Lunchtime Links: Perversely, higher capital limits could make trades more lucrative

So far, discussion of higher capital requirements has focused on the negative effects they're likely to have on banks' trading operations. However, Stuart Gulliver has hit on a potentially positive outcome.

Gulliver, head of the investment banking business at HSBC, told The Times that the FSA's threats to make banks put aside between three and seven times as much capital against trading positions could widen spreads on common FX trades from three to five basis points.

Gulliver doesn't explain the precise mechanism behind this increase, but it's almost certainly down to lower volumes. If this is the case, the post-FSA trading world will involve fewer trades, but far more lucrative ones for the traders concerned. This may not be what the FSA had in mind.

Conservatives threaten punitive taxes if banks refuse to curb bonuses. (Telegraph)

High 'self-monitors' earn relatively large trading profits. (Alea)

Why traders eat Krispy Kreme. (CNBC)

Citigroup working on a sale of Phibro (still). (Financial Times)

Conduit Capital continues to hire "in a controlled manner." (Financial News)

M&A resurgence could be scuppered by lack of financing. (Reuters)

Macquarie hires Citigroup MD as head of European M&A. (Reuters)

Senior bankers returning to Wall Street. (Forbes)

Britain faced bank runs and riots as RBS and HBOs neared collapse. (Bloomberg)

RBS outsourcing 1.2bn to India. (Reuters)

Merrill upgrades financials too. (Alphaville)

Executives close to Winters say he likes living in London and it would take a compelling opportunity for him to return to the U.S. (Bloomberg)

Gregory Curl and Brian Moynihan are remaining internal candidates in the running to replace Ken Lewis. (Wall Street Journal)

BofA's best executives already call the shots. (The Big Money)

Threat to non-audit services (and jobs) at the Big 4. (Wall Street Journal)

Michael Page started hiring recruiters again in September. (Evening Standard)

"We have clearly diverged from 1929." (BarryRitholtz)