SMFG chairman Oku concerned over US, UK banking rules

The chairman of Japan's third-largest bank Sumitomo Mitsui Financial Group, has spoken of his concern about the United States and Britain imposing banking standards over and above hard fought-for global rules due to come into force in 2019.

Masayuki Oku, who has spent 46 years at SMFG and twice headed the Japanese Bankers Association, said his bank had already fully implemented the global package, known as Basel III, even though some aspects were problematic.

"Basel III is a universal regulatory model, and we take it, but if we go to the US then our bank operation is subject to this one, and our UK operation is subject to UK regulation," he said. "I'm very much concerned about such unintended consequences of accumulated regulation."

The US Federal Reserve has passed a rule that will force units of foreign banks operating in the United States to hold more capital and liquidity locally in order to shield taxpayers from any potential losses.

Britain has also been putting pressure on some foreign branches to become subsidiaries, meaning they would hold pots of capital and liquidity in Britain. Critics say such national measures fragment capital markets and are unnecessary because the parents of the banks have adequate safeguards.

Oku did not say specifically what his concerns were relating to the proliferation of new regulations, and whether they were just a matter of the bureaucracy involved in meeting them.

SMFG, whose stock market value of about US$58 billion makes it more valuable than Britain's Standard Chartered, has sizeable operations in London and the United States. Both contribute to the 33 per cent of the bank's gross revenue that comes from outside Japan.