Financial Regulatory Forum

Asia regulators say G20 reform driven by U.S., Europe

By Daisy Ku and Rachel Armstrong

HONG KONG, Nov 29 (Reuters) – The lack of a unified Asian voice in the Group of 20 leading economies means the United States and Europe are driving the overhaul of global financial regulation with several of the new rules posing significant challenges for emerging markets, regulators said in a regional summit on Monday.

The G20 has endorsed a series of major reforms to banking and financial market regulation, which the five Asian members of the group and Financial Stability Board members Hong Kong and Singapore have signed up to.

But Asian regulators say a number of these rules pose significant difficulties for their markets, while others don’t address the way the crisis hit their economies. This, they say, is partly due to the fact that the United States and Europe find it easier to arrive at a common approach to regulatory change.

“There isn’t a uniquely Asian voice and I think that’s a challenge,” Martin Wheatley, head of Hong Kong’s Securities and Futures Commission (SFC), told the Pan-Asian Regulatory Summit held by Thomson Reuters unit Complinet.

New rules on banking liquidity, part of the so-called Basel III framework, were highlighted as one area where the reforms hadn’t taken into account the size of some emerging markets’ debt capital markets.

SNAP ANALYSIS-Swiss give fresh momentum to contingent bonds

RTXSLHY_CompBy Jane Merriman

LONDON, Oct 4 (Reuters) – Contingent capital got a boost on Monday as Swiss regulators said these bonds, which convert to equity when banks are in trouble, could help bolster the capital base of Credit Suisse and UBS.

The Swiss initiative marks a step forward for the asset class, which has failed to find a big fan base among investors since UK bank Lloyds and Dutch-based Rabobank issued contingent-style bonds in November 2009 and March this year.


Basel’s Bark May Be Slow to Bite


(Westlaw Business) – Between bank capital raises and media coverage, the Basel III era may be upon us. After months of anticipation, and more than a little dread on the part of banks, it is true that the Basel Committee on Banking Supervision (Basel Committee) has finalized the Basel III bank capital ratios and other measures. But not so fast. With history as guide, it’s apparent that there is a real gap between Basel-driven standards and actual implementation.


ANALYSIS-Implementation key to Basel III success

By Huw Jones

LONDON, Sept 12 (Reuters) – The global “Basel III” deal on bank capital standards was reached at lightning speed by usually glacial regulators — substantive negotiations took about a year, compared to a decade for the current Basel II rules.

But implementing the new standards consistently over the lengthy phase-in period will be a headache for national regulators, and determine whether Basel III succeeds better than its predecessor in reducing bank sector risk.

* The Basel III rules are much tougher than Basel II, which failed to ensure banks held enough capital to withstand the worst financial crisis since the Great Depression.

ANALYSIS-Europe’s banks loath to jettison cash ballast for returns

By Steve Slater

LONDON, Aug 13 (Reuters) – Some of Europe’s banks are faced with the unusual problem of holding too much cash as they try to lift sluggish returns, and few will dare to eat into capital until well into 2011 amid an uncertain regulatory outlook.

A jump in profits may have prompted banks like HSBC and Barclays to talk about improving returns for investors, but the financial crisis is too fresh in the memory for regulators and bank bosses.


PREVIEW-Basel under gun to divulge bank rule details earlier

By Huw Jones

LONDON, July 9 (Reuters) – Global regulators gathering next week to finalise tough new bank capital rules face increased pressure to be more open after the market’s positive response to greater transparency over European bank stress tests.

The Basel Committee of central bankers and supervisors meets on July 14-15 to finesse its Basel III reform.


Euro rescue could help banks in regulatory battle

By Lionel Laurent and Huw Jones

PARIS/LONDON, May 10 (Reuters) – A $1 trillion rescue package to stabilise the euro could bolster European banks’ negotiating power as they attempt to fight stricter regulatory capital requirements they expect will hurt economic growth.

Europe’s lenders are already significant holders of sovereign euro debt and will be relied upon to buy more state-guaranteed debt as part of the rescue package, which is likely to see them push for extra concessions, analysts said.

“What there needs to be is a realisation among politicians that you cannot legislate and regulate the banks’ profitability away and expect them to keep buying your debts,” MF Global bank sector analyst Simon Maughan said.

ANALYSIS-Bank capital rules are regulatory drive’s top test

By Huw Jones

LONDON, May 4 (Reuters) – This month could bring overdue progress in a global drive to regulate the financial sector in the European Union and United States, but the acid test for policymakers will be agreeing global bank capital rules.


ANALYSIS-Europe’s banks face harsh reality of Basel III jolt

By Steve Slater, European Banking Correspondent

LONDON, Feb 2 (Reuters) – New rules on bank capital will jolt the industry and could force European lenders to raise more cash and restrain returns, dividends and pay for at least the next two years, analysts and industry sources say.

The impact of the proposals — dubbed Basel III – has been underestimated by investors and banks, and clarity on the new rules could be a shock, several analysts said.

The rules could drive the core Tier 1 ratios — a measure of a bank’s strength — at Lloyds Banking Group and Credit Agricole down to near 4 percent, require Barclays to plug a 17-billion-pound capital gap and hurt HSBC and BNP Paribas harder than peers.