Banks voice resistance as regulators say tough Basel norms are just a start

National bank regulators risk undermining a fragile economic recovery if they pursue a new round of capital and liquidity rules beyond those agreed internationally, bankers said at gathering in Washington.

Central bankers told executives at weekend meetings in Washington to expect more financial rules, especially for the largest firms, after international regulators set minimum standards in Basel last month. If countries surpass that accord, they will deny banks a level playing field and impede growth, chief executive officers including Deutsche Bank AG’s Josef Ackermann and Standard Chartered Plc’s Peter Sands warned at the event, hosted by the Institute of International Finance (IIF).

 

“There are growing signs that global coordination is fizzling and unilateral actions are pending,” said Ackermann, chairman of the IIF, which represents more than 400 financial institutions. “Global banks will have to comply with the higher rules in every jurisdiction, regardless of their home base. That will steal from credit to companies and hurt job creation.”

Lobbying groups are shifting attention to national regulators after the industry persuaded some international rule makers that proposed rules may stunt economic growth. The Basel Committee on Banking Supervision softened planned capital and liquidity requirements last month, then gave lenders about a decade to comply. Countries such as Switzerland and the UK, which had pushed for tougher rules, are moving ahead with additional restrictions to rein in their banks.

Setting a minimum
Central bankers that addressed the IIF members during the group’s annual gathering said some rules may surpass Basel III, as the new version of the global capital standards are named. Philipp Hildebrand, president of the Swiss National Bank, Mark Carney, Bank of Canada’s governor, and William Dudley, head of the Federal Reserve Bank of New York, said Basel only set a minimum and more should be expected. Bank of England’s deputy governor Paul Tucker had echoed that phrase yesterday.