New bank capital rules should be about 30 percent higher than agreed, to prevent a repeat of the last financial crisis, the incoming head of the world's biggest accounting standard setter said on Sunday. The Basel III bank capital rules will force banks to more than triple the amount of top quality capital they must hold to 7 percent by 2018 to withstand shocks without resorting to state aid.
But Hans Hoogervorst, who takes over on July 1 as chair of the International Accounting Standards Board (IASB), told Dutch TV programme Buitenhof that still wasn't high enough, implying the actual requirement should be as much as about 9 percent.
"In countries which have been hit hard, such as Switzerland and Britain, the supervisors are saying 'We don't want to run into that trap again'," Hoogervorst said. "I think it will (need to) be a factor of 30 percent higher than what the international agreement is. I cannot make precise statements but I think it can be a notch higher."
IASB has no direct say about bank capital rules, which are set by the Basel Committee, an international body of central bankers.
Hoogervorst, who currently heads the Dutch financial market regulator AFM, said he was also worried about so-called "too-big-to-fail" banks - as those banks whose collapse would threaten the financial system are often described.
Hoogervorst said he expected a new European stress test for banks, which looks at how well banks can cope with economic and financial shocks, to lead to new capital raisings, as also predicted by analysts.
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