Bloomberg News

Schaeuble Urges Timely Basel Accord as German Banks Doubt Plan

August 22, 2012

German Finance Minister Wolfgang Schaeuble urged the European Union to press ahead with its plan to implement Basel III bank capital rules by Jan. 1, shrugging off calls by lenders to delay an “unrealistic” target.

EU states “cannot afford” to delay implementing a cornerstone project that will bolster bank reserves to better offset losses and protect taxpayers from picking up the debt of failed lenders, Schaeuble said in an e-mailed statement after the Cabinet in Berlin today approved a bill to anchor the new rules in German law.

“Basel III talks are being dragged out in Brussels,” Schaeuble said. Cabinet signed off on the bill to send a “signal” to institutions including the EU parliament and the European Commission “to share the urgency.” German lenders criticized the appeal, while a senior government official said the proposed creation of an EU-wide supervisor is adding urgency to the Basel III schedule.

The Basel III accord remains “unsealed in Brussels, a moving target” that will take considerably longer to forge than Germany hopes, Stephan Rabe, the Berlin-based spokesman of the VOeB group that represents 62 state and development banks, said in an interview. VOeB seeks a one-year extension of Basel’s implementation, as do Germany’s private banks, the DSGV savings banks and the BVR cooperative banks.

Proposed in June at the last EU summit, a plan to create an EU-wide supervisor presupposes that the new capital rules are law, a German government official told reporters today in Berlin.

The commission is preparing to present details of the step as part of proposals for a banking union that will also create an EU-wide deposit protection fund.

Adoption of the measures of the Basel Committee for Banking Supervision 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.

To contact the reporters on this story: Brian Parkin in Berlin at bparkin@bloomberg.net; Rainer Buergin in Berlin at rbuergin1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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