FRANKFURT (MNI) – Germany’s banks can meet new Basel III capital
requirements without damaging the real economy, the Bundesbank wrote in
its latest monthly report.
Since German banks will need to raise more capital to comply with
the new rules, the implementation time granted to banks is important,
Germany’s central bank explained.
“According to the assessment of the Bundesbank, German [credit]
institutes will be able to add the necessary capital to fulfill the
capital quotas via retained earnings or the raising of capital, without
there being a drawing down of debt, burdening the real economy,” the
bank wrote.
The new Basel III rules will require banks ultimately to have core
tier 1 capital ratios of 7% or greater, compared with a requirement of
just 2% under the current standard. However, the banks have almost a
decade — until 2019 — to be in compliance with the new ratio.
Basel III also includes two indicators for measuring liquidity
risks, the liquidity coverage ratio and the “net stable funding ratio,”
the German central bank reminded.
“The Bundesbank fundamentally supports the introduction of such
international harmonized indicators for the measuring of liquidity
risks,” the bank said.
Not surprisingly, the bank urged a timely implementation of the new
Basel III rules. Only then will the G20’s goal of strengthening the
international banking and financial systems under the same competitive
conditions be achieved, it said.
On the economy, the Bundesbank predicted further expansion of
private consumption in Germany, given the favorable labor market and the
“really confident consumer sentiment.” In this vein, the bank pointed
out that private auto sales have at last turned positive again.
–Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com
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