EU banks request delay of Basel III rules, citing competitive disadvantage

Michel Barnier

Banks across Europe have requested a postponement of Basel III capital rules by a year to January 2014 from the European Commission after American regulators announced a delay of the new rules.

The rules were crafted by the Basel Committee on Banking Supervision in response to the 2008 financial crisis and require banks to hold three times the amount of basic capital currently held in order to prevent future taxpayer-funded bailouts.

In a letter to Michel Barnier, the internal market commissioner for the EU, the European Banking Federation expressed concern that EU banks could be at a competitive disadvantage if they implemented the new rules before American banks.

“We are now very troubled over the possible repercussions that the most recent statement from the US Authorities may have for the international competitiveness of Europe’s banks,” the group said in the letter, according to West Australian Business. “Our U.S. competitors will not have matching obligations imposed on them in parallel or in a foreseeable future.”

A spokesman for Barnier said that the EU plans to seek coordination with the U.S.

“We will wrap up negotiations in the coming weeks between countries and parliament [on Basel III] and Michel Barnier will seek clarity from the U.S. and work for a coordinated U.S.-EU approach. Basel norms are important for sound and competitive banks in Europe,” the spokesman said, West Australian Business reports. “The important thing now is to conclude trilogue [talks between commission, EU countries and European parliament] so that the EU can start applying Basel rules in 2013. In any case, the various norms come into force gradually up until 2019.”

Giuseppe Mussari, the head of ABI, Italy’s banking association, said that Basel III rules “must be postponed, full stop.”

“Clearly there is no worldwide agreement, so we wouldn’t be starting on a level playing field,” Mussari said, according to West Australian Business.

Elke Koenig, the president of BaFin, Germany’s head financial markets regulator, however, warned against delayed implementation of the rules, saying that “there is no way around introducing Basel III as swiftly as possible,” Yahoo reports.

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