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Basel Committee stalls on capital adequacy changes

  • 03/01/2017
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Basel Committee stalls on capital adequacy changes
Stricter capital rules for European banks which include requirements for riskier mortgage lending have been delayed by the Basel Committee on Banking Supervision.

In a statement, the committee’s oversight body, The Group of Central Bank Governors and Heads of Supervision (GHOS), said more time was needed to finalise work, including the framework’s final design, before it is able to review the package of proposals.

The GHOS has postponed its meeting, which was originally planned for early January, with the Basel Committee expected to complete its work in the near future.

Proposals introduced under Basel III have attracted significant backlash from the mortgage sector, which could see lenders required to hold more capital in reserve for borrowing deemed risky, such as buy-to-let lending and mortgages at higher loan-to-values (LTV).

According to reports in October, the European Union proposed that banks should get more time than the 2019 deadline to implement the rules and instead be given a phased timeline.

Mario Draghi, chairman of the GHOS and president of the European Central Bank, said GHOS remained “committed” to the goal of “restoring confidence in banks’ risk-weighted capital ratios”.

Stefan Ingves, chairman of the Basel Committee and governor of Sveriges Riksbank, added: “The Committee will keep working to finalise its reforms aimed at fixing shortcomings highlighted by the financial crisis to make banks safer and more resilient.”

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