LONDON, July 5 Global regulators proposed on
Friday that banks set aside more capital to cover investments in
"shadow banks" such as private equity or hedge funds to improve
cover for underlying risks.
Policymakers worry that as mainstream banks become more
tightly regulated, risks will shift to other financial
businesses that handle credit but have been less regulated than
The Basel Committee of banking supervisors from the world's
top financial centres said on Friday that more clarity and
consistency is needed on its existing rule for how banks set
aside capital to cover exposure to equity funds.
Basel will make it a requirement for banks to adopt a
"look-through" approach, meaning that banks will have to
calculate risks from their exposure to a fund as if they owned
the fund. A public consultation on the proposed change will
close on Oct. 4.
"The committee believes the revised standard will more
appropriately reflect the risk of a fund's underlying
investments and its leverage," the committee said in a
"The revised standard will also help address risks
associated with banks' interactions with shadow banking