Brussels, 01/08/2003 (Agence Europe) - The Association of employers from SMEs, the UEAPME, is satisfied overall with the agreement reached at Basle on the level of own fund demanded by the banks for covering risks for loan operations.
Lunched in 2001 after the shock of the collapse of the Barning Bank, the Bale II on "adequate levels of own funds" is expected to be soon concluded. It will enter into force in 2007 and transposed into European law by a directive. The agreement outlines the calculating methods for the minimum part of own funds that the banks are expected to have for covering risks. It also enhances safeguard monitoring and calls on banks to publish information on their capitalisation.
Economic director at the UEAPM, Gerhard Huemer declared in a press statement, that "we are satisfied by the progress made in the third proposal of the Basle committee". In the final phase of negotiations, SME representatives, the European Parliament and the Commission feared that financial demands imposed in the Basle agreement would increase procedures for loans to SMEs and make obtaining loans more difficult. The UEAPME considers that "the taking into account of the specificities of credit to SMEs in the new proposal is a major step forward. It also welcomes the fact that the Basle committee has agreed to treat loans of less than EUR 1 million as personal credit, "which reduces the risk and the administrative procedures". The SMEs regret that the USA announced that the Basle II agreement would only be applied to ten international banks. With the desire for equality, it hoped that transposing the agreement into Community law would limit the administrative obligations for the small banks. The UEAPM is requesting adjustments to the draft agreement on the part for guarantors and "collaterals". It is requesting "wide ranging recognition of all SME typical collaterals, which would inmprove credit ratings for small businesses". It is also calling for a satisfactory answer regarding the pro-cyclical effects of Basle II.