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European commissioner Jonathan Hill, in the job
since November, said he would extend his predecessor's policy of
tailoring global banking rules where justified.
The EU was singled out last December by global banking
regulators for departing from some elements of the
internationally agreed Basel III capital rules designed to make
the financial system safer. The rules also aim to aid comparison
of banks from across the world, but discrepancies make this
harder
Hill said he would "differentiate" from other Basel rules, too,
in an effort to ensure that EU legislation is proportionate and
takes into account different business models at banks across the
28-country bloc.
"I don't want to burden smaller, lower-risk institutions with
the same requirements we need for bigger, riskier ones," Hill
told a financial conference in Brussels. "Looking ahead, I am
keen to build on this policy of differentiation."
Two key decisions on banking rules loom.
Hill has to decide by the end of next year whether all EU banks
should be set binding leverage ratios, a broad measure of
capital to assets that are not risk-weighted.
Basel, which calls for a binding ratio, is deliberating over
what level it should be set at. The global body also wants to
set a net stable funding ratio, requiring banks to hold a buffer
of long-dated bonds to cover potential liquidity crunches.
"In both of those areas, differentiation would be crucial," Hill
said.
Global regulators are finalizing a separate rule to force the
world's top 30 banks, including Deutsche Bank <DBKGn.DE>,
Societe Generale <SOGN.PA> and HSBC <HSBA.L>, to issue bonds
that can be written down if the lender gets into trouble.
Hill said he will first check whether the final detail of the
global plans are "coherent" with a similar requirement the EU
has already passed into law.
Brussels has argued that it needs to tailor Basel rules because
they are being applied to several thousand lenders in Europe
while other parts of the world, such as the United States, apply
them only to their biggest banks.
(Editing by David Goodman)
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