US banks to implement new capital rules: Draghi

4th November 2011, Comments 0 comments

US banks, many of which have resisted current capital rules, will have to comply with tougher new legislation aimed at preventing another financial crisis, a top regulator said on Friday.

"All the evidence we have from the US goverment, from the US Federal Reserve which is ultimately responsible for introducing regulation about Basel III, all the evidence we have is that they will introduce Basel III and will implement it," said the outgoing head of Financial Stability Board, Mario Draghi.

Many US banks have not even implemented the Basel II regulations, which were published in 2004 and have been adopted by their European counterparts.

JP Morgan Chase chief executive Jamie Dimon has also spoken out vehemently against the new rules, telling the Financial Times: "I'm very close to thinking the United States shouldn't be in Basel anymore."

"I would not have agreed to rules that are blatantly anti-American," he said, according to the paper. "Our regulators should go there and say: 'If it's not in the interests of the United States, we're not doing it.'"

Basel III requires banks to raise their high-quality, easily accessible, core common equity to 7.0 percent of total assets from the current 2.0 percent.

In addition, to address the issue of systemic importance, regulators are asking 29 of the world's biggest banks -- seen as too big to fail -- to set aside an extra 1.0 to 2.5 percentage points in Tier 1 capital.

If these large banks were to increase their size substantially, they would be required to set aside a further 1.0 percentage point.

© 2011 AFP

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