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(Reuters)
ISTANBUL (Reuters) - Canada's economy could be hurt by the global drive to tighten banking regulations, even if no major changes are made to rules domestically, the CEO of Bank of Nova Scotia said on Monday.
Rick Waugh, chief executive of Bank of Nova Scotia and a board member of the Institute of International Finance (IIF), said there are signs that global regulators may be overreacting to the financial crisis with excessively strict rules that could crimp banks' capacity to lend.
"There are some warning signs that it could go too far and have implications on growth," Waugh told reporters in Istanbul on the sidelines of meetings of the International Monetary Fund and World Bank.
Waugh is chairman of the committee on market best practices at the IIF, an international banking group.
Canada, where banks emerged relatively unscathed from the crisis thanks to a conservative banking culture that others are now trying to mimic, is not expected to make any major changes to the rules that govern its financial system.
But its economy could feel the spillover effects if banks elsewhere have to pull back lending.
"We're so interconnected that what happens in Europe, what happens in the United States, what happens in the G20 countries affects us."
"I'm worried it could have some significant impact on intermediate and long-term growth," he said.
Waugh favors more effective banking regulation but said he feared some countries would impose higher capital levels and tighter leverage, making it harder for banks to finance economic expansion.
"Overregulation can be as detrimental to growth, to jobs, to economies as not having enough," he said.
When asked to comment on Scotiabank's ambitions in Brazil, where Spain's biggest bank Santander has announced an initial public offering, Waugh said he was watching the country but would not speculate on any expansion plans.
"I don't speculate on what we're doing and it's a long road, so we'll see. It's an interesting country."
Waugh has the bank would consider overseas acquisitions to take advantage of its strength during the financial crisis, saying its focus is on the Americas and Asia.
(Reporting by Louise Egan; editing by Peter Galloway)
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