Europe risks repeating the collapse of
Banca Carige and undermining ECB policy with changes to bank
capital rules, according to industry sources in discussion with
According to Sanja Tomicic, executive
director of international relations at the Croatian National
Bank, to avoid a another Banca Carige, "supervisors must ensure
that banks have strong capital positions – preferably
comfortably above regulatory requirements".
However, changes recently proposed by the
Basel Commission mean that banks could use lower-quality
capital to meet pillar two requirements. The ECB fears that
this could encourage banks and markets to manipulate ratios
using additional tier one capital, and make financial markets
A spokesperson for a European regulator
told IFLR that if the proposed changes came into force, "banks
will not be as safe as they currently are".
According to sources, the proposal is akin to the
deregulation seen pre-2008, and threatens the successful work
done after the financial crisis...