Banks, Basel III towards partial postponement while waiting for the US to lay its cards on the table
Hypothesis of one-year postponement for market risks at France's request. Fears of a new competitiveness gap with America, Fed to decide in July
2' min read
2' min read
Above all, the Banque de France, diplomatically hyperactive along with the Paris government in protecting the major transalpine banks, is behind the possible partial postponement in Europe of the new Basel III rules.
In recent days, Bloomberg rumours have revived speculation that the EU Commission is considering postponing by one year the entry into force of the new regulation, which raises banks' capital requirements, by postponing its start from 2025 to 2026. The postponement would only affect one part of Basel III, namely the part of the banks' trading business that impacts market risks. According to Equita's forecasts, the capital surplus attributable to market risks is on average 10% of the total. But for the large French banks the impact is higher, as well as for the two German biggies Deutsche Bank and Commerzbank.
Phased times
.The hypothesis of a possible postponement is related to the different adoption times of Basel between the EU, the UK and especially the US. While in Europe everything is set to start on 1 January 2025, the UK has set the start six months later. But it is above all the United States of America, where the Federal Reserve has not yet resubmitted the so-called Basel 3 Endgame package of rules after the bipartisan rejection by the US Congress of an initial version of the rules that was judged to be too stringent, that is causing fears of a regulatory imbalance, and therefore of competition.
The American Game
.The Fed has pledged to 'soften' the capital requirements but it is still unclear what the final outcome will be. The new proposal will come in July. Will it deviate from the requirements in Europe for all banks, even the smaller ones? And when will it come into effect in the US, given the delays? Questions that seem to worry France in particular, as evidenced by recent explicit statements by the Governor of Banque de France Francois Villeroy: 'If the delays or differences in content are too great, Europe could and should postpone the entry into force of certain requirements, in particular those relating to market risks'.
The postponement of this part of the regulation, according to the final package approved in the EU, can be decided independently by the Commission. For the postponement of the entire regulation of the new Basel III, or any changes in its content, a new approval process by the European Parliament and the European Council would be required.
