Basel III to be less harsh than feared - BlackRock

FRANKFURT Thu Sep 9, 2010 9:46pm IST

A woman uses an ATM machine in Chelsea, central London, August 4, 2010. REUTERS/Andrew Winning/Files

A woman uses an ATM machine in Chelsea, central London, August 4, 2010.

Credit: Reuters/Andrew Winning/Files

Related Topics

FRANKFURT (Reuters) - A new set of banking rules expected to be finalised over the weekend will not be as tough as feared by some market participants, a BlackRock fund manager said, but cautioned about the sector's long-term momentum.

Regulators and central bank officials are expected to wrap up discussions about new capital rules for the financial sector as soon as this weekend, German Bundesbank President Axel Weber said on Wednesday.

Investors are bracing for details of the new standards, dubbed "Basel III", as they will determine rules on liquidity and the amount of capital banks need to hold to defend themselves against future crises.

"We think that the Basel III rules will be less harsh for the banking sector than feared 6-12 months ago," Andreas Zoellinger, co-manager of the BlackRock Euro-Markets Fund, told Reuters in an interview on Thursday.

In anticipation of rules less tough than first thought, Zoellinger said the fund shifted its underweighting of the banking sector in early July to -1.5 percent from -4 percent versus its benchmark, the MSCI EMU Index.

Financial stocks account for about a quarter of the fund that invests mainly in euro zone countries and has a volume of about 1.44 billion euros ($1.83 billion).

Top holdings include Spain's Banco Santander, France's Societe Generale and BNP Paribas, Germany's Deutsche Bank, and Italy's UniCredit.

However, Zoellinger said that the fund's long-term view on the banking sector was negative. "The industry is developing towards less risk and more stable business. But this also means we are seeing less earnings momentum (in the long term)."

He was more confident about mid-term economic trends in the euro zone, saying the region would see positive growth over the next two to three years. European Central Bank Executive Board member Juergen Stark cautioned on Tuesday that the euro zone economy was subject to risks next year.

(Editing by David Cowell)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Pricing Controls

REUTERS SHOWCASE

India-China Relations

India-China Relations

India says to defend China border after standoff ahead of Xi visit.  Full Article 

Importing Iron Ore

Importing Iron Ore

As mining curbs bite, India offers market to glut-hit iron ore.  Full Article 

Lower Output

Lower Output

IOC cuts refinery output as rains hit fuel demand - source.  Full Article 

Drug Approval

Drug Approval

Epirus, Ranbaxy win India approval for arthritis drug copy.  Full Article 

Farming and Technology

Farming and Technology

Climate smart farmers get tech savvy to save India's bread basket.  Full Article 

Rajan Speaks

Rajan Speaks

RBI chief Rajan says limiting reliance on foreign debt.  Full Article 

India-Vietnam Ties

India-Vietnam Ties

India tightens Vietnam defence, oil ties ahead of China Xi's visit.  Full Article 

Debt & Equity Deal

Debt & Equity Deal

KKR to lend $175 million to GMR Infrastructure - source.  Full Article 

Preparing for IPO

Preparing for IPO

Alibaba boosts IPO as demand strengthens.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage