Basel III rules to be released next year

HONG KONG - Agence France-Presse

Chief of the Financial Stability Board Mark Carney speaks to the Canadian Club Of Toronto. Carney says the Basel II rules will be rolled out next year until 2019. REUTERS photo

The timeline for implementation of tougher banking rules designed to prevent another global financial crisis will not change due to turmoil in the eurozone, a senior regulator said yesterday.

The so-called Basel III rules mandating banks increase their capital-to-assets ratios will be rolled out as planned from next year to 2019, Financial Stability Board (FSB) chief Mark Carney said in Hong Kong.
“I wouldn’t characterize that timeline as being aggressive. It’s a consensus-driven timeline. It’s not going to change,” the Bank of Canada governor told reporters after a board meeting.

Many US banks still have not implemented Basel II

Many U.S. banks are still to implement the Basel II regulations, which were published in 2004 and have been adopted by their European counterparts.

There is also criticism that the capital adequacy rules agreed by G20 countries are too tough at a time when the world is facing a new credit crunch stemming from crisis-hit Europe.

But Carney said the board responsible for advising the G20 on how to prevent systemic banking failures saw no reason to change the Basel III requirements.

 “What’s absolutely essential ... is that banks are adequately capitalised,” he said. “Making that a reality will contribute to financial stability and therefore contribute to growth in any part of the world, including Europe.” Adopted in September 2010, Basel III requires banks to raise their high-quality core capital to 7.0 percent of total assets from the current 2.0 percent.

Big U.S. banks criticize the new rules as overly tough, with JPMorgan Chase chief executive Jamie Dimon suggesting the U.S. should reject the Basel accords.

JPMorgan Chase was one of 29 global banks, nine of them from the United States, designated by the FSB as systemically important financial institutions (SIFI) and so required to hold a higher level of capital under Basel III.