Basel III Rules Set for Patchy Global Start

Many countries will not be ready by January to enforce new banking rules that form the world's regulatory response to the financial crisis, a global supervisory body said on Monday.

Many countries will not be ready by January to enforce new banking rules that form the world's regulatory response to the financial crisis, a global supervisory body said on Monday.

World leaders from the G20 economies approved the Basel III rules in November 2010 after their taxpayers had to shore up undercapitalized lenders in the 2007/09 credit crunch.

"It is clear that not all jurisdictions will be ready in time," said Stefan Ingves, chairman of the Basel Committee on Banking Supervision, which wrote the new rules.

It is the first official recognition that a unified global start to a regime that forces banks to hold three times the previous minimum level of core capital is now off the cards.

The Basel rules are being phased in over six years from January and will require banks to have a core Tier 1 capital ratio equivalent to 7 percent of their riskier assets.

With 12 weeks to go, the committee - comprising central bankers and supervisors from the G20 countries and elsewhere - said that only seven of its 28 member countries have made the Basel III rules legally binding: Japan, Australia, China, India, Saudi Arabia, Singapore and Switzerland.

Turkey and Argentina have yet to draft proposals, while the United States and the European Union, which contain most of the world's banking assets, are still at the drafting stage.

The European Union is bogged down in internal disagreements and last week the committee slammed the bloc for trying to water down its rules.

Compounding the sense of unease, the Bank of England's financial stability director, Andrew Haldane, has said that Basel III is too complicated. Thomas Hoenig, a director at the Federal Deposit Insurance Corporation, an agency that oversees some U.S. banks, wants his country to reject the new rules unless they are simplified.

Another key G20 deadline will also slip.

A pledge by the world leaders to require derivatives contracts to be cleared and recorded centrally from Dec. 31 will be phased in over time because capital rules are not ready. U.S. and EU supervisors are also trying to iron out differences in their approaches.