Basel III’s January Deadline Comes Too Soon for Most Nations

More than half the nations that drew up a global accord to toughen bank capital rules will miss next month’s deadline to start implementing the measures, global regulators said.

Only 11 out of 27 member countries have completed the necessary rulemaking to meet the deadline, the Basel Committee on Banking Supervision said after a two-day meeting in the Swiss city. The laggards include the U.S. and the European Union, which has 9 member states in the Basel group. The committee didn’t announce a deal on a draft liquidity rule for banks that was also on the agenda of the talks.

Implementation of the accord, which more than triples the amount of core capital lenders must hold compared with previous international standards, “is an absolutely critical step towards strengthening the resilience of the global banking system,” Stefan Ingves, the Basel group’s chairman, said in a statement today.

The EU and the U.S. have said that they will miss the deadline, amid calls from some officials for the so-called Basel III rules to be scrapped in favor of a simplified form of bank regulation. The 2013 start date is supposed to be the start of a phase-in process for Basel III that runs until 2019.

The European Union plans a Jan. 1, 2014 deadline for legally implementing the measures, on concerns that national parliaments must be given enough time to adopt the overhaul, Othmar Karas, the lead EU legislator working on the standards, said this week. The bloc is targeting a political deal on the rules on Dec. 18.

U.S. regulators said in November that they wouldn’t be ready for Jan. 1, 2013 as they wanted to take more time to consider responses from banks.

Agreed Timetable

“By the end of 2013, almost all Basel Committee jurisdictions will be implementing Basel III in accordance with the agreed timetable,” Ingves said.

The 11 countries that will meet the 2013 deadline include Canada, China, Mexico and Switzerland, the Basel group said.

“Even though there are delays in implementing the regulations, national supervisors are ensuring that internationally active banks are, where necessary, making steady progress in strengthening their capital base in accordance with the Basel III framework,” Ingves said.

Nations that are late in writing the measures into their national rulebooks should do so as soon as possible, and then fall back in line with the original timetable for phasing them in, he said.

Liquidity Ratio

The group this year carried out so-called peer reviews of the EU and U.S. that found flaws in their draft rulemaking to apply Basel III. The group will next year complete assessments of other countries with globally systemic banks, the group said.

The Basel group at its meeting discussed possible revisions to a planned liquidity rule that would force banks to hold enough easy-to-sell assets to survive a 30-day credit squeeze.

The so-called liquidity coverage ratio has been criticized by some central banks and regulators, including European Central Bank President Mario Draghi, as a threat to interbank lending and economic recovery.

Regulatory and central bank chiefs have called on the committee to review the measure and draft proposals by the end of 2012, so that they can be signed off by them when the Basel group’s governing board meets in January.

The Basel committee brings together banking regulators from nations including the U.S., Japan, U.K., Germany, and China to coordinate their rulemaking.

To contact the reporter on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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