EU to unveil new banking reforms in October-FT

July 7, 2009

    LONDON, July 6 (Reuters) – New European Union laws designed to force banks to strengthen capital buffers will be unveiled in October, part of a regulatory drive stop a repeat of the global financial crisis, the Financial Times reported on Tuesday.
   The paper said a draft report expected to be backed by EU finance ministers in Brussels on Tuesday says that there is a “strong case” for curbing existing rules on banks’ funding needs.
   Critics say existing rules exacerbate the ups and downs of economic cycles.
   The FT said it had learnt the report recommends accounting reforms and other policy measures to build more resilient capital “buffers” during good economic times.
   It says the report shows that Brussels intends to present legislation in three months’ time that would introduce “dynamic provisioning” for Europe’s banks.
   The aim of the new laws would be to make it easier for banks to build up provisions in good times without having to assign the money to specific impaired assets. These funds could then be used to weather future economic storms.
   The FT said one of the ideas that EU finance ministers may discuss is to limit the impact on capital requirements of downgrades in credit ratings.
   (Reporting by Stefano Ambrogi; Editing by Diane Craft) ((stefano.ambrogi@reuters.com +44 20 7542 8167; Reuters Messaging: stefano.ambrogi.reuters.com@reuters.net)) Keywords: BANKING EU/REFORMS
  
Tuesday, 07 July 2009 00:00:32RTRS [nL6230277 ] {C}ENDS

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