PARIS Oct 10 France opposes a big hike in
European banks' capital requirement under new global bank rules
being hammered out, and says the increase should be no more than
5 percent, a Finance Ministry source said on Monday.
The Basel Committee of bank supervisors from nearly 30
countries aims to finalise the rules by the end of this year to
avoid repeats of the 2008-2009 financial crisis when taxpayers
had to bail out undercapitalised lenders.
France and Germany, worried that proposals presented so far
could discourage their banks from lending to consumers and
companies, have stressed that the new rules must not
significantly raise the capital that banks hold against their
"An order of magnitude that does not seem unreasonable is
more or less 5 percent," the finance ministry source said,
adding that Germany was of the same mind. "Anything above that
is getting unreasonable."
The rules complete the so-called Basel III bank capital
reform initiated by world leaders during the financial crisis.
Basel has said it won't lead to a significant increase in
capital, without defining what this means in practice.
Banks have dubbed the changes "Basel IV" as if they were a
new set of regulations, saying it will lead to capital hikes of
10 percent or more.
The French finance ministry source said the bank capital
rules must reflect the fact that in Europe banks provide a much
higher proportion of financing to firms and home buyers than in
the United States, where financial markets have a much bigger
The French and German banking federations said in July that
draft proposals could raise capital requirements by as much as
50 percent in some cases.
EU finance ministers had floated a hard limit of a 5 percent
increase in July, but ended up dropping it from formal
conclusions of their meeting.
They are to discuss the proposals again on Tuesday at a
meeting in Luxembourg, but are not due to make a formal
statement on the issue.
Last week, a top EU official signalled the bloc could refuse
to apply Basel's changes if they lead to big hikes in capital.
Basel Committee secretary general, William Coen, responded
to criticism on Friday, saying the aim was not to punish banks
with increased capital requirements, though genuine "outlier"
banks could face a significant increase.
(Additional reporting by Huw Jones and Francesco Guarascio;
Editing by Susan Fenton)