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By Alexander Smith
January 26, 2012 9:42 AM EST
Bankers feel under siege, and from the heights of Davos in the Swiss Alps they are looking to convince the world that they have a role to play in getting economies back on their feet.
Their banks need growth, for without it the outlook for many is still grim, particularly in Europe where the euro zone debt crisis has resulted in bailouts, a retreat from lending, job cuts and government pressure to refocus their business.
Once the darlings of Davos, bank chief executives at this year's gathering are keeping a fairly low profile. Some, such as the chief executives of Italy's UniCredit and nationalised Royal Bank of Scotland, have given it a miss altogether. UniCredit's Federico Ghizzoni is attempting to raise 7.5 billion euros (5.7 billion pounds) in capital to meet regulatory demands, while Stephen Hester is dismantling the British bank's investment banking arm.
For those who made it to the Swiss ski resort, including top executives at JP Morgan, Citigroup, HSBC and Barclays, there are back-to-back meetings. They are advising corporate clients, meeting potential investors, testing the economic pulse or seeking to persuade governments and regulators to loosen the regulatory vice, which was tightened in response to 2008's financial crisis.
The few who have chosen to speak out say they need to win over a sceptical public, also stressing the need for their services if economies are going to grow.
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"We should all recommit ourselves to a robust financial system, a system that balances safety and soundness on one hand but also addresses the need for growth," Citigroup chief executive Vikram Pandit said.
"It is important for the financial system to recognise there is a great deal of anger that is directed at it for the crisis, and trust has been broken and we've got to start addressing that," Pandit said, adding banks must "serve clients and not themselves."
The problem in Europe, where a sovereign debt crisis has resulted in a second banking crisis, is that banks have responded to increased capital requirements by reducing their lending, in a process known in the industry as deleveraging.
This has been felt most acutely by small and medium sized businesses (SMEs), but also further afield by borrowers whose loans or projects are now regarded as too risky to warrant carrying on the bank's books.
"Deleveraging appears to be here to stay. And when you combine deleveraging with the increase in capital requirements that the financiers are going to be subject to...it is going to choke capital for SMEs," said NYSE Euronext
One top bank executive, who declined to be named, told Reuters that a withdrawal of the region's banks to their home markets was creating liquidity there, but was damaging other economies and threatening global trade.
Not all banks are shrinking their lending. Some such as Standard Chartered have used their dominance in the growing economies of Asia to keep on growing. Standard Chartered Chief Executive Peter Sands told Reuters that his bank had increased its lending by 75 percent between 2007 and 2011, while others have been drawing in their horns.
ECB INSURANCE
However, several European bank executives said that the European Central Bank's (ECB) recent liquidity lifeline, in the form of cheap three-year loans commonly known as LTROs, was not yet flowing through into lending to companies or individuals.
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