Basel watchdog urges banks to get on with implementing rules

LOBBYING by banks to water down agreed capital guidelines merely diverts them and their regulators from coping with the day-to-day and rising dangers they face, a world banking watchdog stated on Friday (Feb 23).

The Basel Committee of banking regulators from internationally is dealing with pushback from banks within the United States particularly on the ultimate leg of its ‘Basel III’ post-financial disaster financial institution capital reforms to stop taxpayer bailouts of struggling lenders.

“Regulators are often accused of fighting the last war,” Basel Committee chair Pablo Hernandez de Cos, informed a convention in Belgium.

“Yet in the case of implementing Basel III, it is the dragging on of the process – with attempts to reopen past reforms and battles – that will divert important resources from banks and supervisors to deal with current and emerging risks instead,” stated de Cos, who can also be Bank of Spain governor.

“In total, it will be 20 years since the Great Financial Crisis by the time the last element of the outstanding Basel III standards is expected to be implemented in 2028.”

US banks argue that the “end game” Basel guidelines will probably be so burdensome that they’ll dent lending to the economic system. Lenders within the European Union have additionally obtained momentary waivers from a few of the guidelines as UK lenders additionally ask for some reduction.

But De Cos stated discussions round Basel III are sometimes “dominated by somewhat flimsy assertions”.

Basel is already turning to tackling new dangers, such because the social-media fuelled runs witnessed through the banking turmoil that started within the US in March final yr.

“This is why the Committee will publish a report in the coming months on the bank and supervisory implications of the digitalisation of banking,” he stated.

Significant development in non-bank monetary intermediation (NBFI), now practically half of complete international monetary property, is being scrutinised for hyperlinks to banking.

“Against this backdrop, the Committee will be consulting on updated supervisory guidance with regard to NBFI risk management over the course of this year,” de Cos stated. REUTERS