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German banks warn on new rules

November 21, 2012

German banks fear being unfairly disadvantaged if US institutions would be spared tougher capital rules due to be introduced in 2013. Their warning comes as US regulators seek to ditch the landmark Basel III accord.

Wall Street sign and US flag
Image: Fotolia/Stuart Monk

Growing resistance in the United States to implement new banking rules under the so-called Basel III agreement has raised concern among senior German banking officials.

"Americans must not be allowed to ditch at the last minute an accord they had negotiated themselves," said Andreas Dombret, senior board member of the German central bank, in a statement released Wednesday.

Dombret added that any attempt at "watering down" the Basel III agreement was bound to lead to "new strains" in financial markets.

At the end of last week, the United States Treasury announced that it would not implement the new set of rules, claiming US banks were not yet ready to meet tougher capital standards.

Basel III sets the minimum for banks' common equity holding at 7 percent of so-called risk-weighted assets, up from 2 percent at the moment. The accord was signed by 27 industrialized nations, of which only eight have so far adopted implementation legislation.

On Wednesday, Germany's banking sector lobby group, BdB, also leveled sharp criticism at the United States, claiming financial institutions in Germany and Europe would be treated unfairly.

"There is no denying that a different timetable for implementation amounts to a major competitive disadvantage for European banks," said BdB President Andreas Schmitz, adding that German banks had a vested interest in implementing the measures that were aimed at stabilizing financial markets.

European banking officials were especially upset about a statement by Thomas Hoenig, the vice-president of US financial market regulator FDIC, and published in the German business newspaper "Handelsblatt" on Monday.

Hoenig urged the rule-setting Basel Committee on Banking Supervision to give up implementing the accord because it was too complex and would provide loopholes for banks to bypass some of its rules.

uhe/dr (dpa, AFP, Reuters)