Banks “have resumed risk taking practices” that “led to the crisis”, ECB

 Christian Noyer, a European Central Bank Governing Council member, delivering a speech at a financial conference in Singapore on Monday, said that banks are taking today the same risks that were at the heart of the world financial crisis and said that instead of paying immense compensations to their managers banks need to preserve more capital.

Impressive bank revenues reported in recent weeks resulted from the public policies implemented by governments to wrestle the worst ever recession in decade. Therefore, these achievements cannot be ascribed to recovery in the industry and this does not mean any further reforms shouldn’t and won’t be undertaken.

"Nothing could be further from the truth. Indeed, one major risk in the period to come is the emergence of a business as usual mentality," Noyer said.

"There are signs that parts of the financial industry have resumed risk taking practices reminiscent of those which led to the crisis," he said, pointing to bankers' pay packages that appeared out of line with performance.

Earlier, it was reported that Goldman Sachs assigned $16.8 billion to pay staff while it was not long ago as it paid back $10 billion in taxpayer money. The move produced concerns that Wall Street has not declined its previous practices that were “habitual” before the global downturn.

According to Noyer banks should be robust and better capitalized in the long term and in the short run they should rely on to profits to strengthen balance sheets and finance credit.

"This would require some restraint in dividend distribution and of course in the overall amount of variable compensation," he said. "In parallel, all possibilities to issue new equity should be exploited."