Two years ago, Jamie Dimon, chief executive of JPMorgan Chase, told an audience in Davos, Switzerland, that people should stop picking on bankers. Mr. Dimon is still waiting for his wish to come true.
Bankers, always a big presence at the World Economic Forum in Davos, will arrive this year under less regulatory pressure and with better profits than in past years. But they are still on the defensive.
Mr. Dimon, scheduled to appear on one of the first panels when the Davos forum opens on Wednesday, is again embroiled in controversy. Last week, JPMorgan’s board cut his pay for 2012 in half, to $11.5 million, holding him accountable for a multibillion-dollar loss on derivatives trading.
International bankers are under pressure from the law enforcement authorities as well, and examples can be found near Davos.
UBS, based in Zurich, agreed to pay a $1.5 billion fine to the global authorities after admitting this month that it had helped manipulate a benchmark rate used to set mortgage and other interest rates.
And Wegelin & Company, a private bank based in St. Gallen, Switzerland, shut down this month after admitting it had helped wealthy Americans evade taxes. The bank, founded in 1741, was the oldest in Switzerland.
At a news conference last week in Washington, the managing director of the International Monetary Fund, Christine Lagarde, lamented a “waning commitment” to tougher financial regulation and called upon the banking authorities to finish the job of fixing the world’s banks.
For all that, though, bankers may find the atmosphere in Davos a bit more congenial than in some recent years. Among the government overseers who will also be in attendance, there appears to be a growing sentiment that the banks have taken enough abuse.
This month in Basel, Switzerland, for instance, an international gathering of central bankers and bank supervisors relaxed new rules that were intended to ensure that banks would be able to survive an event like the collapse of Lehman Brothers in 2008.
The rules, which are not binding but serve as a benchmark for national regulators, would require banks to maintain a 30-day supply of cash or liquid assets that are easy to convert into cash. But after the decision in Basel this month, banks would have until 2019 to accumulate the additional cash and assets, instead of 2015.
The regulators also broadened the types of assets that could be used to include even some mortgage-backed securities — the same general class of security that was at the heart of the crisis.
Many analysts see the decision as a gift to the banking industry, which had insisted that planned new regulations would lead banks to curtail lending. Bank stocks in Europe rose after the decision.
“Most bankers I talked to breathed a huge sigh of relief,” said Cornelius K. Hurley, a professor at the Boston University School of Law and former assistant general counsel to the board of governors of the Federal Reserve.
Gavan Nolan, a credit analyst at Markit, a data provider in London, agreed that changes in the rules “went further than many had presumed, and in a direction that seems to favor the banks.” Still, he wrote in a note to clients, “the effects shouldn’t be overstated,” adding that the rules “will still make it more difficult to make money, in comparison to the previous era.”
The discussions at Davos may offer clues about whether the Basel decisions foreshadow other concessions.
There is a risk that efforts to rein in financial risk could lose momentum as the trauma of Lehman’s collapse fades, Mr. Hurley said.
“We said to ourselves back in 2008, a crisis is a terrible thing to waste,” he said. “It seems the farther away we get, the evidence is that we are wasting it.”
The World Economic Forum tends to be a place for talk rather than action, but it is one of the few events that reliably brings central bankers, regulators, economists, legislators and bankers under one snow-laden roof.
The discussions have sometimes been contentious, as in 2010 when American policy makers like Representative Barney Frank met behind closed doors with top bankers including Brian T. Moynihan, then the chief executive of Bank of America.
Mr. Frank left the meeting fuming about bankers’ unwillingness to accept more safeguards and vowed to impose them anyway. Six months later, Congress passed the sweeping financial regulation bill known as Dodd-Frank.
But Mr. Frank has retired, and there are signs that the officials who set the tone for global regulation of banks have become more worried about a credit squeeze in Europe than about the risk of another banking crisis.
Some of the most influential people in the regulation debate are sounding more conciliatory.
“We welcome these rules, we think they are important,” Mario Draghi, president of the European Central Bank and a member of the group that met in Basel, said this month. “We also welcome their gradual phasing in.”
At least some banks have had a profit rebound recently, including JPMorgan, Morgan Stanley and Goldman Sachs, whose chief executive, Lloyd C. Blankfein, is scheduled to take part in a panel on competitiveness at Davos on Friday.
European banks are still ailing, though, which threatens the fragile calm that has prevailed in financial markets. Whereas the euro zone debt crisis has fallen most heavily on southern European countries like Spain, weakness in the banking system is a problem even in healthier countries like Germany.
Deutsche Bank, the largest lender in Germany, is profitable but faces official investigations in Germany and the United States, mostly related to its activities before the financial crisis.
In December, police officers surrounded the bank’s headquarters in Frankfurt and seized documents as part of a tax-evasion inquiry that involves one of the bank’s co-chief executives, Jürgen Fitschen.
Other large German banks like Commerzbank and several of the state-owned landesbanks are still hobbled by bad investments they made before Lehman collapsed.
Belgium, France and Austria also have troubled banks, even though they are not considered to be countries in crisis.
“The bottom line is that I don’t think the banking system is in good condition, and I don’t expect it to come back to good condition soon,” said Nicolas Véron, a senior fellow at Bruegel, a research institute in Brussels.
Mr. Véron said he did not have reservations about the decision in Basel to ease new regulations on liquid assets, noting that previously there were no rules at all on liquidity.
“I think the big headline remains that liquidity regulations have been introduced,” he said. “When you look at what has happened in the crisis, that is a good thing.”
But he sounded less optimistic that policy makers meeting in Davos or elsewhere were making progress on other important banking issues, like how to close down terminally ill banks at no cost to taxpayers.
“We have not had the systemwide restructuring process I believe is necessary to get back to sound conditions,” he said.
DealBook: In Davos, Atmosphere for Bankers Improves
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DealBook: In Davos, Atmosphere for Bankers Improves
