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Banks must continue their reforms and increase their base capital, says Christian Noyer, member of the governor board of the European Central Bank (BCE). He recommended limiting dividends and compensations.
Noyer said the following yesterday in Singapore: "The efforts to consolidate regulations and capital in the banking field remain a priority, even though banks keep announcing impressive quarterly earnings".
According to him, "it is striking that such results were obtained just a few months after some of these banks were close to going bankrupt. This could create the impression that the financial sector has recovered and that reforms are no longer necessary, which is very far from the truth".
Noyer considers that in the near future, capital preservation should become a priority for banks. The ECB official said: "Bank profits should remain in the system and used for the consolidation of their balance sheets".
The financial crisis caused 1,600 billion in losses for the global banking system.
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