June 12, 2012 / 5:49 PM / in 6 years

Capital rules for local banks uncertain-Bundesbank

FRANKFURT, June 12 (Reuters) - International banking regulators are split over how much extra capital big local lenders must hold to shield taxpayers from bailing out failed banks, an official at Germany’s central bank said on Tuesday.

Banking watchdogs have already agreed that about 30 global systemically important banks, known as G-SIBs, must hold extra capital buffers from 2016 because they pose such a threat to the financial system should they fail.

These banks must have an extra 1 to 2.5 percentage points in their core capital solvency ratios on top of the globally agreed minimum of 7 percent that is being phased in from next January for all lenders across the world.

Regulators have also agreed to apply a similar approach to big national players that could threaten financial stability on a smaller scale.

But they have run into difficulties in hammering out rules for the next group down, the domestic systemically important banks, or D-SIBs, that would be consistent with the rules for their larger G-SIB peers, said Erich Loeper, who is responsible for banking supervision at the Bundesbank.

In Germany only the country’s top two lenders, Deutsche Bank and Commerzbank, are seen as globally systemically important, while about 10 players are seen as falling into the D-SIB category.

Loeper said the foreign units of globally important banks posed a problem for regulators where the banks were so significant locally that they would be required to hold more capital.

The cumulative capital surcharges set by local regulators could surpass the amount seen as necessary by international regulators for the parent bank, Loeper said.

Germany has sought unsuccessfully so far to set a cap on the overall burden faced by internationally active banks, Loeper said at a conference on banking supervision.

A majority of international regulators did not want to compromise, he said.

The framework for the treatment of nationally important banks is expected to be ready by November at the latest, following the publication of the criteria for identifying those banks.

The Basel Committee, which is drawing up the banking rules, is due to meet next week in Stockholm and the framework for Germany’s banks could be ready soon after, Loeper said.

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