E.U. leaders are attempting to come to agreement on the amount of capital banks would have to set aside as a precaution against losses, with Britain and Sweden seeking even larger percentages than rules already being discussed.
Reuters reported Wednesday that the 27 members of the European Union had different ideas about how much bank capital should be set aside to cover potential losses, with the lessons of the financial crisis spurring some countries to demand more stringent regulation.
Denmark, the present occupant of the six-month rotating presidency of the group, is trying to find consensus among countries about proposed new capital rules so that an accord can be reached with the European Parliament by the end of June. It has pressed members to find common ground, which thus far has been unsuccessful.
The end goal is to take Basel Committee regulators’ higher capital standards for banks and make them into law so that banks must begin to abide by the new regulations by the beginning of 2013.
Margrethe Vestager, economic affairs minister for Denmark, said in the report, “This is a very important lesson from the crisis. I see a strong willingness to compromise but the countries have very different opinions.”
According to a Danish diplomat, the time has come to reach a conclusion. “We believe that the matter is ready—that the issues have been clarified to a sufficient extent,” the diplomat said.
However, many officials do not expect a deal to be reached Wednesday. One British diplomat was quoted saying, “The simple fact is that ministers haven’t discussed this legislation in detail yet and we’re likely to need more discussion before an agreement can be finalized. You can’t ignore the reality that the costs of getting this wrong are profound.”
Both Britain and Sweden are reluctant to cede autonomy over their banks, with both wanting the authority to resort to additional measures beyond the proposed law to force compliance from the banks. Both say they need to be able to protect taxpayer interests since taxpayers could end up being the ones to bail out failed banks.