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Exclusive - Basel regulators near final deal on global bank capital: sources
October 10, 2017 / 10:36 AM / in 12 days

Exclusive - Basel regulators near final deal on global bank capital: sources

LONDON (Reuters) - Global banking regulators are nearing a final deal on their package of crisis-era capital rules as Europe and the United States look set to meet halfway over the last main element under dispute, banking and regulators sources said on Tuesday.

The Basel Committee met last week in another attempt to finalise its “Basel III” rules aimed at averting another global banking meltdown as seen in 2007-09. Most of the rules are in force, but the committee has hit resistance trying to finalise the last part of the regulatory package.

Europe and the United States have disagreed over the extent to which banks can use their own risk models to calculate their capital requirements.

Basel is trying to set an “output floor” that would limit the extent to which a bank’s capital requirements based on the lender’s own risk model can diverge from how they would be calculated under a more conservative model set by regulators.

Europe has wanted a floor set at 70 percent, while the United States has called for a tougher level of 75 percent. A deal at 72.5 percent now looks on the cards, the sources said.

Basel’s oversight body now needs to approve any deal, and its members will be present in Washington this weekend to attend International Monetary Fund meetings, the sources added.

Reporting by Huw Jones; Editing by Rachel Armstrong

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