–Adds Comments On Credit Developments And Capital Needs
FRANKFURT (MNI) – The new Basel III capital requirements for banks
can be met by the German banking sector, but they will pose challenges
and do not all work in favor of stability, German Banking Association
head Manfred Weber said Monday.
The new rules are “all in all realizable,” in line with the time
requirements, “even if the challenges are considerable and there are a
few things to fight,” Weber said in prepared remarks provided by the
association.
“There are points…that we criticize because they do not serve the
goal of more stability,” Weber added.
For example, the agreed leverage ratio may not necessarily serve
its desired purpose, Weber argued. “In the USA where this instrument has
been in place for a long time, a leverage ratio neither prevented the
crisis nor mitigated its course or its consequences,” he argued.
“Furthermore, we also criticize the additional capital buffer,” he
said, arguing that it impairs efficiency and limits lending, without
“giving additional stability.”
Nevertheless, Weber affirmed his broad agreement with the Basel
III. “We are convinced that Basel III is correct at its core…Basel III
is a good result.”
The Basel III accord will ultimately require banks to achieve core
tier 1 capital ratios of at least 7%, up from the 2% currently required.
In a first phase, the ratio would be lifted to 4.5% by 2015. Then, an
additional capital buffer of 2.5% would be phased in by 2019. Banks that
fell into the buffer zone — ie, below 7% — would face constraints on
paying out dividends and bonuses.
An additional “countercyclical” buffer of between 0 and 2.5%,
depending on national circumstances, would also be tacked on.
Credit developments in Germany have been better than expected and
“there has not been a credit crunch, and one does not seem to be coming
to us,” Weber predicted.
He refused to give a precise answer when asked whether he still
believed that Germany’s ten largest banks needed to raise E105 billion
in new capital, as his association predicted ahead of the Basel III
agreement.
–Frankfurt bureau tel.: +49-69-720142. Email: frankfurt@marketnews.com
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