Banking Supervisors May Seek to Simplify Capital Rules

Global banking regulators will examine whether their new rules forcing lenders to hold more capital to absorb any future losses should be simplified after criticism that they are too complex to be effective.

LONDON, March 12 Global banking regulators will examine whether their new rules forcing lenders to hold more capital to absorb any future losses should be simplified after criticism that they are too complex to be effective.

Stefan Ingves, chairman of the Basel Committee on Banking Supervision, said a "vigorous debate" has developed over whether its rules, known as Basel III, strike the right balance between the ease of application and being sophisticated enough to make big banks safer.

Bank of England director of financial stability Andrew Haldane and Thomas Hoenig, director at the FDIC, a U.S. regulator, have said Basel III is too complex to work properly, prompting the committee to look again at its rules.

The global roll-out of Basel III began in January and will take six years but the European Union and United States have yet to formally implement the accord.

The committee will discuss a review when it meets on Wednesday. But Ingves warned it should not become an excuse to put off implementing Basel III or other reforms already agreed.

"It is too early to say how we will take this work forward," Ingves said in a speech released on Tuesday.

Some changes could be made to how trading books are supervised or supervision in general, he said. "And others might necessitate a deeper, longer-term review before we can decide on any solution, he said.

The committee will publish a discussion paper in the coming months that discusses some of the complex trade-offs that need to be made, Ingves, who also heads the Swedish central bank, added.