Britain plans to apply Basel bank capital rules in full

By Huw Jones

LONDON (Reuters) – Britain said on Wednesday it plans to fully implement globally-agreed bank capital rules that were a response to the financial crisis a decade ago.

Tougher Basel capital rules were devised by global financial regulators to prevent a repeat of the 2008 crisis when taxpayers had to bail out undercapitalized banks.

Much of the package has been implemented but some remaining elements will come into force over the next few years and European banks have been lobbying to water some of them down.

Britain’s finance ministry said it intends to implement recent revisions to the Basel capital rules to demonstrate “the government’s ongoing commitment to implementing leading global standards in financial services”.

Bank of England Deputy Governor Sam Woods has singled out European banks for wanting to set off investment in software against capital requirements, a step he does not want Britain to take.

The ministry said it wants a “flexible approach” to rulemaking that ensures continued “proportionality” for non-systemic investment firms and supports UK competitiveness in global financial services.

The ministry said there would be public consultations on implementing the remaining Basel rules.

RULES “GRID”

The ministry said a regulatory initiatives “grid” would be launched over the summer to give a two-year heads-up on what new rules are coming up.

This is in response to the financial sector saying it is often faced with a plethora of new rules at same time from different regulators, making it hard to comply in a timely way.

“The grid will be published twice a year and will set out an indicative timetable for each regulatory initiative,” the ministry said.

It will include all of Britain’s main financial regulators along with the Competition and Markets Authority, with a ministry official as an observer.

Stephen Jones, CEO of UK Finance, said the announcement of the grid was a positive step and showed the government had taken on board the finance industry’s concerns.

“Good coordination between regulators helps to ensure the flow of regulatory activity is manageable for firms and avoids unintended interactions and unnecessary costs,” he said.

“We look forward to working closely with the Treasury and regulators on the detail of these measures.”

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