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Regulation and Compliance > Federal Regulation

Basel Capital Rules Could Be Delayed: Sources

By Marlene Y. Satter

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The start date for new Basel III rules on bank capital could be pushed back by anywhere from six months to a year, according to three people with knowledge of current discussions. However, the European Union denied any such plan.

Bloomberg reported Friday that, according to one of the unnamed sources, at a meeting held Thursday to address implementation of the rules, European Parliament (EP) legislators and representatives from Cyprus, the nation currently holding the presidency of the EU, explored the possibility of delaying implementation of the stricter rules past Jan. 1 of next year. Dates discussed as possible alternatives were July 1 of next year or even Jan. 1, 2014.

Yesterday’s meeting agenda, sources said, also included draft liquidity rules for lenders and capital requirements for when banks finance international trade.

“A delay would give more oxygen to banks to solve their capital problems,” said Marco Elser in the report. Elser, a partner at the investment bank Advicorp in Rome, added, “The oxygen is the time, which will give banks more options.”

However, Othmar Karas, the lawmaker who is leading the EP’s work on the draft rules, said there was no such discussion about a change in implementation date.

He was quoted in the report saying, “A change of the dates of entry-into-force of the new capital requirements for European banks has never been discussed. The time schedule of the implementation will be discussed in the last round of negotiations and not a moment before.” Banks have called the Jan. 1, 2013, date “wholly unreasonable.”

Karas was also said by one of the sources to have asked for written comments on when the Basel rules should go into effect, but this was also denied by a spokesperson. Daniel Koster, a spokesman for the EP’s EPP group, of which Karas is a member, was quoted saying, “The question of timing hasn’t been discussed and Mr. Karas has not asked for written comments.”

Richard Reid, research director for the International Center for Financial Regulation in London, said in the report that even if the deadline is changed, that “will still not prevent some institutions from seeking to meet the new requirements ahead of their competition in order to enhance their market position.”

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