Banks have three to six times more capital than they did before the financial crisis, and the quality of that capital is “significantly enhanced,” Mr Flint said at a panel that saw the two British bankers debate Paul Singer, the billionaire hedge-fund manager who runs New York-based Elliott Management, and Stanford University professor Anat Admati, the author of The Bankers’ New Clothes: What’s Wrong with Banking.
Since the financial crisis, Davos has become a yearly sparring match between bankers and their critics.
Mr Singer, arguing the system was not safer, said banks still benefit from government subsidies, while Mr Admati compared the overhauls implemented since the end of the crisis to a 5mph reduction of a 90mph speed limit.
“The ability to withstand shocks is much higher,” countered Mr Flint, 58, who has been chairman of Europe’s biggest bank since 2010. “If banks are getting a subsidy in their reference rate, then they are passing it onto society in terms of cheaper finance.”
In 2010, politicians pushed for bankers to sign up quickly to new rules, while executives said proceeding cautiously was the best way to go.
Last year, JPMorgan Chase & CEO Jamie Dimon defended banks from blame for the crisis, and argued regulators were “trying to do too much, too fast.”
In a poll at the end of today’s discussion, about 62% of the audience said financial markets are safer. Mr Dimon, whose bank has agreed to pay more than $23bn (€17bn) in the past 12 months in fines and settlements, was standing at the back of the room.
Less bullish about the state of banking was UBS chairman Axel Weber, who warned this year’s stress test on European institutions “may trigger a comeback of some of the concerns,” with some banks set to fail the examination.
“I don’t think the markets at this point will supply sufficient capital, at least not for the banks that are in doubt,” Mr Weber said. “This is going to be a key issue this year.”