Bank regulators see mood shift as rule-making phase nears end
By Huw Jones and Steve Slater
LONDON (Reuters) - Global banking regulators are not looking for the banking sector to raise yet more capital as political support for additional rules wanes and the regulatory juggernaut slips down a gear, top officials said on Thursday.
Global banking watchdogs are finishing a package of new capital rules, aimed at making the industry safer in the wake of the 2007/09 financial crisis.
Those rules are being added to, but most of the focus is now on applying them consistently rather than "layering on" more capital requirements, officials said at a British Bankers' Association conference on Thursday.
"The rule-making phase in banking is coming to an end. We will then move to consistency and implementation issues, which will keep us busy for a while," said Andrea Enria, who chairs the EU's European Banking Authority.
"On the European side, we will still be busy in 2016 ... but then the rate of regulatory products we have to issue really drops dramatically."
That is likely to be the case globally, according to William Coen, secretary general of the Basel Committee, which sets global banking rules.
"We've done quite a bit since the crisis and there's not an appetite to layer on more and more," Coen told Reuters on the sidelines of the conference.
He earlier told the conference that the Basel Committee was not aiming to add to the aggregate amount of capital the industry should hold, playing down the threat of a new quantum change that banks have already dubbed "Basel IV".
"There's not a prevailing view among the Basel Committee that we need more and more capital, I think we've got a good handle on the amount of capital," Coen said.
He added, however, that the committee's work on trading-book risk -- due to be finished this year -- means that some banks may need to hold more capital.
"There will be an impact on some banks, but it's not our explicit intention on an aggregate basis to raise capital," he said.
Basel members were also considering whether to toughen up the leverage ratio, a broad measure of capital to assets, by making only the purest form of capital eligible for inclusion or by lifting the minimum level above 3 percent, Coen told Reuters.
WANING SUPPORT
Eight years since the start of the financial crisis, regulators have said there appears to be waning political support in some countries for more reforms because bank lending is considered key to boosting economic growth.
"There has been a shift in tone," said Hector Sants, who headed Britain's financial regulator during the crisis and is now at consultancy Oliver Wyman. "It's right the growth agenda should come to the fore more."
Britain's finance minister George Osborne, for example, has talked of a "new settlement" with the industry and there has been an easing in UK banking reform plans this year.
Coherence and implementation now appears to be the big issues.
"It is quite conceivable that given the range and speed of regulatory reforms, there are parts of the framework that might not work in the way we intended," Bank of England Deputy Governor Jon Cunliffe said.
But there will be no going "back to the future" of tolerating more risk to financial stability as memories of the crisis fade, he added.
Memories of 2007/09 are still fresh, however, and the rise to prominence of financial technology and cyber security means that regulators will have to remain vigilant.
"The global regulatory juggernaut is slowing down, but it hasn't stopped," said David Wright, secretary general of the International Organisation of Securities Commissions, a global umbrella body for market regulators.
(Editing by David Goodman)
