By Chris White, Publisher, EU Reporter

Moderator:
Ben Moshinski, journalist, Bloomberg

Speakers:
Jan Hommen
CEO, ING

Richard Gnodde
Co-Chief Executive Officer, Goldman Sachs International

Uli W. Fricke
Chairperson elect, EVCA

Sharon Bowles
MEP

Lawrence McDonald
Former Vice-President, Lehman Brothers

A safe, risk-free financial future for Europe would create serious problems for growth and the economy. A world of limited risk would damage entrepreneurism, and the world following the recent financial crisis should be built on sound foundations without strangling growth. This was the clear and resounding message from speakers at the European Business Summit workshop on the theme ‘What Kind of Future for Finance?’.

The discussion and questions built to an apparent consensus on the need for sound regulation, healthy capitalization of financial institutions and, above all, responsible corporate management.

Jan Hommen, Chairman of ING and Richard Gnodde, co-CEO of Goldman Sachs International discuss the dangers of too much regualtion.

Goldman Sachs International Co-Chief Executive Richard Gnodde was the first to warn of the consequences of over-regulation: “We need to get finance back on course,” he said. “We must get back to basics and start lending money to drive the economy.

“There is a need to complete the task of cleaning up the events and errors of the past number of years. But, whatever we do must be based on solid foundations. The language needs to be changed.

“There has to be adequate capitalization but then there is the debate about risk-tolerance. If we are going to live in a safe world of limited risk there is a consequence for growth.”

In the debate that produced a surprising amount of general agreement Jan Hommen, CEO of ING, said that the financial crisis “has put financial institutions into the forefront of a global debate. “The world of finance can only work if we have trust in the institutions and in the system.”

He told the audience that the financial crisis has “changed the landscape”. “We now have a completely different one, people are sitting together and are discussing together. But there are deep concerns about the future of the European Single Market, people are taking nationalistic decisions.”

On legislation he added: “No one will argue against the fact that financial institutions need sound capital but we need to be careful that we are not overburdening the system. We need to be careful that we are not using the medicine in such a way that it will kill the patient.”

MEP Sharon Bowles, who is also a member of the European Parliament’s Economic and Finance Committee, outlined recent and up-coming decisions of the institution. Approval of a Directive concerning bankers’ bonuses due to take effect in January 2011 had been “cleverly crafted to catch this year’s December bonuses”.

But she too warned that care has to be taken in framing legislation. One aspect was a concern that “we are not setting ourselves up in terms of liabilities”. The financial review and action plan currently under discussion would, she said, have happened anyway, crisis or no crisis.

Lawrence McDonald, former Vice-President of Lehman Brothers, said that the US Congress had failed to address corporate governance as President Obama had suggested they would. He said later, during questions, that he put this down to one of two possibilities – that the massive lobbying exercise in Washington had been effective or that politicians were concerned about the health of the US banking system. There then came an impassioned argument from Uli W. Fricke on behalf of the European Venture Capital Association – she too wanted to avoid legislation that would have a negative impact on the ability of venture capitalists to finance entrepreneurs.

“Venture capitalists support growth and the European economy. We do not want to see legislation that is discriminatory. We already suffer disclosure requirements that are in excess of our companies’ competitors. What we want is a fair approach. Legislation has to be relevant.”

With most speakers offering similar messages, Bowles neatly summed up the debate: “The challenges are contained in a fear of lack of competitiveness.”

Then, agreeing with a questioner that there should be more financial education for children to help them become entrepreneurs, she concluded: “What we need to develop is an intelligent cynicism about finance.”