Economic group says banks will be unable to operate on same level

Egypt News.Net
Sunday 12th October, 2008

The chairman of the Financial Stability Forum, Mario Draghi, has said banks will have to accept lower levels of profit as controls on their debt-fuelled expansion are tightened.

Speaking in Washington, Draghi said that in a new post-credit crunch world, world banks would have to carry less debt and have higher capital reserves, in order to prevent further collapses.

Draghi said profits would to be lower in the financial services industry in the future.

The Financial Stability Forum presented a report to G7 finance ministers at the International Monetary Fund in Washington over weekend.

The FSF, which includes central bankers and financial regulators, said in their report that banks would need to tighten accounting standards; reveal their exposure to complex derivatives trades and prevent excessive lending in boom times.

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