February 16, 2017 / 12:52 PM / 7 months ago

No deal on global bank capital rules expected in early March

LONDON (Reuters) - Global banking regulators meeting in early March are not expected to reach agreement on capital requirements rules to keep lenders stable in a crisis, two people close to the talks said.

Approving any deal would be difficult until U.S. President Donald Trump’s Administration appoints a new top financial supervisor at the Federal Reserve, the people said.

“There will be appointments in the United States and we have to be a little bit patient. There is a sequence for these things,” one of the people said. “Will there be an agreement in the foreseeable future? Then, yes.”

The Basel Committee of banking regulators from nearly 30 countries meets on March 1-2.

Last November it was unable to reach a deal on reforms to inject more consistency into how banks assess risks from loans to determine the size of their capital buffers.

The reforms supplement a global “Basel III” accord already in place, forcing banks to hold more capital after lenders had to be rescued in the 2007-09 financial crisis.

Basel’s oversight body, the Group of Central Bank Governors and Heads of Supervision (GHOS), had to postpone a January meeting aimed at brokering a deal because of splits over finer details.

The Basel Committee has largely done what it can and now it is up to GHOS, a body whose members includes the Fed.

The committee had no comment on Thursday.

Regulators are anxious to see who Trump will name as Fed banks supervision chief after he signed an executive order to review regulation to help banks lend more.

It triggered concern in Europe that a global approach to banking rules would be fragmented.

Some European regulators expect the United States to focus more on easing rules that are specific to U.S. banks and not ditch global standards altogether.

“What’s important is that U.S. regulators remain committed to coming back to the Basel table. We are patient,” one of the people said.

On Wednesday Fed Chair Janet Yellen was asked by a lawmaker to avoid agreeing new Basel rules until Trump had named the central bank’s top financial supervisor.

“Nothing going on in these international discussions binds us to carry out things in our rulemaking process,” Yellen replied.

Reporting by Huw Jones; editing by Susan Thomas

Our Standards:The Thomson Reuters Trust Principles.
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