European regulators may apply less stringent rules to loans to medium-sized companies to maintain the flow of credit, according to Germany’s association of cooperative banks.
“From what I hear, loans to medium-sized companies, the Mittelstand, will continue to be treated under Basel II rules when Basel III takes effect,” Uwe Froehlich, president of the Bundesverband der Deutschen Volksbanken und Raiffeisenbanken, said today at a conference in Frankfurt. “Loans to those companies would not be burdened additionally.”
Global banks are preparing for stricter rules on capital and liquidity from the Basel Committee on Banking Supervision, known as Basel III, even as the debt crisis in Europe hurts the economy. The International Monetary Fund said European banks may shrink assets by as much as $4.5 trillion through 2013 if policy makers fail to implement pledges to fight the debt crisis, curbing lending and economic growth.
Germany’s BDI federation of industries said in an Aug. 22 statement that its members are concerned they will bear the brunt of Basel III requirements as loans become more expensive.
The U.K.’s Financial Services Authority relaxed the amount of funds British banks must keep in reserve, in an effort to spur lending and stimulate credit growth, the FSA said in a Sept. 27 statement on its website.
Basel III rules are designed to help prevent a repeat of the taxpayer-funded bank rescue that followed the 2008 collapse of Lehman Brothers Holdings Inc. German banks plan to implement the standards next year.