Banks call on Basel to reconsider rules

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S have called for a rethink from the Basel Committee over its stringent liquidity requirements.

The committee yesterday denied that it is preparing to loosen the rules, which will come as bad news to lenders, who say the current rules force them to buy too many government bonds and are too expensive.

The British Bankers Association’s (BBA) Irving Henry, head of prudential capital and risk, said: “Right now, the emphasis is on sovereign bonds. We would welcome a recalibration of the asset pool so that less emphasis is placed on sovereign bonds.”

“With the emphasis on government securities, banks are mandated holders and becoming almost indistinguishable from the state,” Henry added. “[Basel] needs to think about that concentration risk.”

Meanwhile banking lobby group the Institute of International Finance predicted that the myriad rules being brought in around the world could dent global economic output by as much as 3.2 per cent by 2015.

This would lead to 7.5m fewer jobs being created, the IIF said.