The US Treasury announced Friday that it would not implement the Basel III rules for strengthening banks on January 1, saying the banks were not yet ready to meet the tougher capital standards. "Many industry participants have expressed concern that they may be subject to a final regulatory capital rule on January 1, 2013, without sufficient time to understand the rule or to make necessary systems changes," the Treasury said.
The Treasury said that US regulators who are members of the Basel Committee on Banking Supervision "take seriously our internationally agreed timing commitments regarding the implementation of Basel III." US regulators "are working as expeditiously as possible to complete the rulemaking process," it said. But the Treasury did not give a new date for when it expected the new capital rules agreed for major banks around the world can be implemented.
Coming out of a deep crisis, US banks have fought to delay the application of the new standards, which raise the requirement for higher-quality capital to be held by the banks. Basel III sets the minimum for banks' common equity holding at 7.0 percent of risk-weighted assets, up from 2.0 percent. The new rules also demand improved risk coverage, especially for complex illiquid trading activities.