UNICE points out the new framework for capital requirements must not have a negative impact on companies` access to capital and on capital charges, and fears that the numerous ‘national options’ may hamper the application of the new framework by national supervisors.
As procyclicality of lending is an intrinsic concern of the new regulatory framework, a flexible procedure to update the new legislative framework quickly through a comitology fast-track procedure could help to accommodate desired changes. UNICE also favours a legislative procedure under the Lamfalussy process as it provides for stronger consultation of market participants.
On the impact on equity and venture capital finance UNICE believes that current rules might lead to a more restrictive attitude of banks and investment firms vis-à-vis such exposures. Therefore, UNICE suggests the creation of a reduced risk weights to equity exposures to SMEs compared with unrated claims on corporates, or alternatively a “discount solution” for SMEs with annual sales of less than 50 million Euros.
Finally, UNICE is concerned that the large number of ‘national options’ might lead to divergences in interpretation and application of the new framework by national supervisors. To avoid regulatory burdens and inefficiencies, reciprocity and mutual recognition have to be the cornerstones of the process. Furthermore, consistency in application of Basel-II and CAD-3 should be a guiding principle to ensure an international level playing field.
UNICE paper
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