EU to miss deadline for Basel 3 rules

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Europe will definitely fail to meet the globally agreed January deadline for the implementation of tougher capital requirements for banks after EU talks to agree on implementation of the rules were postponed yesterday.

World leaders approved the Basel 3 regime in late 2010, giving the Group of 20 (G20) leading economies two years to get ready. The accord will force banks to triple the amount of capital they hold over six years.

EU member states and the European Parliament made progress last week on a draft law to implement Basel 3, the main regulatory response to undercapitalised banks that had to be rescued during the 2007 to 2009 financial crisis.

A senior legislator said last week that the bloc, which accounted for about half of the world’s banking assets, was on the “cusp” of a deal and yesterday’s meeting was intended to iron out final points of disagreement.

However, yesterday morning Sharon Bowles told the European Parliament’s economic affairs committee, which she chairs, that there should be wider consultation with legislators on last week’s proposals.

“I can confirm there will be no negotiations today [yesterday],” a parliament spokeswoman said.

A spokesman for the EU’s Cypriot presidency said that it had not been possible to schedule negotiations for yesterday and further talks to broker a deal would be held under the Irish presidency, which begins on January 1.

The EU joins another major banking centre, the US, in delaying the introduction of the Basel 3 rules.

Last week’s talks proposed a compromise whereby bankers’ bonuses would be capped at no more than twice the level of their salaries. In return for the cap on bonuses, it was agreed that EU governments would have a say when it comes to introducing other key elements of Basel 3.

Legislators are expected to formally delay implementing Basel 3 until January 2014. Only 11 of the G20 countries are ready to start phasing in the accord from next month. Huw Jones from Reuters

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