Tuesday, December 4, 2012

US and EU in Basel III Standoff


Author: David Schwartz J.D. CPA David Schwartz J.D. CPA

Citing the large volume of comments received in response to the proposed rules, on Nov. 9, 2012, the Federal Reserve Board, the OCC, and the FDIC announced in a joint release that proposed rules to implement the Basel III regulatory capital accords will not take effect on January 1, 2013.

The banking agencies did not indicate when they expect to issue final rules, but noted that they are mindful of their international commitments.

In light of the volume of comments received and the wide range of views expressed during the comment period, the agencies do not expect that any of the proposed rules would become effective on January 1, 2013. As members of the Basel Committee on Banking Supervision, the U.S. agencies take seriously our internationally agreed timing commitments regarding the implementation of Basel III and are working as expeditiously as possible to complete the rulemaking process. As with any rule, the agencies will take operational and other considerations into account when determining appropriate implementation dates and associated transition periods.

On November 21, the European Banking Federation sent a letter to EU Internal Market Commissioner Michel Barnier formally requesting a delay on the grounds that EU banks would be at a competitive disadvantage if they introduced the new rules before their US counterparts.

We are now very troubled over the possible repercussions that the most recent statement from the U.S. Authorities may have for the international competitiveness of Europe's banks.

In response, Europe is preparing to follow the US in delaying the introduction of Basel III rules on bank capital while it waits for a revised implementation schedule in the U.S. Though no formal announcement has been made, EU officials are considering a six month implementation delay, at the very least.
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