EU listens to banks’ red tape plea

SMALL banks could benefit from a cut in red tape, according to top officials from the EU and UK, who have said that rules designed for complicated global banks should be slackened for less complex and less risky institutions.

Newly established banks and specialist lenders complain that they must abide by most of the same rules as giant banks, imposing substantial costs which have to be paid by a much smaller organisation. Specific grievances include the bonus cap, which officials said is designed to target risk-takers at big banks, but also applies to small lenders.

“I acknowledge the framework is fiendishly complicated, especially for banks with very simple business models,” said Andrea Enria, chairman of the European Banking Authority (EBA). “Regulators have a duty to ask if simpler ways can be found to achieve the same outcomes … the complexity of regulation should match the complexity of business models.”

He was joined at the EBA’s fifth anni- versary conference by European Commissioner Lord Hill. “I want us to keep rules as simple as possible,” he said.

“Part of good law making is that you have rules that command respect. That means they need to be proportionate, related to risk and drawn up in a way that reflects different business models and sizes.”

That could include reducing reporting requirements to cut the administrative burden on banks, and trying to make sure tight capital rules do not choke off lending.