European Commission welcomes banks – economy

The EU does not want to implement the stricter rules on bank capital (Basel III) before 2025, with a delay of two years. European Commission Vice-President Valdis Dombrovskis on Wednesday spoke of a realistic timetable. The legislative proposal of the European Commission is based on the recommendations of the Basel Committee on Banking Supervision. In 2017, the panel of experts from 28 countries decided on a package of reforms for the international banking sector, which should incorporate the experience of the global financial crisis. “Overall, the result is good. There is no weakening,” said Joachim Wuermeling, member of the Bundesbank board of directors. Experts had recently warned of weakening and delay in implementation. It is of the utmost importance that the Basel III rules “are implemented fully and on time,” warned the ECB’s head of banking supervision, Andrea Enria. The deadlines are now not respected.

It is a success of the lobbying work of the banks. The industry was therefore also satisfied. “The lawmaker has been accommodating with the banking sector,” Deutsche Bank CFO James von Moltke said on Wednesday. “The European Commission’s proposals for the implementation of the new Basel rules show the right way,” said Christian Ossig, managing director of the Association of German Banks.

The strictest rules concern the deposit of loss buffers with banks. Big banks like Deutsche Bank have a lot of freedom when it comes to calculating the risk of default on their loans. They use their own models for this. Smaller establishments should use standard models which are specified by the supervisory authorities. The freedom of the big banks must be restricted. This happens through the so-called exit floor, which should be 72.5%. An example: a large bank grants a large number of loans and controls the risk of default. If the standard approach of the supervisor sees 1000 euros as a capital buffer, then a large bank will have to set aside at least 725 euros in the future – even if its own model calculated a lower capital buffer. . This exit floor has long been controversial. Bundesbank board member Wuermeling said the supply of credit in Germany was not affected by the rule. Incidentally, the production floor should not apply in full before 2032, four years later than expected.

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