Top regulators agree new Basel III package

[Sunglass]

Sunday, September 12, 2010

Top regulators agree new Basel III package

(Reuters) - Global regulators and central bank governors have reached a deal on Basel III, a sweeping reform that will force banks to hold more capital to withstand financial shocks, a source close to the process said on Sunday.

"There is a deal," the source said, without elaborating.

Agreement was reached at a meeting of central bank governors and top supervisors from 27 countries chaired by European Central Bank President Jean-Claude Trichet.

A formal, more complete announcement is expected after 1600 GMT.

Most details of Basel III were agreed in July, leaving Sunday's meeting to add the final two pieces in the jigsaw -- how much extra capital will be required and how long banks have to comply.

In the wake of the global financial crisis, which was partly due to risky trading by banks, leaders of the Group of 20 leading countries called on regulators and central bankers in 2009 to work on tougher bank capital rules.

The G20 leaders are set to endorse Sunday's deal when they meet in Seoul in November, with the new rules taking effect from 2013 in stages.

Analysts, regulators and bankers expected Sunday's meeting to agree that banks will need to have a minimum, core "Tier 1" capital ratio of somewhere between 7 and 9 percent of their risk-bearing assets, including a "capital conservation buffer".

Tier 1 refers to a bank's basic capital reserve, which it uses to absorb shocks; the core level was pegged at 2 percent under existing rules, too little to withstand the worst financial crisis since the Great Depression.

The new rules are likely to include a minimum core Tier 1 ratio of 4.5 to 6 percent, with an additional capital conservation buffer of 2 to 3 percent. Any bank that fails to keep above that buffer would have to curb payouts such as bonuses and dividends.

There has been strenuous debate over how long banks should have to comply with the tougher rules; the final package is expected to include a transition period of about five to 10 years.

The world's top banks, having to a large degree recovered from the financial crisis, are not expected to need to rush to raise funds. But there remain worries that banks in some countries face a long road to recovery and that the changes will cut the amount of money which banks can lend out to companies.

Sources told Reuters on Friday that Deutsche Bank, Germany's biggest bank, might raise up to 9 billion euros ($11.4 billion) to bolster its balance sheet.

Regulators say they are confident that the new Basel capital rules will increase the stability of the financial system without hurting the volume of lending.

(Writing by Huw Jones; Editing by Hugh Lawson and Andrew Torchia)

Link: http://in.reuters.com/article/idINIndia-51436720100912

[kingfish]

I just read that on FOX NEWS... The federal govt is taking most of the money out of the system and now wants to require the banks to hold more in reserves. (STARTING IN 2013)

This was caused by bad loans made by banks that were TOLD to loan to the people for houses that were over priced and bought by people that had no way to pay for them. (Started in the Clinton era... every American should be able to own a home.)

Now credit is so tight that those that can get a loan have to have an 800+ credit score.

My fiance applied for a loan over 6 weeks ago for a house that appraised over $60,000.00. She was to borrow $27,000.00 and has a credit score over 800.

They have been working on this for 6 weeks.

We need help with loans.... NOT HANDOUTS, America needs to go back to work... Employers need lines of credit to get thru hard times so they can continue to keep people employed.. Employed people will make the economy move.... a moving economy will start us on our recovery.

O must GO. He is doing everything in his power to kill Capitalism.... Wait isnt that what the terrorists and the communists want to do,

Does that mean that O is a Communist Terrorist.... No it doesnt .... It just means that he is not looking out for the intrest of the American People.

I suguest we make him powerless so that he can do no more harm. I would like to use the word Impeach but if it hasnt happened by now.... Its not going to.

Remember in November....... If you want any hope here..... You need to get rid of the change!!!!!

Edited September 13, 2010 by kingfish

[cris]

Thanks for the post sunglass....and thanks Doc, couldnt agree more....go RV already!!!