The Basel Committee on Banking Supervision will postpone their next meeting in another bid to agree on global capital rules, taking more time to try to overcome objections from European banks to minimum capital levels, people familiar with the talks said. The next meeting of the BCBS was set for mid-September but it is now expected in early October.
The Basel meeting delay will give officials more time to overcome European banks’ reluctance to accept a “floor” or minimum level of capital a big bank must hold, the sources said. Basel members such as the United States want a floor equivalent to 75 percent of the amount standard regulatory capital calculations used by smaller lenders comes up with. Europe wants a figure nearer 70 percent. Potential compromises include scaling back on capital elsewhere in the package if a floor of 75 percent is chosen.
Conversely, capital could be ratcheted up elsewhere in the package if a floor of 70 percent is selected, sources said to Reuters. A floor of 72.5 percent would look silly but acceptable if it gets the deal done, a source said to Reuters. Central bank governors such as the US Federal Reserve’s Janet Yellen, the European Central Bank’s Mario Draghi and Bank of England chief Mark Carney are pushing for a deal to allow the banking sector and regulators to move on. The rules under discussion would complete Basel III, the world’s response to undercapitalized lenders that taxpayers had to bail out in a financial crisis that started a decade ago.