Global regulators are changing how they treat the pan-eurozone exposure of lenders based in the bloc in a move which should allow France’s BNP Paribas to cut its capital requirements and make cross-border mergers easier in the region.
The shift, which was announced by the Bank for International Settlements on Tuesday, is a step towards harmonising regulations for the eurozone banking sector, which policymakers and politicians have been pushing for since the region’s debt crisis a decade ago.
The biggest banks based in the 19 countries that share the euro will have their cross-border exposures within the bloc treated more like domestic ones under the change, which could reduce the amount of extra capital they need to cover their systemic importance.
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BNP Paribas has an extra 2 per cent capital buffer through being grouped in the third bucket along with Citigroup and HSBC. The new rules mean the French group is likely to drop into the fourth bucket, reducing its extra capital buffer requirement to 1.5 per cent. BNP, which is one of the biggest lenders to eurozone households and businesses with €2.6tn of total assets, declined to comment.
The full article is available at https://www.ft.com/content/adb97a6a-d93b-4d14-b7d5-07350a3dace2