June 14, 2011 / 9:13 AM / 8 years ago

UK warns EU against weakening Basel, bank tests

LONDON, June 14 (Reuters) - Tougher new global bank capital rules must be implemented in full in the European Union and the bloc’s banking health check must not be diluted, Britain’s financial services minister said on Tuesday.

“It’s in no one’s interest to undermine the stress test by watering them down,” Mark Hoban told the Chartered Institute for Securities and Investment conference.

The European Banking Authority is completing the stress test with results due in early July in a bid to restore confidence in the banking sector after last year’s health check flopped.

“This year’s stress test has to be different,” Hoban said.

A robust, credible exercise would help to restore confidence in the banking sector and Britain welcomed the strong review of the results and the pass mark set, he added.

The EU is also due to publish a draft law next month to implement a global set of rules known as Basel III to increase the regulatory capital cushions banks must hold from 2013.

Britain fears the EU will seek to make the new rules a ceiling in the 27-nation bloc rather than a minimum standard a member state can require banks to increase.

“It’s a constant battle to resist any attempt to unpick it. We support full implementation of Basel III,” Hoban said.

“The European Commission should implement Basel III in a way that sets a floor and not a ceiling... There is growing international support for our argument,” Hoban said. (Reporting by Huw Jones and Sudip Kar-Gupta; Editing by Jon Loades-Carter)

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