Europe Must Show Banks Some Love: Strategist
Web Producer, CNBC.com
European regulators should stop banker-bashing and allow banks to do their job or risk losing ground to competition from the US, Middle East and Asia in the financial sector, Howard Wheeldon, senior strategist at BGC Partners, told CNBC.com.
In the UK, Chancellor of the Exchequer George Osborne needs to say something soon that will alleviate concerns that banks such as HSBC , Barclays or Standard Chartered want to move their headquarters elsewhere, Wheeldon said.
Calls for splitting up the banks in the UK by separating the commercial banking part from the investment banking one are "ridiculous" because nobody else will do it, he said.
"There is no point in doing it. You will empower the competition. The US is going in reverse. My argument is based on the need of strength," Wheeldon said in a telephone interview.
Some analysts have blamed the 1999 repealing of the Glass-Steagall Act in the US, which was separating retail banks from investment banks, for the financial crisis that started in 2007 and brought on the world's worst post-war recession.
Many, in Europe and the US, have called for a global rule to separate the two categories of banks.
"It's just not going to happen," Wheeldon said. "There's always going to be one who won't do it."
Authorities in Europe are finally realizing that this is impossible and are backing down on it, but they are imposing tough recapitalization rules on banks which will make it harder for then to do business, he said.
"European regulators … are just opening the door to Middle East competition in the longer term," Wheeldon said. "They're in a very strong position to exploit any weakness in the Western banking hemisphere."
"I'm all for keeping the status quo and letting banks do their jobs, which they do well," he added.