EU ministers to meet to end deadlock on bank capital rules
* EU finance ministers due to meet on May 2 in Brussels
* Britain at loggerheads with Germany over new rules
BRUSSELS, April 4 (Reuters) - EU countries are making a fresh attempt to break the deadlock over new bank capital rules and ministers are due to meet on May 2, officials and diplomats said, accelerating efforts to find agreement on measures crucial for lending and the economy.
The European Commission has proposed new standards for the amount of capital banks across the 27-state European Union must hold to cover risks.
But Britain is demanding the flexibility to impose higher levels of capital on banks if necessary, putting it at loggerheads with Germany, which favours a uniform standard across Europe.
Clarifying the rules on capital, almost five years after the start of the financial crisis that toppled lenders, would remove some uncertainty for banks, already nervous about lending as Europe slides into recession.
But in recent weeks, the complex debate has become bogged down, leaving the EU with little time remaining to finalise its rules.
World leaders have agreed to start phasing in global bank capital rules, known as Basel III, from next year and the EU wants to finalise its framework within months.
Now Denmark, which as the current holder of the EU presidency is responsible for brokering agreement on such issues, has taken the unusual step of calling an extra meeting of finance ministers in Brussels on May 2 to break the logjam.
"They have more or less exhausted how far they can get at the working group level," said one Danish diplomat, talking on condition of anonymity. "It is political decisions that are needed."
"An exceptional meeting of finance ministers has been agreed for May 2," said another EU diplomat.
One European official said the meeting could concentrate the minds of finance ministers, who met last weekend in Copenhagen.
Bank capital received little attention at that gathering as countries were preoccupied with separate disputes about introducing a tax on financial transactions and how best to regulate credit rating agencies.
"The UK would like to push its comparative advantage that its banks are better capitalised by securing the possibility to impose more stringent capital rules," said one official.
"Others want to maintain a level playing field in the EU. Germany is with France on this."
Critics say that allowing some countries go it alone with stricter standards would upset the EU's single market - French or German corporates, for example, could shift deposits to a British bank if its capital cushion was higher.
But Britain, whose banks are generally better capitalised than their rivals in France and Germany, is insisting on flexibility.
"It's vital that legislation properly implements international standards in the EU, strengthens the European banking system and safeguards the stability of the European economy," said one British government source.