Basel bank plans eased in face of sector lobbying

LONDON (BestGrowthStock) – The Basel Committee will scale back some of its proposals to beef up bank capital and liquidity rules, its oversight body said on Monday, signaling further concessions in the face of hard lobbying by banks.

The Basel Committee of global banking supervisors published a draft Basel III reform last December that would force banks to hold more and better quality capital to withstand future shocks without taxpayer help again.

The committee’s oversight body, headed by European Central Bank President, Jean-Claude Trichet, met in Basel, Switzerland on Monday where it announced changes to the draft reform.

“The agreements reached today are a landmark achievement to strengthen banking sector resilience in a manner that reflects the key lessons of the crisis,” Trichet said in a statement by the Group of Governors and Heads of Supervision.

The changes water down a requirement to exclude from Tier 1 the capital held by affiliated banks in which it has a minority stake.

“The Committee will allow some prudent recognition of the minority interest supporting the risks of a subsidiary that is a bank,” the oversight body said.

Changes were also agreed to Basel’s proposals on counterparty credit risk, leverage caps and a looser net stable funding ratio which ensures a bank has enough long term liquidity to stay solvent in a crisis.

The Basel Committee’s reform was in response to the Group of 20 leading countries which pledged last year to implement such measures by the end of 2012.

Banks have argued fiercely that introducing Basel III on time would crimp their ability to lend and aid recovery.

The G20 agreed in June to phase in the reform over several years and the Basel Committee also agreed a one-year delay for tougher new trading book capital requirements.

“We will put in place transition arrangements that ensure the banking sector is able to support the economic recovery,” Trichet said.

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Basel bank plans eased in face of sector lobbying