UPDATE 2-German watchdog wants swift transition to Basel III

Mon Nov 19, 2012 11:33am EST

* BaFin's Koenig says Basel III needs swift, global adoption

* Comment follows U.S. criticism of Basel III rules

* Bankers worry rules could push up lending costs

FRANKFURT, Nov 19 (Reuters) - There should be a swift, worldwide introduction of new capital rules for banks, Germany's financial markets regulator said, after criticism flared up weeks before they come into force.

BaFin president Elke Koenig said she was surprised by last-minute attacks on Basel III rules which have been years in the making and designed to prevent a repeat of the 2007-09 financial crisis that prompted bank collapses.

"There is no way around introducing Basel III as swiftly as possible, and I mean globally," Koenig told Reuters on Monday on the sidelines of a conference.

Koenig said regulators needed to ensure a uniform standard for bank rules was applied internationally. Basel III will force banks to improve their way of assessing risks and setting aside capital as a buffer against downturns.

She was responding to a renewed call by Thomas Hoenig, a director at the U.S. Federal Deposit Insurance Corporation (FDIC), to abandon rules set to be gradual introduced from Jan. 1.

Hoenig told Germany's Handelsblatt newspaper in an interview on Monday the rules could make banks more susceptible to crises rather than safer, adding he hoped Europe would rethink its implementation plan.

Also at the conference, the head of cooperative lender DZ Bank, one of Germany's top five banks, said a "regulatory tsunami" was unnecessary, especially for smaller banks, adding further study was needed to learn more about the rules' effects.

The chief executive of Helaba, one of the big regional public sector lenders known as landesbanks, said the wave of new rules threatened to raise the cost of lending. "The banking sector is on the brink of regulatory collapse," Hans-Dieter Brenner told the conference.

Against that, a co-chief executive of Deutsche Bank - Germany's biggest lender - said banks around the world should maintain momentum for implementing Basel III. "It cannot be that we re-open the debate now," Juergen Fitschen said.

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