WSBG: Basel III framework has to avoid harm to non-quoted retail banks
10 September 2010
The trade associations that promote the interests of retail and savings banks at global and European level are highly concerned about the effects of Basel III on alternative banking structures.
The proposals that will be published on 12 September 2010 by the Basel Committee on Banking Supervision, the so-called Basel III framework, will significantly change quantity and quality of banks’ capital. In a last and urgent appeal, WSBI and ESBG call for regulators to ensure that these changes will not be to the disadvantage of retail banks not organised as joint stock companies. WSBI and ESBG, the trade associations that promote the interests of retail and savings banks at global and European level, are highly concerned about the effects of Basel III on alternative banking structures.
WSBI and ESBG fully support the objective of the rules to strengthen the resilience of the banking sector by applying stricter capital requirements where banks did not prove resilient during the crisis and whose operations pose systemic risk.
However, “the new rules, as they are currently expected, will punish some of the most resilient banking structures such as savings and regionally oriented banks by a disproportionate increase in capital requirements”, says Carl Eric Stålberg, ESBG President. “There is indeed a real danger that these stable and reliable banks will be obliged to significantly reduce lending to the real economy, or risk being put out of business”.
“The currently expected reform proposals favour one type of bank structure – banks organised as joint stock companies – over all other ownership structures”, continues José Antonio Olavarrieta, WSBI president. From both an economic and a prudential point of view, it is simply not acceptable that a regulatory one-size-fits-all approach damages or compromises traditional banking structures. Ultimately, the aim of the new framework is to strengthen the resilience of the global banking system as a whole, therefore the utmost effort should be made to ensure that any unintended consequences are avoided. In this sense, it is important to consider that these entities, with their closeness to customers, are the ones that provide stability to the financial system, in a business model based on proximity and relationship banking.”
