October 20, 2014 / 1:47 PM / 3 years ago

Global regulators to fast-track bank leverage rule

LONDON (Reuters) - Global regulators will fast-track work on finalising a key benchmark to measure bank capital even as countries begin applying their own higher ratios, a top regulator said on Monday.

The Basel Committee on Banking Supervision was due to finalise the so-called leverage ratio in 2017, a year ahead of when it comes into force.

The leverage ratio - a measure of capital to a bank's total assets - is part of a package of bank rules known as Basel III that is being phased in after the 2007-09 financial crisis. Under the package, banks will have to start publishing their current leverage ratio from 2015.

An interim ratio was set by the committee at 3 percent but countries such as the United States and Switzerland are calling for higher levels.

The Bank of England is due to publish its own proposed leverage ratio for UK banks at the end of this month with analysts expecting a figure of 4 to 5 percent. The Committee had planned to decide on a final leverage ratio in 2017.

"There is an appetite within the committee to start that work sooner rather than later," William Coen, secretary general of the Basel Committee, told reporters on the sidelines of a conference in London.

The new figure would be consulted on, Coen said.

The United States, Britain, Sweden, Switzerland and others are likely to put pressure on a ratio that is higher than the interim 3 percent the committee set.

Once the committee published other parts of the package, banks came under market and supervisory pressure to show they could comply as soon as possible rather than by the 2019 deadline for much of Basel III.

Banks could come under pressure to comply early with the revised leverage ratio as well.

"It's hard to control what the markets require," Coen said.

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Coen said the committee is serious about making sure banks across the world apply Basel III consistently so that investors can have trust in the capital figures they publish.

The committee will shortly publish a survey of all the exemptions from bank capital rules granted by many national supervisors as a first step to removing some of them.

"The other discussion now is what are we going to do about it? Are there areas where this discretion doesn't add to safety and soundness," Coen told reporters.

The committee is also due to publish proposals in December on how to impose more consistency on how banks tot up risks on their books, a key calculation that determines how much capital they must hold.

The proposals will include setting a capital "floor" below which a bank cannot go, whatever its calculations show is the right level.

Big banks, who use in-house models to calculate capital buffers, may also be asked to use the so-called standardised approach, which the vast majority of lenders use, as well.

Reporting by Huw Jones; Editing by David Holmes and Susan Thomas

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