Germany, France Seek Relaxation of Bank Capital Rules-Report
By REUTERS
LONDON (Reuters) - France and Germany will call on Monday for a relaxation of global bank capital rules to prevent lending to the real economy being choked off, the Financial Times reported on Monday.
German finance minister Wolfgang Schauble and his French counterpart Francois Baroin will urge special treatment for banks that own insurance companies, according to a joint paper seen by the newspaper.
The pair will also urge important elements of the Basel III guidelines on capital requirements to be watered down to mitigate any "negative effect" on growth, according to the article.
The FT said the paper calls for a three-year delay to the mandatory deadline to disclose leverage ratios, a measure of bank borrowing and risk.
Banks across the world will have to follow Basel III accords for disclosing the size and quality of their capital safety buffers from 2013 to help reassure investors they are stable.
(Reporting by Stephen Mangan; Editing by Kim Coghill)
http://www.nytimes.com/reuters/2012/01/22/business/22reuters-france-germany-regulation.html?_r=1&hp
January 22, 2012 4:20 pm
Paris and Berlin seek to dilute bank rules
France and Germany are to call for a relaxation of global bank capital rules to prevent lending to the real economy being choked off, setting them at odds with the UK’s stricter approach to banks.
A joint paper by Wolfgang Schäuble, German finance minister, and his French counterpart, François Baroin, will on Monday call for important elements of the Basel III rules to be watered down to mitigate any “negative effect” on growth.
More
ON THIS STORY
- EU plans raise home foreclosure risk
- Barnier urges Cameron and City to ‘play the game’
- Global Insight Grand Duchy exposes eurozone fault lines
- Editorial Comment No accounting by taste
- In depth European banks
ON THIS TOPIC
- US funds return to European bank paper
- Europe retreats from five-month high
- Capital plans boost Commerzbank
- Fears rise over Commerzbank and MPS
IN EUROPE
A draft of the paper seen by the Financial Times calls for special treatment for banks that own insurance companies and for a three-year delay to the mandatory deadline to disclose leverage ratios, a measure of bank borrowing and risk.
The demands will delight some bankers but are likely to infuriate policymakers in London, who have been fighting hard to stop French-led attempts to dilute the Basel III accord.
While the debate revolves around relatively technical regulatory issues, it is politically highly charged. British ministers complain that Paris and Berlin are going soft on their banks and attempting to cover up their more relaxed approach by stopping London from taking a tougher line.
The power to go beyond European Union bank capital rules was one of the demands made by David Cameron, UK prime minister, at a summit in December that resulted in Britain vetoing a new treaty.
Implementation of the Basel III capital rules with regard to banks with insurance companies is a particular point of friction, as tweaks backed by France and Brussels will boost the capital of Société Générale and Crédit Agricole by billions of euros – both owners of insurance companies.
In December global regulators rebuffed France and overwhelmingly sided with the UK’s stricter interpretation. Yet the Franco-German statement will restate support to amend the rule, which prevents capital being double-counted towards the requirements of both the insurer and parent bank.
Monday’s proposals will also open a new faultline by suggesting the deadline to publish leverage ratios – the ratio of top-quality capital to total assets – should be pushed back from 2015 to 2018.
That contrasts with UK regulators who have proposed that banks disclose the ratio as soon as next year, well in advance of the Basel III timetable requirement.
According to the draft proposal, Mr Baroin and Mr Schäuble warn that a rush to implement the rules could crimp lending capacity and severely affect the real economy. “European institutions should agree on achieving the EU financial market regulation agenda while taking due consideration of its impact on the financing of the real economy,” the draft proposal states.
The draft Franco-German statement supports tweaking the rules to help banks support small and medium-sized businesses by allowing them to set aside less capital against specific loans.
That is expected to chime with the position of Othmar Karras, the German MEP who will on Monday publish the European parliament’s draft report on capital requirement proposals intended to implement Basel III.
Talks about the capital requirements proposal – which are now under way – must also bridge differences about bank liquidity ratios.
While the ratio is not binding until 2015, there is disagreement about a definition. France and Germany want to stop any country introducing the ratio before 2014. The UK, by contrast, has already begun to require its banks to maintain stockpiles of easy to sell assets.
0 comments:
Post a Comment