Basel proposals include enforceable capital rules

Global regulators behind new Basel rules have proposed that banks should limit their exposure to other banks by a maximum of five per cent. There are presently no enforceable rules, although a discretionary guideline limit of 10 per cent has been in place. As with a new minimum core capital ratio of seven per cent this rule would come into play from the start of 2019.

"This is to ensure that the large exposures standard is effective and consistent for internationally active banks," a committee statement said.

"On this basis, breaches of the limit should be exceptional events, should be communicated immediately to the supervisor and should, normally, be rapidly rectified."