Nov 17 (Reuters) - PNC Financial Services Group CEO Bill Demchak on Tuesday added his voice to other financial executives raising concerns that post-crisis banking rules could destabilize markets.
Speaking on a panel in New York at an event hosted by financial services industry group The Clearing House, Demchak was asked about the unintended consequences of regulation.
“Liquidity in the capital markets bothers me a lot. We’ve seen some really strange things occurring right now today,” said Demchack, a former derivatives executive at what is today JPMorgan Chase & Co
Demchak did not specify which rules he was referring to but market participants, particularly bond investors, have said international regulations such as Basel 3 and the U.S. post-crisis legislation known as Dodd-Frank are responsible for banks reducing bond inventories. The reduced inventories, they have warned, could exacerbate market swings, particularly in fixed-income markets. The rules are intended to minimize the risk of bank failures and government bailouts.
The rules require banks to hold more cash or cash equivalent securities, which Demchak said was also a concern. He said he also worries about the growth of non-bank financial entities, some of which aren’t subject to the same regulations as banks.
Bank of America CEO Brian Moynihan also sitting on the panel, expressed broad agreement with Demchak.
The panel, which also included TD Bank Group CEO Bharat Masrani and Barclays PLC Americas CEO Joe Gold, touched on a range of topics, from branch banking to cyber security to technological innovations in consumer banking. It is part of a three-day conference ending Wednesday. (Reporting by Dan Freed; Editing by David Gregorio)