December 20, 2017 / 8:48 AM / in 2 months

French banks can cover Basel capital needs with earnings - Villeroy

PARIS, Dec 20 (Reuters) - French banks should be able to cover increased capital needs under new international banks rules with retained earnings, the head of the Bank of France said on Wednesday.

Global financial regulators reached a long-sought deal earlier this month to harmonize global banking rules, capping a decade of effort to make banks more resilient even if they fell short of their own initial hopes.

French banks in particular had resisted and Paris finally relented on the new rules, known as Basel III, only when a phase-in period was proposed, putting the rules into full force only by the start of 2027.

“The definitive Basel III agreement will lead to a capital increase over 10 years of a little more than 15 percent, a figure pretty close to the European average,” Bank of France governor Francois Villeroy de Galhau told journalists.

“This capital increase is compatible with French banks general earnings capacity and their conversion into reserves. To say it differently, no French bank will have to carry out a capital increase specifically dedicated to Basel III,” Villeroy added. (Reporting by Leigh Thomas, Yann Le Guernigou and Myriam Rivet, Editing by Dominique Vidalon)

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