Bloomberg News

Banks May Seek Basel Compliance Delay as Talks on EU Law Drag On

July 27, 2012

Banks (SX7P) in the European Union may seek to delay a “wholly unreasonable” January 2013 deadline to comply with parts of new Basel bank capital rules still being honed by the bloc’s lawmakers, an industry association said.

The European Parliament’s provisional timetable for voting on the plans wouldn’t leave banks enough time to prepare for the implementation of the rules, the European Banking Federation said in an e-mailed statement today.

“Firms will need to examine and fully understand the new rules, prepare staff, adapt systems and seek the necessary approvals from supervisors as to internal models that they may set up,” the EBF said. “These changes cannot possibly be achieved within a timeframe of one or two months.”

The EU is seeking to meet a January deadline set by the Basel Committee for Banking Supervision to implement the draft law, which would more than triple the core capital that lenders must have to 7 percent of their risk-weighted assets. The Group of 20 nations said banks should boost their reserves to prevent any repeat of the wave of taxpayer bailouts that followed the 2008 collapse of Lehman Brothers Holdings Inc.

The plans must be agreed on by lawmakers and national governments before they can take effect. Negotiations between legislators and Cyprus, which holds the rotating presidency of the EU, will resume in September. The parliament is targeting a deal in time to vote on the law in October.

The measures, known as Basel III, are scheduled to be phased in between 2013 and 2019. Lenders would have to comply as soon as 2013 with some changes to the information they report to regulators and investors, as well as to their internal models for calculating the capital they must hold.

To contact the reporter on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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