STRASBOURG, France, Sept 26 European Union
lawmakers want to change how globally agreed bank capital rules
will be applied in the 27-nation bloc, a move that risks a
backlash in the United States.
A draft EU measure now being discussed by member states and
the European Parliament puts into law the Basel III accord, the
world's core regulatory response to the financial crisis to
make banks safer.
All the EU's 8,000 lenders will have to comply when the
requirements are phased in from 2013 over six years.
"The banks are not exactly looking solid at the moment,"
German centre left lawmaker Udo Bullmann told the assembly's
economic affairs committee on Monday evening.
The raging euro zone debt crisis has slammed into bank
holdings of government bonds, with recapitalisations of lenders
now widely seen by investors as necessary.
Othmar Karas, the Austrian centre-right lawmaker sponsoring
the bill in parliament, wanted to use "room for maneouvre" in
implementing Basel III.
"We should be able to say 'No' to the letter from some
member states who want to go back to the original decision
taken by the Basel Committee," Karas said.
Britain and a group of other EU states have warned Brussels
not to water down Basel in Europe. [ID:nLDE75K1RQ]
Vicky Ford, a Conservative UK member of the assembly, said
against the backdrop of the euro zone crisis the EU measure
will be watched very closely, especially for any sign it will
be weaker than international standards.
"It would not be in the interests of any EU banks that the
capital requirements directive would be sub-equivalent to
Basel," Ford said.
The EU measure as drafted is seen by critics as opening the
door to lower quality assets for inclusion in what are meant to
be a bank's core buffers of top quality capital.
Karas is also against the automatic adoption of caps on how
much banks can leverage their debt.
Ford said a U.S bank has said the draft measure differed in
52 ways from Basel III and weaker in 34 of those instances.
U.S. policymakers have already been questioning whether
Europe will apply the global accord properly, while some EU
lawmakers doubt the United States will apply Basel III at all
after failing to introduce its predecessor accord on time.
Britain has been lobbying Brussels so that it can require
domestic banks to hold more than the 7 percent minimum core
capital under the Basel rules.
The draft EU law would make the Basel standards a maximum
level to ensure a consistent rule across the bloc, although
with some flexibility for top ups.
Markets are already putting pressure on banks to comply
sooner rather than later with the new rules to show they can
withstand losses from falls in government debt prices in Greece
and other euro zone countries that have convulsed markets.
Karas hopes for final approval of the EU measure next
summer, giving regulators only a few months to flesh out 150
new rules to implement the law in time for its 2013 start
(Writing by Huw Jones; editing by Andre Grenon)