South African bank bosses say they do not need the punishing new rules being touted by US President Barack Obama and the Swiss-based Basel Committee on Banking Regulation.

Though pundits have complained that the proposed crackdown on banks is aimed at "punishing the survivors" of the financial crisis, Obama said the new rules for US banks are aimed at ensuring that taxpayers are never again "held hostage by a bank that is too big to fail".

Obama's proposals include banning US banks from running their own trading desks, and limiting their hedge fund or private equity businesses - all mainstream bank activities, even in SA.

At the same time, the Basel committee plans to ask banks to set aside billions more rands in capital reserves, and comply with other tough new measures.

But South Africa's bank bosses, many of whom are at the World Economic Forum in Davos, do not believe local banks should carry the can for the US banking system's near-collapse.

Mike Brown, who takes over from Tom Boardman as CEO of Nedbank next month, said: "I certainly don't think we need more regulation in South Africa. Our existing rules, and the way they've been embraced by the banks and implemented by our regulators, have stood us in good stead."

Absa's deputy CEO Louis von Zeuner said South African banks survived the crisis without much damage precisely because "we have an adequate regulatory environment".

"Obama clearly wants to protect the retail depositor and ensure his money isn't at risk," said Von Zeuner. "But South African banks are well governed and sound, and we should guard against over-engineering a system that isn't as challenged and exposed as that of the US."

Talk that SA might be dragged into the slipstream of the new rules came, ironically, as the country's bankers were lauded at Davos for successfully navigating the recent crisis.

Brown said South African banks were the envy of Davos. "In all meetings I've been to here, people clearly recognise the strength of South African banks, which is a really positive thing for investment prospects in our country," he said.

The World Economic Forum's global competitiveness index rates South Africa sixth of 133 countries for "soundness of banks" - from 15th last year. While SA trails leader Canada, it beats emerging-market rivals Brazil (10th), India (25th) and China (66th), and is way ahead of the US (108th) and the UK (126th).

FirstRand CEO Sizwe Nxasana said the relevance of the Obama proposals for SA was "limited".

He said South African banks devote a relatively small amount of assets to riskier businesses such as proprietary trading, private equity and hedge funds.

"For us, it would also be quite difficult to separate our proprietary trading - where we trade using our capital - from client activities. We serve clients looking for specific solutions, such as buying foreign exchange, but, to mitigate the risk, we often use our own capital to hedge those transactions, so it's all linked," he said.

Simon Ridley, the financial director of Standard Bank, said implementing the Obama proposals in SA would be a "complete overreaction, especially because we haven't had the really irresponsible activity happening that you had in the US".

"When you split banks into different (pieces), it can actually increase the relative concentration. So, for example, when our retail bank came under stress, we had a good performance from investment banking that balanced it out." The Obama rules would not permit that.

Brown said appropriate trading activities were key to banking. "The very nature of banking is often about taking a transaction, repackaging it, and selling it back into the market."

He said regulators should rather focus on limiting the proprietary trading to an appropriate percentage of the banks' assets, or requiring banks to hold higher capital in reserves for risky activities - which is what the Basel plans seek to do.

Local bankers realise, however, that there will be changes.

Von Zeuner said there might be a need for banks to set aside more capital. "But these capital requirements should change according to the product, activity and client."

The amount of capital that must be set aside for banks trading on their own account could be far higher than capital reserves for home loans, for example.

"If anything, we should be focusing on whether our risk assessments are adequate, not trying to kill a certain product - like proprietary trading - simply because the rest of the world is going in that direction," said Von Zeuner.

Ridley said the new rules should rather place greater emphasis on "stress-testing" to detect problems early, and on "ensuring senior bank managers have the right skills - something the SA Reserve Bank has well established".

The Obama plan comes weeks after new proposals by the Swiss-based Basel Committee on Banking Supervision, which tries to prevent banks collapsing.

The reforms include forcing banks to raise billions of dollars to hold in capital reserves in case of disaster, and would discourage them from holding shares in overseas banks that they do not own.

Nxasana said the Basel proposals "make a lot of sense" and address the critical issue of liquidity - the real reason behind US bank failures.

"South African banks have already addressed the issue of capital, and we already hold far higher amounts in reserves than banks elsewhere in the world," he said.

But some of the rules are punishing. The worst for Standard Bank, which owns banks in 17 African countries, is the "minority shareholding rule".

It prevents a bank from recognising capital invested in a subsidiary by minority shareholders. If it owns 60% of a bank in Uganda, it would have to hold capital on 100% of those assets, yet only 60% of this capital would be "recognised" - even though the other 40% from minority investors could absorb any losses.

This means Standard Bank, for example, would have to reserve extra capital for some of its subsidiaries.

"All these rules mean that banks will end up lending less money to companies and individuals and there will be less oiling of the global economy," he said.

As yet there is no sign of Obama-style regulations being implemented in SA. However, finance minister Pravin Gordhan is expected to reveal his thinking on bank rules in his February 17th budget.