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

REUTERS SHOWCASE

Coal Block Allocation

Coal Block Allocation

Government urges Supreme Court to not cancel some 'illegal' coal mines  Full Article 

Modi in Japan

Modi in Japan

Japan and India agree to boost strategic ties at summit  Full Article 

Basel III Norms

Basel III Norms

RBI amends Basel III guidelines for banks  Full Article 

HSBC PMI

HSBC PMI

Factory activity expands at slower clip in August.  Full Article 

Current Account

Current Account

Balance of payments surplus for third straight quarter  Full Article 

India Infrastructure

India Infrastructure

RBI rule handicaps India's infrastructure hopes  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past  Full Article 

China Economy

China Economy

Retreat in China's PMIs heightens calls for policy easing.  Full Article 

Managing Share Sales

Managing Share Sales

Govt seeks bids from banks to manage PFC, REC share sales   Full Article 

Reuters India Mobile

Reuters India Mobile

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