European Union countries are close to agreeing on a watered-down version of new capital rules for banks after the industry warned that a strict approach would risk choking off the supply of credit to the bloc’s economies.
The most recent draft proposal for implementing
Basel III includes several changes to an earlier version from the EU’s
executive arm and could be approved Tuesday by finance ministers meeting
in Brussels, according to people familiar with the matter.
Banks would dodge an increase in the perceived
riskiness of several types of equity exposures, fewer subordinated debt
holdings would be moved to a higher risk-weighting and there would be
more flexibility for property loans, according to comparison of the
earlier proposal with the latest document seen by Bloomberg.
Global
regulators spent a decade after the financial crisis coming up with new
rules to force banks to boost their capital reserves to avoid a repeat
of the 2008 credit crunch and the ensuing bailouts by taxpayers. Yet
Europe, where companies rely more on banks for funding than bond or
stock markets, has been reluctant to fully implement the standards its
regulators agreed to in Basel.
The
latest EU plan cites the “utmost importance” of implementing
outstanding pieces of regulation, but it also states the need to avoid a
“significant increase in overall capital requirements” for Europe’s
banking system and take account of “specificities of the EU economy.”..
more at Bloomberg
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