(2)---(2)
Brad Hintz, an analyst at Bernstein Research in New York, said in a research note that the new capital standards would roughly halve the profitability of sales and trading businesses in American investment banks, which would leave them unable to cover their cost of capital.
Switzerland has placed itself at the extreme end of a spectrum of higher capital charges, and is thus likely to see its big banks shrink more than most.
The first is that when investment banks can no longer smooth out their earnings with timely sales of bonds, their profitability will probably become more volatile rather than more stable.
Property prices in expensive parts of London will probably benefit, but it is not clear that the export of risk from America will make the global banking system safer.
And if their divisions subsequently post losses, those payments may be reduced or even cancelled.
There have been mutterings that the two big Swiss banks may try to work out ways of circumventing regulation at home by listing their investment banks abroad. Similar rumblings are heard in London.
Yet an enduring lesson of the crisis is that wholesale money markets can dry up from one day to the next.
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