Banking supervisors say Basel accord won't be derailed

LONDON Fri Dec 14, 2012 12:45pm EST

LONDON Dec 14 (Reuters) - The failure of Europe and the United States to meet next month's deadline on tougher bank capital rules won't derail the global accord, regulators said after they themselves were unable to agree changes to one of the new rules.

The Basel Committee on Banking Supervision concluded a two-day meeting on Friday saying 11 countries were ready to start phasing in its Basel III bank capital and liquidity rules.

The committee is made up of nearly 30 countries but major financial centres like the European Union and United States are delaying the start of the world's main regulatory response to the 2007-09 financial crisis.

The accord requires banks to triple their basic capital buffers in set stages over six years, with new mandatory liquidity reserves and a cap on balance sheets added from 2015.

"It is expected that as remaining jurisdictions finalise their domestic regulations during 2013, they will incorporate all the remaining transitional deadlines in line with the original global agreement, committee chairman Stefan Ingves said in a statement.

He said this would be the case even when they have not been able to meet the Jan. 1 2013 start date.

"Hence, by the end of 2013, almost all Basel Committee jurisdictions will be implementing Basel III in accordance with the agreed timetable," added Ingves, who is also governor of Sweden's central bank.

"This is an absolutely critical step towards strengthening the resilience of the global banking system."

Talks to introduce Basel III into European Union law reached a tentative conclusion on Friday in a deal to delay the start of formal implementation until January 2014.

The United States is also delaying introduction and Brazilian financial newspaper Valor said there were talks at the country's central bank to delay Basel III there as well.

Ingves said even in countries where there were delays, supervisors were making sure big banks are building up their capital cushions.

In countries like Britain, the United States, Sweden and Switzerland banks, are already being forced to meet or exceed what they must hold in capital when Basel is fully implemented.

The committee also discussed how to ease or delay full implementation of the "liquidity coverage" ratio or LCR, which will require banks to have a buffer of cash or highly-rated bonds from 2015 to withstand short-term market turmoil unaided.

The committee was due to agree on changes this month so banks have enough time to prepare.

A European regulatory source said no overall agreement could be reached due to differences of opinion and the committee would have to discuss the liquidity rule again.

"There will be agreement at the level of the committee regarding the LCR, subject to some further work in 2013. It is a good deal," a second European regulatory source said.

The Basel Committee was unable to comment immediately.

Regulators will review how Basel III is being applied, but critics say they have no powers to force a country to implement the rules on time or in the form written by the committee.

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