EU wants changes in re­form of global bank­ing rules

The Sun (Malaysia) - - SUNBIZ -

BRUS­SELS: A planned re­form of global bank­ing rules be­ing dis­cussed by the US, Europe, Ja­pan and other ma­jor economies risks neg­a­tively af­fect­ing Euro­pean banks and needs to be changed, the EU fi­nan­cial ser­vices com­mis­sioner said yes­ter­day.

The Basel Com­mit­tee, a body of bank­ing su­per­vi­sors from nearly 30 coun­tries, set the year-end as the dead­line to con­clude an over­haul of ex­ist­ing bank­ing rules – known as Basel III – meant to make the sec­tor safer.

But op­po­nents, mostly in Europe and Ja­pan, reckon the re­view goes too far, as they fear it dis­pro­por­tion­ately in­creases how much cap­i­tal banks must hold against risk.

“As things stand, the pro­pos­als Basel has is­sued for con­sul­ta­tion would im­ply sig­nif­i­cant cap­i­tal re­quire­ment in­creases in all ar­eas,” EU com­mis­sioner Valdis Dom­brovskis told a bank­ing con­fer­ence in Brus­sels yes­ter­day, in what is so far the most ex­plicit crit­i­cism to the re­view made by a Euro­pean of­fi­cial.

EU fi­nance min­is­ters had al­ready called for the re­form to not sig­nif­i­cantly in­crease cap­i­tal re­quire­ments for banks but have so far fallen short from crit­i­cis­ing pub­licly what is on the ta­ble from global reg­u­la­tors.

“We want to avoid changes which would lead to a sig­nif­i­cant in­crease in the over­all cap­i­tal re­quire­ments shoul­dered by Europe’s bank­ing sec­tor,” Dom­brovskis told the con­fer­ence or­gan­ised by the Euro­pean Bank­ing Fed­er­a­tion.

Euro­pean bankers and of­fi­cials fear the changes will put Euro­pean banks at a dis­ad­van­tage against their US rivals, as their large loan port­fo­lios would look more risky, and hence need more cap­i­tal, than US banks, which pro­vide more bond fi­nanc­ing and pack­age mort­gages on for trad­ing else­where.

Bankers nick­named the re­form as Basel IV for the ad­di­tional re­quire­ments it im­poses, up to 50% more than cur­rent cap­i­tal buf­fers, the French and Ger­man bank­ing fed­er­a­tions es­ti­mated.

Con­trary to the US, banks still rep­re­sent by far the main source of fund­ing for com­pa­nies in Europe. – Reuters

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