Germany’s Buba urges caution on bank capital changes

September 24, 2009

zeitler-2    FRANKFURT, Sept 24 (Reuters) – Regulators mulling changes to bank capital buffers should keep the big picture in mind and not change any rules until the crisis is resolved, Germany’s Bundesbank warned on Thursday.
   Bundesbank Vice-President Franz-Christoph Zeitler said regulators had to keep the impact of the long list of proposed bank reforms in mind.
  “In order to avoid getting mired in detail, we need to keep our eyes on the big picture in terms of the effects of the many proposals for new rules,” he said in a speech to be delivered at a conference on banking regulation.
   His comments came as Group of 20 leaders prepared to meet in the U.S. city of Pittsburgh to debate ways to prevent another financial crisis.
   As part of the focus on better regulation, the Basel committee on bank regulation earlier this month unveiled plans make banks set aside more profits as a cushion against hard times and limit their debt. [ID:nL6452915] 
   Zeitler said the debate about higher capital requirements for banks was an important step towards preventing the next crisis.
   “However, that will not end or shorten the current crisis. Although encouraging signs of recovery are emerging, the crisis is not yet over and it will take years to come back to previous levels of output,” he said.
   “The growing use of fair value accounting, strong rating migration and cliff effects under the Basel framework render the financial system to some extent pro-cyclical. Regulators wishing to avoid this having a knock-on effect on banks’ ability to lend should therefore not implement capital measures until the crisis has been safely resolved.”   (Reporting by Krista Hughes; Editing by Ron Askew) ((; +49 69 7565 1313; Reuters Messaging:
Thursday, 24 September 2009 08:15:02RTRS [nLN625398 ] {C}ENDS

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