BRUSSELS (MNI) – The European Banking Federation warned Monday that
the new Basel III capital requirements were “onerous” and would have
economic fallout.
European banks will meet the new requirements,” said EBF Secretary
General Guido Ravoet in a press release.
“But it will have consequences on the volume and cost of lending
and therefore a cost on our economy too,” he said. “I would like to
stress that in Europe, 75% of the lending to the private sector is
carried out by banks, against only 25% in the US.
According the accord announced Sunday, the minimum ratio for core
tier 1 will be raised to 4.5% from the current 2%. Banks will also be
required to hold a capital conservation buffer of 2.5% to withstand
future periods of stress, bringing the total common equity requirement
to 7%.
Implementation of the new tier 1 rules will be phased in starting
in 2013 and must be completed by 2015. The capital conservation buffer
will be phased in from 2016 to 2019.
The EBF reiterated its concern about “the lack of a thorough
cumulative impact assessment before the adoption of all the regulatory
measures proposed as part of the global financial reform.”
In a global competitive market, it is imperative that these
requirements are implemented similarly across jurisdictions if a level
playing field is to be ensured, Ravoet stressed.
The EBF also rejected the need for extra demands, whether for
Systemically Important Financial Institutions (SIFIs) or for the
counter-cyclical buffer.
What SIFIs need is better supervision and crisis resolution
mechanisms, including more cooperation between supervisors,” Ravoet
said. “Further requirements would have damaging consequences on the
economy. We also maintain strong reservations about the adequacy of the
proposed counter-cyclical buffer.
The EBF argued that “the non-risk-based instrument of a leverage
ratio should remain a supplementary measure for discussion between a
bank and its supervisor, as part of the supervisory review process.”
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