* EU finance ministers due to meet on May 2 in Brussels
* Britain at loggerheads with Germany over new rules
By John O'Donnell and Ilona Wissenbach
BRUSSELS, April 4 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
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
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
"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
"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.