Regulators, lenders clash over Basel III
The 212 lenders surveyed would have needed to find a combined €1.76 trillion in easy-to-sell assets to meet a minimum liquidity rule set by the Basel Committee on Banking Supervision, the group said in a statement on its website. The measures are scheduled to be phased in by 2019.
Global regulators have clashed with lenders over the severity of the capital and liquidity rules, which were set out in 2010 as part of an overhaul of banking regulation in the wake of the financial crisis that followed the collapse of Lehman Brothers Holdings Inc. The measures, known as Basel III, will more than triple the core capital lenders must hold to at least 7% of assets, weighted for risk.
“The new Basel rules mean banks will have to make tough decisions about which businesses they are in, as the capital build needed is massive,” Huw van Steenis, a banking analyst at Morgan Stanley, said.
The Basel Committee’s survey covered 103 larger banks with international businesses and reserves in excess of €3bn, and 109 smaller lenders.
The €485.6bn capital shortfall for larger lenders takes into account the reserves that lenders would need to raise to meet the 7% rule, as well as capital surcharges that the committee said last year would be imposed on lenders whose failure would roil the global economy.
The smaller banks’ capital shortfall was €32.4bn, the Basel group said.
“Not only will dividends be limited for many banks as they build capital, but more and more business will shift from banks to the markets,” van Steenis said.
