Size may well be an advantage for financial institutions in
today’s intense regulatory climate, according to a
prominent asset manager.
Speaking at the FT Banking Summit in London last week, Eric
Knight, CEO of Knight Vinke said this is because banks are much
less profitable than they used to be.
US regulators were quicker to deal with banks'
problems than their EU counterparts"Just look at
derivatives, where the margin has gone from 60bp to
three…the idea that banks might find a way out of the
impasse by shrinking their balance sheets seems to me to be
missing the point," he said.But others are unsure of its
relevance. Cass Business School senior fellow Simon Samuels
said there’s little evidence that it was ever an
advantage, even in a pre-crisis world. "In our research we
found that size and CEO compensation have always been more
reliably aligned than size and advantage,"...