Europe to Miss Basel III Deadline After EU Talks Postponed
Europe will definitely fail to
meet the globally-agreed January deadline for the implementation
of tougher capital requirements for banks after European Union
talks to agree the rules were postponed on Tuesday.
World leaders approved the Basel III regime in late 2010, giving the world's top 20 economies (G20) two years to get ready. The accord will force banks to triple the amount of capital they hold over six years.
Member states and the European Parliament made progress last week on a draft law to implement Basel III, the world's main regulatory response to undercapitalized banks that had to be rescued during the 2007-09 financial crisis.
A senior lawmaker said last week that the bloc, which accounts for about half of the world's banking assets, was on the "cusp" of a deal and Tuesday's meeting was intended to iron out final points of disagreement.
However, on Tuesday morning Sharon Bowles told the European parliament's economic affairs committee, which she chairs, that there should be wider consultation with lawmakers on last week's proposals.
"I can confirm there will be no negotiations today," a parliament spokeswoman said.
A spokesman for the EU's Cypriot presidency said that it had not been possible to schedule negotiations for Tuesday and further talks to broker a deal will be held under the Irish presidency, which begins on January 1.
The EU joins another major banking center, the United States, in delaying the introduction of the Basel rules.
Last week's talks proposed a compromise whereby bankers' bonuses would be capped at no more than twice the level of their salaries.
In return for the cap on bonuses, it was agreed that EU governments would have a say when it comes to introducing other key elements of Basel: new liquidity buffers for banks and a cap on their balance sheets from 2015.
Lawmakers are expected to formally delay implementing Basel until January 2014. Only 11 of the G20 countries are ready to start phasing in the accord from next month.
On Monday a group of U.S. banks called on regulators to scale back the Basel liquidity rule being introduced in two years' time, saying that they have already built up adequate buffers of cash and similarly liquid assets.
Despite the delays, banking supervisors are already forcing the biggest banks to bulk up on capital.