Businesses demand easing of EU bank capital rules

September 3, 2009

conf    BRUSSELS, Sept 3 (Reuters) – Leading German and Italian business groups urged the European Union on Thursday to relax capital requirements for banks temporarily to boost lending and fight the economic crisis.
   In a letter to the European Commission and the EU’s Swedish presidency, BDI and Confindustria said the current Basel II capital rules had contributed to the credit crunch, which was choking many firms, especially small and medium-sized ones.
   “The rules are designed in such a way that they lead banks to restrict their supply of credit,” the letter said.
   “FDI and Confindustria ask the EU to urgently take all necessary initiatives in order to address this critical issue.”
   EU finance ministers agreed in principle in July to make capital rules for banks more flexible to reduce their likelihood of worsening boom-and-bust cycles in the economy.
   But they raised doubts about a German proposal to relax urgently the Basel II rules on capital requirements. 
 (Reporting by Marcin Grajewski; Editing by Dale Hudson) ((; +322 2876830; Reuters Messaging:
Thursday, 03 September 2009 17:10:44RTRS [nL326584  ] {C}ENDS

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