Basel: industry begs regulators to slow down

Author: | Published: 28 Apr 2010
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An increase in capital requirements is “the single biggest issue” facing the banking industry today, with participants calling for the Basel Committee to launch another consultation period before finalising its regulatory plans.

“There is a lot of concern about the aggressive pace of regulatory deadlines,” said Lorraine Charlton, managing director and general counsel of the Association for Financial Markets in Europe (AFME), speaking at the IFLR European Capital Markets Forum today. “Without a real reflection on the impact we’re in for trouble.”

During the last consultation period (which closed on April 16), and alongside organisations such as the British Banking Association, AFME has been lobbying both the Basel Committee and the G20 to revisit their implementation plans for tougher capital adequacy rules.

And Charlton says there’s growing recognition among regulators of the need to slow down. “We’re hoping for another consultation from Basel by the end of this year, including a quantative impact study,” she said. “At the moment this is a bit like the Titanic – a very large ship advancing at a very specific speed.”

Existing regulatory plans would see new measures being agreed by the end of this year, with implementation before the end of 2011.

Michael Raffen, partner at Freshfields in London, agreed that further consideration was necessary. “New regulation is being looked at in silos at the moment,” he said. “The overall impact must be looked at more carefully.”

Speakers also expressed concern over the lack of coordination between the EU and global capital initiatives.

“The EU and the Basel Committee are constantly leapfrogging over each other,” said Charlton. “It makes it very difficult for the industry to keep up.”