HSBC Holdings PLC is seeking support for a plan that would link banks' capital requirements to the systemic risk the industry and individual countries face at specific times, according to people familiar with the matter.
HSBC, though not opposing regulatory reforms, dissents on the idea that all banks should raise their capital buffers now, at a time when money should actually be injected into the system to boost the still-fragile economy, these people said.
Instead, HSBC believes that regulators should recognize that, when systemic risks are low, capital should be relatively low. When risks rise, capital requirements should rise.
HSBC is discussing its ideas with policymakers in Europe and hopes the plan will be included in the Group of 20 debate in June on capital and other financial reforms, said one of the people familiar with the matter. The company recommends that an independent "financial stability authority" monitor real-time macroeconomic and systemic indicators. Blending these with historical data, the body would be able to identify stress points in specific sectors.
