In a debate with the European Parliament’s economic and monetary affairs committee on Wednesday 12 October, the secretary general of the Basel Committee on bank supervision, US national William Coen, rejected the three approaches followed by the major international regulators for finalising the Basel III reforms to boost capital requirements.
"We are well on track to finalise these reforms by the end of the year", said Coen, hoping banks and investors would finally have the clarity and certainty needed to be able to carry out their work smoothly. He said the new rules would apply in a few years’ time.
The Basel Committee secretary general identified three broad categories of post-crisis reforms: enhancing the risk sensitivity and robustness of standardised approaches, which facilitate the comparability of banks' capital ratios; introducing additional constraints to the role of internally modelled approaches in the capital framework, particularly in areas for which the use of models may not be suitable for calculating regulatory capital; and finalising the design and calibration of the leverage ratio and a potential capital floor based on standardised approaches.
During the debate, several MEPs argued the approach taken by most member states that was made clear on Tuesday at the ECOFIN Council in Luxembourg (see EUROPE 11643). Completing the current reform must not lead to a substantial increase in own capital requirements. And depending on the rules decided upon, European banks must not be disadvantaged in relation to their international competitors from the United States. European industry is actively opposing the reform plans on the table.
The member states favour a standardised calculation method imposed on all banks in the world for working out their capital requirements. Europe said that this method would have a bigger impact on its banks than on those in the United States, because it would require a much bigger increase in their capital. (Original version in French by Mathieu Bion)