

BRUSSELS, 13 August 2018

The recent celebration in Berlin of the 200th anniversary of the Berliner Sparkasse and the Caisses d’Epargne of France reminded me and other WSBI members that savings and retail banks have always made every effort to be really close to customers, building on savings banks self-help roots.   

It’s no different in today’s 2​4/7, always-on world. It takes hard work, an innovation mind-set and a regulatory framework that helps, not hampers our quest to remain at the forefront of need, serving households, local communities and economies through a regional approach.   

To make savings and retail banks’ efforts have more impact in the places they serve, regulators need to keep in mind our unique approach to banking. They have imposed hugely detailed rules for universal banks that are vastly more complex than is appropriate for relatively less complex savings and retails banks. That’s where the principle of proportionality can help.   

In this edition of News & Views, we explore proportionality from two angles. The first is the workforce. We cover two new reports that give added ammunition to our calls for a more balanced approach to regulation. Both provide data showing the negative impact of an overly burdensome regulatory system on banks, especially the work force. One report comes from the Nordic Financial Unions, showing compliance leads to growing pressure on finance employees, forcing them to choose between providing good customer service and following rules and regulation.   

The second study published by ESBG and other European social partners show hiring decisions have changed, with a focus on high-skill labour due to higher regulatory pressure. Data used in the report show an upward shift in the average age and education level among bank employees since the 2007-2008 financial crisis. At the same time, they observe a simultaneous big drop in hiring younger employees. 

The social partners involved attribute the quick pace of rules being issued contributing to making compliance more difficult.   

Both studies back up our stance that proportionality is needed more than ever. Our new ESBG President Helmut Schleweis has said as much, stating the need to continue to share with policymakers the need for more proportionate and better regulation, more adapted to decentralised institutions such as savings and retail banks that are the engines for financing the real economy. Those points echo with all WSBI-ESBG members in some 80 countries.  

The second angle on proportionality comes from the United States, where our U.S. member ICBA’s Plan for Prosperity has inspired policymakers there to enact a new law – the bipartisan Economic Growth, Regulatory Relief and Consumer Protection Act. 

Regulatory relief measures are included in the bill to help locally focused banking. New ICBA CEO Rebecca Rainy shares her thoughts on this.   

In Europe, proportionality is making inroads as seen in meetings recently with EU policymakers. We have made clear with them in broad strokes and in highly technical areas. On putting into law the latest regulatory reforms stemming from Basel (“Basel IV”), we pointed out that the lack of risk sensitivity, which the introduction of an output floor would bring, is highly problematic. Risk sensitivity must not be sacrificed when implementing the Basel IV reforms in Europe.  

We will reinforce with policymakers too that a proportionate approach to banking rules can help savings and retail banks make globalisation inclusive for all, our theme for the  November 2018 WSBI World Congress in India.​

Chris De Noose

Publisher, WSBI-ESBG News & Views

Managing Director, WSBI-ESBG