Effective but not completely honest reasoning

The bankers did not dead hand go. After have triggered the crisis, called the public authorities to help, restricted credit for SMEs, overpaid their traders is that they threaten to do more to finance the economy. "We're going in the wall," they repeated a single voice. A to hear the future standards of solvency, so-called Basel III, which must prevent that the excesses of the crisis, sounding the end of the Bank financing. Nothing than this. A threat of fearsome while recovery is expect, especially in Europe where, as banks like to remind, the financing of the economy depends at 70 of bank credit.

Small return back. After the bankruptcy of Lehman end of 2008, the world gradually became aware of the State of the balance sheets of major institutions and the extent of the debt to which they had used to search for profitability. In other words, the very low level of capital put face risky assets or activities. Yet needed capital to absorb losses in case of default. This is the famous "lever": volumes of colossal assets, funded by very little capital, or even not at all in the off-balance sheet. Result: Returns stratospheric, exceeding 100 in certain trades. And of recapitalisations mass States when defects occurred.

Eighteen months and several G20 later, regulators have taken the commitment: the capital requirements will be identified on both sides of the Atlantic, especially in market activities, and the "lever" will be monitored with a specific flag. Banks will also extend their refinancing, and no longer Fund credits to 15 years with debt at 3 months, favorite exercise of some British before the crisis. But now that the financial industry, that they expected more proactive, Cree to the scandal. Too much capital, too many constraints on liquidity, this will influence the distribution of credit, we are told. Effective, but not completely honest reasoning.

In private, some bankers diverge. The reality is that European banks are still too indebted, much more than US banks, even taking into account the differences in accounting treatment. A year and a half after the onset of the crisis, their balance sheets are worth even more than 40 times their own funds. Three times too. If we stick to the good old solvency ratio of requiring banks to hold the equivalent of 8 of their assets in own funds, the multiple should not exceed 12.

Morality, should reduce the lever, formidable factor of amplification and distribution of the risk to the rest of the market. That means both to increase own funds and reduce the balance sheet of banks by transferring assets. An adjustment should not be done by the restriction of credit, but there where is housed the risk: in the Investment Bank.

In fact, the future standards of Basel III act in priority on the own funds allocated to the activities of market. In these trades notoriously sous-pondérés equity capital should double or triple. But it goes so low that banks only dare to tell. They focus the bulk of their criticism on the other side of standards, which aims, to secure refinancing, by requiring banks to anticipate a situation of crisis of liquidity for a month. A scenario not totally absurd, if one remembers that the liquidity post-Lehman crisis necessitated the intervention of States across in the world. This does not prevent banks clearly state that if it restricts their ability to finance credit by borrowed resources, the financing of the economy in costs. Yet, if we stick to the fundamentals of the Bank, credits should be financed by deposits of the clients, the use of markets to remain marginal. It is even the basis of the trade, the crisis has reminded.

Last criticism issued by professionals, the creation of "cushions counter-cyclical", these reserves of capital that banks will have to be top cycle to cope with the crisis, by reducing the distribution to shareholders. By raising the General level of own funds, these pillows come here still charge distribution of the credit. But a study of the Bank of England shows that if the British banks had reduced 20 distribution of the result to their shareholders between 2000 and 2008, they would have had sufficient own funds through the crisis without resorting to injections of the State.

The reality is also that, for banks, the issue is not that of the financing of the economy, but that the profitability. The first effect of the new standards, it is mechanically reduce the performance of the own funds of banks, the sacrosanct "RoE". But this is still one of the lessons of the crisis, can not permanently display a profitability of 15 when the global growth of 3. The profitability of banks must fall.