EU, US draw flak for lapses in capital rules

The US and European Union may fail to fully implement bank-capital rules drawn up to prevent a repeat of the financial crisis that followed the 2008 collapse of Lehman Brothers Holdings Inc, global watchdogs warned.

International teams of regulators found weaknesses in the US and EU draft implementing measures for the so-called Basel-III standards, the Basel Committee on Banking Supervision said today in a statement on its website.

“There is now a window of opportunity for the gaps identified to be closed,” Stefan Ingves, the Basel group’s chairman, said in the statement.

A related review found Japan’s rule-making to be compliant with Basel-III, Ingves said.

The largest global banks would have needed an extra euro 374.1 billion ($482.4 billion) in their core reserves to meet Basel-III had the standards been enforced at the end of 2011, according to data published by the committee last month. Nearly 200 billion euros of the collective shortfall was at banks in the 27-nation EU.

Michel Barnier, the EU’s financial services chief, said he has “reservations” about some of the Basel group’s findings, “which do not appear to be supported by rigorous evidence and a well-defined methodology.”

There is a “lack of consistency” in how different jurisdictions have been reviewed, Barnier said in an e-mailed statement.