EU's banking chief rejects Basel regulators' criticism

(GENEVA) - Europe's top banking chief launched a rebuttal on Monday to criticism by the industry's global supervisory authority that the EU is dragging its feet on protecting banks against a fresh financial crisis.

Expressing "reservations about the preliminary findings" of the Basel Committee, European Commission financial services commissioner Michel Barnier said that the EU did intend to roll out the new rules to boost banks' capital base.

"The European Union remains firmly committed to the robust implementation of the internationally agreed capital standards, the so-called Basel III agreement," he said, adding that it would apply to more than 8,000 European banks, representing more than 50 percent of world banking assets.

In its latest report, Regulatory Consistency Assessment, the Basel Committee found that the EU was "compliant" or "largely compliant" in 12 out of 14 areas of banking legislation.

But the EU fell down in two areas, the report said, namely the definition of capital and the calculation of credit risk capital requirements.

Barnier rejected those findings in a detailed rebuttal, saying they "do not appear to be supported by rigorous evidence and a well-defined methodology."

Calling for fair treatment, Barnier said it was "of the utmost importance that the Basel III agreement is applied consistently around the world, in order to ensure global financial stability and a level playing-field".

Barnier's comments come after the Basel Committee announced last month that 100 countries supported changes to global bank regulation principles as a result of the global financial crisis in 2008.

The principles were changed among other things to highlight the need for more intense supervision of systemically important banks, for supervisors to help identify, analyse and take preemptive action to address systemic risk and for more effective crisis management.

The revisions were made by a group comprising banking supervisors from both member and non-member countries of the Basel Committee, along with regional banking supervisor groups, the International Monetary Fund, the World Bank and the Islamic Financial Services Board.

The Basel III international banking regulations are to be phased in from 2013 to 2019.