Of Special Interest
- Financial wellness affects half of peoples’ mental or physical health, finds report
- Study finds traditional financial institutions embrace Fintech disruption
- Grass is greener for environmentally friendly businesses, finds Barclays
- Prospective homeowners would consider a 40-year mortgage to escape renting, finds Santander
- Millennials’ needs are changing the face of banking industry, says new report
- FS is putting consumer data at risk by failing to protect mobile apps, says Arxan
- A lack of belief in their ability holds 28% women back in work, says Cambridge & Counties
- ‘Which?’ reveals Scotland has lost over a third of its bank branches in eight years
- Next downturn unlikely to be as bad as 2008, according to S&P
- FCA reveals findings from first cryptoassets consumer research
- US consumers favour single mobile app for banking and payments
- Banks suffering major IT shutdowns every day, ‘Which?’ reveals
- The US will be a key offshore centre in 2019, says GlobalData
- Debit industry changes markedly in 10 years of the Debit Issuer Study
- UK's ‘Big Five’ face ‘too big to compete’ as small challengers secure stellar returns
- Banks as vulnerable now as before crash, says new study
- Leverage ratio a constant conundrum for European and US banks, says SNL
8th November 2011
Growth in shadow banking worldwide
Vikram Pandit, Citigroup CEO and former hedge fund manager, agreed banks should not be involved in principal trading and highlighted the growth in shadow banking.
Pandit was speaking at the Securities Industry and Financial Markets Association Annual gathering on Monday. He started first by seeming to agree with the controversial Volcker rule banning banks from engaging in Principal trading, speculating using their own capital. He then went on to say that it was difficult to set the boundaries between what should and should not be allowed. After which he observed that shadow banking, was growing fast. These are institutions such as hedge funds that can invest using their own capital and do not face the tough regulatory regime and capital restrictions of banks. He went on to explain this was not just a US phenomenon as a result of the Volcker rule but a world wide trend. Specifically he suggested that up to 50% of China's financial markets could be classified as shadow banking.
Another point he made was that a major difference between the 2008 banking crisis and now is the degree of bank leverage. Whilst banks are still in the process of de-leveraging the position was much better now than in 2008.