On Tuesday 11 October, the European finance ministers reiterated their position, which is that the finalisation of the so-called Basel III reform must not lead to any substantial increase in the capital requirements of banks for the European industry.
It is critical that the European countries sing from the same hymn sheet, said the president-in-exercise of the Ecofin Council, the Slovak minister Peter Kazimir. The French minister, Michel Sapin, said that a "clear, precise position, coordinated with Germany" prevails: we need to complete the Basel III reform without it bringing about a significant increase in optimum quality capital. "We don't want the rules to create disparities for the European banks, on the pretext that they are the same for all banks in the world", he stressed, adding that this position was unanimously shared within the EU and also supported by Japan.
The French minister stressed by way of example that a 5% increase in capital requirements would be the maximum threshold acceptable in his view as a consequence of the finalisation of the reform. However, setting a threshold of this kind, which is not stipulated in the conclusions of the July Ecofin Council, makes no sense to Dutch minister Jeroen Dijsselbloem. He said that it was important to focus the regulators' activities more on standardising the internal models of risk management. The outcome of the current reform should be that we have "good quality standards for internal models" for the management of bank risks, he said, not shying away from the fact that banks with gaps in this area will be required to increase their capital levels.
The Spanish minister, Luis de Guindos, argued in favour of maximum transparency on the part of the Europeans to avoid any suspicions as to the health of the European banking sector. Denmark feels that the introduction of a revised capital floor should be avoided.
The European Commissioner for Financial Services, Valdis Dombrovskis, reiterated the importance of the Basel III reform taking account of European specifics, in particular that the capital requirements should take account of the nature of the risks run by banks (see EUROPE 11635). (Original version in French by Mathieu Bion)