Global banking regulators on Tuesday postponed the approval of new capital rules designed to avert a repeat of the financial crisis, saying they needed more time to finalise the long-awaited and contentious reform. Central bank governors and heads of supervision from nearly 30 countries were due to meet on January 8 to approve new rules that will determine how much capital lenders in the world's major financial centres must hold against loans and other assets.
But the proposed changes have proven divisive, with European regulators worrying they would curb bank lending - the prime source of funding for companies in the region. After failing to strike an agreement in Chile late last year, the Basel Committee said on Tuesday more work was needed before the new rules could be submitted for approval by its oversight body, the Group of Central Bank Governors and Heads of Supervision (GHOS).
"More time is needed to finalise some work, including ensuring the framework's final calibration," the Basel Committee said. "A meeting of the GHOS, originally planned for early January, has therefore been postponed. The Committee is expected to complete this work in the near future."
Sources told Reuters last month regulators had softened the new rules, including a "floor" on how much capital a bank needs to hold irrespective of what its own model says. This rule is bound to have a major impact on large banks such as Germany's Deutsche that use their own, rather than standard, computer models to determine their required capital buffers.