Exclusive: Europeans lobby Fed's Tarullo over bank curbs

(Full story)

By Lionel Laurent and Philipp Halstrick

PARIS/FRANKFURT | Fri Mar 22, 2013 4:24pm EDT

(Reuters) - European bankers are lobbying U.S. Federal Reserve board member Dan Tarullo in an attempt to dilute curbs that would tighten oversight of foreign banks in the United States and squeeze their profits in the world's biggest financial market.

Tarullo's plan would force foreign banks to group all their subsidiaries under a holding company, subject to the same capital standards as U.S. holding companies. The biggest banks would also need to hold liquidity buffers.

Bankers say the plan would worsen an already fragmented regulatory landscape as the European Union pushes ahead with plans to cap bankers' bonuses and to limit risky trading. Euro zone banks believe the combination will make it tough to compete for talent or for profits against U.S. rivals.

The heads of France's BNP Paribas (BNPP.PA) and Germany's Deutsche Bank (DBKGn.DE) recently met Tarullo following the adoption of his foreign bank proposals in December, sources with direct knowledge of the meetings said.

The Fed confirmed Tarullo met with Deutsche Bank on March 7. It did not have an immediate comment on the meeting with BNP Paribas.

Other lenders including Societe Generale (SOGN.PA) are putting pressure via representatives in lobbying hub Brussels, the sources said.

"It's an outrageous plan that will further balkanize the banking sector," said a French banking lobby source.

"Thank goodness we will have a banking union with the European Central Bank as chief supervisor in place soon. Tarullo's proposal will be the first issue to be addressed."

Fed records show that executives from Deutsche Bank and Paribas, including Deutsche's co-CEO Anshu Jain and BNP's CEO Jean-Laurent Bonnafe, as well as officials from Britain's Barclays (BARC.L) and representatives from the French Embassy have met with Fed representatives in recent weeks.