EU banks want to match US in delaying tough capital rules

Tim Wallace
Follow Tim
NEW CAPITAL rules are being introduced too quickly, putting European banks at a disadvantage compared with their US rivals, industry body the European Banking Federation (EBF) claimed over the weekend.

The Basel III rules will hike the amount of capital banks must hold, with the aim of making them more resilient and less likely to collapse.

That comes with considerable extra costs, which critics say is reducing the amount of lending to households and businesses, hurting the economy.

Europe’s banks are supposed to start introducing the new requirements in the New Year, whereas US banks will follow a slower timetable. That means EU banks will face higher costs sooner than those in the US. They are now calling on the European Commission to level the playing field by shifting to a timetable closer to the one adopted in the US.

“We are now very troubled over the possible repercussions that the most recent statement from the US authorities may have for the international competitiveness of Europe’s banks,” the EBF said in a letter to European commissioner Michel Barnier, urging him to delay the implementation of the new requirements until January 2014.

But Barnier’s spokesperson rejected the claims.

“The important thing is to conclude [negotiations] so that the EU can start applying Basel III rules in 2013.”