Banks get 4 more years to meet ratio
Source: Bloomberg News |
January 8, 2013, Tuesday
|
Print Edition
Print Edition
GLOBAL central bank chiefs have given lenders four more years to meet international liquidity requirements and watered down the measures in a bid to stave off another credit crunch.
Banks won the delay to fully meet the so-called liquidity coverage ratio, or LCR, following a deal struck by regulatory chiefs meeting on Sunday in Basel, Switzerland. They'll be able to pick from a longer list of approved assets including equities and securitized mortgage debt as they seek to build up buffers of liquidity for use in a financial crisis.
"This was a compromise between competing views from around the world," Bank of England Governor Mervyn King said at a briefing following the meeting.
King chairs the Group of Governors and Heads of Supervision, or GHOS, which decides on global bank rules.
"For the first time in regulatory history we have a truly global minimum standard for bank liquidity," he said.
Banks and top officials such as European Central Bank President Mario Draghi pushed for changes to the LCR, arguing that it would choke interbank lending and make it harder for authorities to implement monetary policies.
Lenders have warned the measure might force them to cut back loans to businesses and households.
"The new liquidity standard will in no way hinder the ability of the global banking system to finance a global recovery," King said. "It's a realistic approach. It certainly did not emanate from an attempt to weaken the standard."
The decision to relax liquidity rules for banks may boost pretax profit at Barclays by about 4 percent, according to Andrew Lim, an analyst at Banco Espirito Santo SA.
UK banks such as Barclays, which have built up large reserves of high-quality liquid assets, will be among the biggest beneficiaries of global regulators' decision to implement a watered-down version of the LCR, Lim said in a note.
Banks won the delay to fully meet the so-called liquidity coverage ratio, or LCR, following a deal struck by regulatory chiefs meeting on Sunday in Basel, Switzerland. They'll be able to pick from a longer list of approved assets including equities and securitized mortgage debt as they seek to build up buffers of liquidity for use in a financial crisis.
"This was a compromise between competing views from around the world," Bank of England Governor Mervyn King said at a briefing following the meeting.
King chairs the Group of Governors and Heads of Supervision, or GHOS, which decides on global bank rules.
"For the first time in regulatory history we have a truly global minimum standard for bank liquidity," he said.
Banks and top officials such as European Central Bank President Mario Draghi pushed for changes to the LCR, arguing that it would choke interbank lending and make it harder for authorities to implement monetary policies.
Lenders have warned the measure might force them to cut back loans to businesses and households.
"The new liquidity standard will in no way hinder the ability of the global banking system to finance a global recovery," King said. "It's a realistic approach. It certainly did not emanate from an attempt to weaken the standard."
The decision to relax liquidity rules for banks may boost pretax profit at Barclays by about 4 percent, according to Andrew Lim, an analyst at Banco Espirito Santo SA.
UK banks such as Barclays, which have built up large reserves of high-quality liquid assets, will be among the biggest beneficiaries of global regulators' decision to implement a watered-down version of the LCR, Lim said in a note.
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