Financial Regulatory Forum

By Dominic Lau

LONDON, Jan 26 (Reuters) – Stricter global banking rules will add to short-term headwinds facing European banks and hurt their shares, yet details being hammered out could make them more alluring for more risk-averse long-term investors.

The Basel Committee of central bankers and financial supervisors is seeking to avoid a repeat of the credit crunch and reduce the industry’s cyclical volatility by raising the quality of banks’ capital, after many of the assets they were using crumbled during the crisis.

U.S. President Barack Obama has also laid out rules to restrict some banks’ most lucrative operations.

Investors looking for quick returns may not like these ideas. The banking sector, which rallied sharply in 2009, is also under pressure from the prospect of central banks gradually withdrawing liquidity this year and from rows over bonuses.

But the tougher regime, with the Basel proposals taking effect by end-2012, may not be bad for long-term players.  (For scenarios on possible impact of Basel proposals, click here)

WASHINGTON, Oct 27 (Reuters) – Financial firms that could pose a risk to the economy will not all be named at once under Obama administration plans to tighten bank and capital market regulations, a congressional aide said on Tuesday.

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By Jane Baird and Jane Merriman
LONDON, Sept 4 (Reuters) – Royal Bank of Scotland will not exercise options to redeem more than $1.5 billion of subordinated debt next month after regulators objected to it using state aid to repay the low-ranked bondholders.

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By Karey Wutkowski

WASHINGTON, Aug 19 (Reuters) – The Federal Deposit Insurance Corp will meet next week to vote on its policy for private equity investments in failed banks, according to an agenda posted to its website. The FDIC proposed the private equity guidelines in July. Investors and some regulators criticized them as too harsh.

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By Tom Freke and Clara Ferreira-Marques
LONDON, Aug 18 (Reuters) – State-owned British bank Northern Rock said on Tuesday it would defer paying interest on a range of subordinated bonds, propping up its capital position and preempting an anticipated European Commission requirement.

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