June 26, 2010 / 8:49 PM / 8 years ago

UPDATE 1-G20 sees varied timeline for new bank rules - draft

* Rules phased in reflecting different starting points

* Will result in significantly higher capital

* Not all countries will impose a bank tax

TORONTO, June 26 (Reuters) - Some G20 countries will phase in new bank rules faster than others, according to a draft communique obtained by Reuters, which also agreed there are alternatives to the bank tax to protecting taxpayers from bank failures.

The Group of 20 emerging and advanced powers is due to endorse in November new standards for bank capital, liquidity and leverage known as Basel III and aimed at preventing another global financial crisis.

The G20 originally pledged to implement the new rules by the end of 2012, but the communique suggested a differentiated timeline.

“Phase-in arrangements will reflect different national starting points and circumstances, with initial variance around the new standards narrowing over time as countries converge to the new global standard,” a draft version of the communique said.

Banks have lobbied hard to water down the rules. They argue overly stringent capital levels will crimp their ability to lend and hamper the global economic recovery.

The G20 draft upholds the goal of starting to introduce what it called “significantly higher” capital levels by the end of 2012. However, it said countries will phase in the new requirements “over a timeframe that is consistent with sustained recovery and limits market disruption.”

In order to set the transition horizon, an economic impact assessment will be conducted by the Financial Stability Board, comprised of G20 regulators and central banks, as well as the Basel Committee on Banking Supervision.

The G20 draft includes broad guidance on the amount of Tier 1, or core capital, banks will eventually require.

The debate over a global bank tax is now officially dead, with the draft stating bluntly: “Some countries are pursuing a financial levy. Other countries are pursuing different approaches.”

“We agreed the financial sector should make a fair and substantial contribution towards paying for any burdens associated with government interventions, where they occur, to repair the financial system or fund resolution and recognized that there are a range of policy approaches to this end,” the draft said. (Reporting by G20 team; Writing by Louise Egan, Editing by Chizu Nomiyama)

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