Private banks welcome regulatory crackdown

By Thomas Atkins

GENEVA (Reuters) - Leading bankers to the world's wealthy welcomed a regulatory crackdown from officials seeking to hinder tax evasion and money laundering, saying it was good for their business despite a huge increase in compliance costs.

Bankers at the Reuters Wealth Management Summit said the regulation revolution has forced banks to streamline and modernize how they do business, reassess some client relationships, and assess whether certain business lines are still profitable.

"We have more and more regulations but I don't feel them as a threat," said Patrick du Saint, head of Swiss private banking at France's largest bank BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz). "They are heavy to manage but it's a way of protecting us."

The love-thy-regulator attitude voiced by private banking pacesetters marks a sharp reversal to the flood of complaints over the past three years from banks forced to adopt the most sweeping changes in generations to the way they do business.

"Regulations force you to interact with your clients, and if there is one success factor with your clients, it is interactivity," said Arthur Vayloyan, a senior executive at one of the world's biggest wealth managers, Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz).

"You look at the processes (and) in the course of implementation you have the chance to clean up," Vayloyan told journalists at the Geneva summit. "It is not per se that regulation is a drawback."

Regulators and lawmakers have in many ways rewritten the global bank code in the past several years by revolutionizing the way banks account for risks through the New Basel Accord, also called Basel II.

Meanwhile, U.S. legislation like the Sarbanes-Oxley and the Patriot Act sought to crack down on lax accounting standards and murky cross-border flows of cash that could be used to finance terrorist or criminal acts.  Continued...