The head of financial services for the European Union (EU) said Wednesday that banks failing to abide by new and stronger rules regarding liquidity and capital will be subject to fines of as much as 10% of turnover.
Reuters reported that draft laws that would implement the Basel III accords were revealed by Michel Barnier, internal market commissioner for the EU. The laws will compel banks, by 2013, to hold higher levels of capital reserves of better quality than current regulations.
Among the new measures in the draft laws are a requirement for minimum core equity capital equal to 7% of a bank’s riskier assets. There are also tougher sanctions in the event of failure to comply, as well as a dilution of the impact of credit ratings and corporate governance improvements. That last includes whistle-blowing programs as well as requirements for more female members to be considered for board positions.