A bank lobby group has claimed that a regulatory crackdown on banks could hit economic growth over the next five years in the US, euro zone and Japan and cost almost 10 million jobs.
The Institute of International Finance (IIF), which represents more than 400 companies, said a need to hold more capital, pay more taxes and other possible reforms could hit economic growth hard.
Gross domestic product (GDP) in the three regions would fall by 0.6 percentage points a year between 2011 and 2015, the IIF said in a report released at a meeting in Vienna.
'The IIF calls on the participants of the forthcoming G20 Summit and the international regulatory authorities to consider carefully the content, timing and calibration of proposed bank regulatory reforms, mindful of the potential drag on economic activity that could result,' said Josef Ackermann, CEO of Deutsche Bank and IIF chairman.
Banks face new taxes and requirements to hold more and better quality capital and liquidity - dubbed Basel III - and other reforms after the financial crisis.
'We find ourselves in a situation eerily reminiscent of the 1930s,' billionaire US investor George Soros said at the conference. 'Many governments have to reduce debt under pressure from financial markets. This is liable to push the global economy into a double dip.'
Soros warned that the recent loss of confidence in sovereign debt showed the fragility of the market and that the financial crisis was far from over.
The absence of published stress tests by euro zone banks has added to jitters about the sector's health, but Ackermann said publishing results would be dangerous if support mechanisms were not in place beforehand.
'Disclosure is a good thing; it calms down uncertainty in the market. But it can only happen if backstop facilities are in place and if governments are willing to support banks which have difficulties,' Ackermann said.
A regulatory source said the IIF study focused only on costs and did not include the benefits that higher bank capital brings, such as a more stable financial system which could be rewarded with higher credit ratings and thus cheaper capital raising.
Banks are becoming more vocal about the danger of uncoordinated action before G20 leaders meet on June 26-27.
