Basel Committee: additional capital buffers to range 1% - 2.5%

PanARMENIAN.Net - Global regulators said banks deemed too big to fail must hold as much as 2.5 percentage points in additional capital as part of efforts to prevent another financial crisis. As many as 30 banks may face some level of surcharges, according to a person familiar with the discussions.

The additional capital buffers will range from 1 percentage point to 2.5 percentage points, the Basel Committee on Banking Supervision said in a statement yesterday. From 28 to 30 banks, including as many as eight in the U.S., may face surcharges, said the person, who declined to be identified because the talks are private.

Regulators are at loggerheads with some banks over the additional capital rules, with lenders arguing the requirements may harm the global economic recovery. Many banks are “vigorously lobbying” against being branded as systemically important, Sheila Bair, chairman of the U.S. Federal Deposit Insurance Corp. told U.S. lawmakers.

“It’s the best possible outcome for U.S. banks given the way the regulators were pushing for high capital levels,” Charles Peabody, an analyst with New York-based Portales Partners LLC, said in a phone interview. The 2.5 percent maximum surcharge is the most that European banks can withstand as they’re “less well-capitalized” than U.S. banks and more exposed to risky sovereign debt, Peabody said, Bloomberg reports.

The Basel committee has said internationally active banks should hold core Tier 1 Capital of 7 percent of their risk- weighted assets, and the additional requirements are for banks it considers systemically important financial institutions, or those whose collapse would harm the global economy.