JP Morgan Chase and Co CEO Jamie Dimon said in a conference that lenders are accumulating more capital than needed. This is in line with regulator push for banks to build more equity in their portfolios.
Dimon said, "I don't think it's just JP Morgan. I think all banks will have too much capital in two and a half years. And they're not going to know what to do with it."
He identifies excessive regulation as the stumbling block to growth as the Federal Reserve and international authorities push banks to hoard capital to be able to weather another financial crisis. JP Morgan itself has been chastised by regulators for undertaking buybacks after the discovery of a trading loss in its chief investment office amounting to US$6.2 billion.
He further dismissed the argument that clients would turn to banks with higher capital ratios, such as UBS AG, the Zurich based bank which has been targeting a Basel III common-equity ratio at 13% of its risk weighted assets.
JP Morgan for its part said that at the end of 2013, capital would account for 9.5% of risk weighted assets under the Bassel rules.
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