The European Union may be planning to get even tougher on bankers than the Basel Committee on Banking Supervision. A parliamentary draft of a proposed law provides for higher capital reserves and lower bonuses.
Bloomberg reported Friday that the draft, prepared by Othmar Karas, an Austrian lawmaker guiding the adoption of global bank-capital and liquidity rules, could provide for regulators to impose capital surcharges of as much as 10% of a bank’s assets, weighted for risk. That could result in core capital reserve requirements of up to 17%.
Denmark, currently holding the rotating presidency of the E.U., has advanced a proposal that permits countries to impose surcharges of up to 3% across their banking systems. The proposed surcharges would be added on top of regular requirements for banks to hold core reserves of 7%; they would be applied to banks, according to the document, “in the highest category of systemic relevance.”