Speaking at a London seminar, Robert Jenkins, IMA Chairman, expressed frustration at the way that the proposal for EU regulation of the alternatives industry, had been prepared:
"It is curious that the response of some European politicians to the banking crisis is to regulate the investment management industry."
"Clearly some political leaders would prefer to focus attention on those who did not cause the problem rather than attend to those who did..."
On the proposal to cap leverage used by alternative fund managers, he noted that it had been much greater within the banking system than in hedge funds:
"Let us then legislate against leverage and maintain a level playing field at the same time. I propose that all alternative fund managers cap their leverage at the level currently prevailing at Deutsche Bank. Well, if you insist, you can cap alternatives at a level equal to ½ that of Deutsche Bank." [Deutsche Bank's balance sheet leverage is currently ca. 25 times - down from over 40 times at the start of the crisis.]
Jenkins noted that many European politicians were perhaps confusing one part of the financial services industry with another:
"Perhaps the problem is not on of malice but rather one of mistaken identity. In this case may I politely point out that investment management is not investment banking."
"When the banks ran out of liquidity, our customers for whom we act as agents, helped supply it. When the banks ran out of capital, the funds we manage contributed to the take up of new debt and equity issues. And when one day, governments divest their shares in the walking wounded of the banking world, to whom do you suppose they will sell? In short, the investment management industry is not part of the problem but we are part of the solution."
Noting the importance of investment management to finance and industry and the importance of alternatives to the money management business, Jenkins criticised short sighted politicians who would do damage to both:
"It would appear that (like many Brits) Mr Steinbrűck has forgotten that his country is part of Europe. He is no doubt painfully conscious that German industry must remain globally competitive but he seems to forget that Europe's financial industry must compete globally as well."
"Alas, Mr Steinbrűck and a number of continental comrades seem determined to shoot a key part of the money management industry in the back and themselves in the foot."
To view Robert Jenkins' speech click here
"It is curious that the response of some European politicians to the banking crisis is to regulate the investment management industry."
"Clearly some political leaders would prefer to focus attention on those who did not cause the problem rather than attend to those who did..."
On the proposal to cap leverage used by alternative fund managers, he noted that it had been much greater within the banking system than in hedge funds:
"Let us then legislate against leverage and maintain a level playing field at the same time. I propose that all alternative fund managers cap their leverage at the level currently prevailing at Deutsche Bank. Well, if you insist, you can cap alternatives at a level equal to ½ that of Deutsche Bank." [Deutsche Bank's balance sheet leverage is currently ca. 25 times - down from over 40 times at the start of the crisis.]
Jenkins noted that many European politicians were perhaps confusing one part of the financial services industry with another:
"Perhaps the problem is not on of malice but rather one of mistaken identity. In this case may I politely point out that investment management is not investment banking."
"When the banks ran out of liquidity, our customers for whom we act as agents, helped supply it. When the banks ran out of capital, the funds we manage contributed to the take up of new debt and equity issues. And when one day, governments divest their shares in the walking wounded of the banking world, to whom do you suppose they will sell? In short, the investment management industry is not part of the problem but we are part of the solution."
Noting the importance of investment management to finance and industry and the importance of alternatives to the money management business, Jenkins criticised short sighted politicians who would do damage to both:
"It would appear that (like many Brits) Mr Steinbrűck has forgotten that his country is part of Europe. He is no doubt painfully conscious that German industry must remain globally competitive but he seems to forget that Europe's financial industry must compete globally as well."
"Alas, Mr Steinbrűck and a number of continental comrades seem determined to shoot a key part of the money management industry in the back and themselves in the foot."
To view Robert Jenkins' speech click here
No comments:
Post a Comment