Caruana firm on need for extra bank capital

There is nothing novel about Australian banks lobbying for some sort of exemption from the pile of new banking regulations and there is nothing likely to suggest those crafting the rules will pay much attention. Or so Jaime Caruana, the general manager of the Bank for International Settlements, suggested at an industry lunch yesterday.

Asked about the local industry's gripes over the prospect of working with steeper capital ratios and increased liquidity requirements, Caruana said: "I have heard this in many places. They argue, 'Why [do] we all have to do this. We don't have the same kind of problem. Why do we all have to take the medicine?'

"And I think we need to recognise that, yes, they were frustrated enormously.

"This is a global crisis and to the extent they were part of the intervention that was necessary on the part of the government to stop this rush, and if this intervention had not happened, these other [banks], they would have been overwhelmed.

"The lesson is that capital was not enough.

"If they have not been able to suffer as much, it's because there was a huge intervention. Thirty per cent of GDP was put on the table to stop this.

"If that had not been the case any institution would have suffered."