Banks to increase buffers

Banks around the globe still need hundreds of billions to safeguard themselves against future financial crises, the Basel Committee on Banking Supervision maintained on Thursday.

It said lenders would have to accumulate another 485.6 billion euros ($640 billion) in core reserves to conform with new rules whose full implementation would span a period from 2013 to 2019. Under the new regulations, banks would be required to raise their total capital buffers to at least 7.0 percent, up from 2.0 percent at the moment.

Starting next year, banks are called upon to gradually beef up their common equity in a bid to make them less vulnerable to any big financial crisis that might hit them in the future and ease refinancing worries. Only genuine core reserves and retained earnings will be accepted for the emergency buffer.

Fine-tuning yet to be done

The Basel Committee said on Thursday that the 103 biggest banks earned 357 billion euros between June 2010 and June 2011, but didn't specify how much of it they put aside for a rainy day.

The European Union's current Danish presidency announced on Thursday that EU finance ministers would hold a special meeting in Brussels on May 2 to discuss the so-called Basel-III rules.

"The goal is to reach an agreement within the Council before entering negotiations with the European Parliament," Presidency Spokesman Preben Aaman said in a statement.

The 27 EU member states must reach a common position on the future setup of Europe's 8,200-bank system, with Britain pressing for stricter rules regarding capital buffers.

hg/ai (Reuters, AFP)