EU could breach global banking rules, regulators warn

  • Regulators warn of weakening ‘minimum safety net’
  • EU states and lawmakers expected to approve looser rules
  • Britain and the United States have yet to submit proposals
  • Banks say tougher capital rules could hamper lending

FRANKFURT/LONDON, Nov 4 (Reuters) – The European Union could breach international banking standards designed to prevent a repeat of the global financial crisis if proposed changes to water down capital rules are passed, top banking regulators said on Friday. of the EU.

EU states and the European Parliament are considering the European Commission’s proposals on the final stage of the Basel III accord, which aims to tighten global banking standards after the 2007-2008 crisis, but which has not not yet implemented.

EU proposals include delaying implementation of the deal, which sets capital adequacy, stress testing and liquidity standards, from next year to 2025, as well as other changes aimed at save capital for European banks.

Negotiations focus on whether certain exemptions should be temporary or permanent.

In their strongest warning to date, the European Central Bank and the European Banking Authority have opposed a waiver from Basel III, stressing that these standards constitute a “minimum safety net” designed to make the system safer.

“It is the reputation, competitiveness and ultimately the funding costs of the EU banking sector that are at stake,” the ECB and EBA said in a statement. common blog Publish.

“If all the deviations under discussion end up in the final legislative package, we cannot exclude that the Basel Committee classifies the EU as ‘non-compliant’.”

Several EU states are members of the Basel Committee, chaired by Pablo Hernández de Cos, Governor of the Bank of Spain.

The EU has offered to delay implementation of the final stage of the deal to give banks time to recover from the economic upheaval caused by COVID-19.

Britain has also delayed implementation until 2025 and, along with the United States, has yet to specify in detail how the rules will be implemented.

Banks say they already hold sufficient capital, as shown by their ability to cope with the pandemic, and that accumulating more requirements would reduce lending.

The EBA itself said in September that banks held more than enough capital even to meet the full version of Basel III.

EU policymakers say rules designed for international banks need to be tailored to Europe’s diverse banking sector.

“Europe sat down at the negotiating table in Basel, and the final agreement therefore incorporates many suggestions and adjustments proposed by European players,” the blog reads.

“Claims that the deal is not suitable for the EU financial sector are therefore misleading.”

Regulators have warned against weakening rules for scrutinizing senior bank executives.

“Particularly in relation to the proper and proper assessment of the management of banks, we need an ambitious improvement in the rules to meet the challenges we see.”

Reporting by Francesco Canepa; Editing by David Goodman, Alex Richardson and Philippa Fletcher

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