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:

REUTERS SHOWCASE

2015: India Outlook

2015: India Outlook

India in 2014: A dream run for markets  Full Article 

Funding Woes

Funding Woes

Co-founder of SpiceJet seeks time to finalise rescue  Full Article 

Regulating Airfares

Regulating Airfares

India considers temporary cap on airfares - government official  Full Article 

Flying Back on Course

Flying Back on Course

The inside story of the new Airbus A350 jet  Full Article 

Oil Price Forecast

Oil Price Forecast

Oil prices likely to rebound in second half of 2015: poll  Full Article 

Cyber Attacks

Cyber Attacks

China condemns cyberattacks, but says no proof N.Korea hacked Sony  Full Article 

Connecting Markets

Connecting Markets

China stock connect scheme scorecard throws up surprises  Full Article 

Reuters India Mobile

Reuters India Mobile

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