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

Shares Hit Record

Sensex, Nifty rise to second consecutive record high

Sensex surges 500 points on BOJ easing, L&T gains

The BSE Sensex and Nifty surged to record highs for a second consecutive session on Friday after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips such as Larsen & Toubro.  Full Article 

REUTERS SHOWCASE

Indian Economy

Indian Economy

India's fiscal deficit in H1 almost 83 pct of full-year target.  Full Article 

M&M Earnings

M&M Earnings

M&M Q2 net profit down 4 percent, hit by poor monsoon.  Full Article 

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 

Commodities

Commodities

Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Reuters India Mobile

Reuters India Mobile

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