Global regulator may simplify complex new bank rules

Mon Jul 8, 2013 10:14am EDT
 
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By Laura Noonan

LONDON (Reuters) - The world's main bank regulator may simplify a mass of new rules coming in for the industry, a sign that watchdogs are still grappling with how best to keep banks in check nearly five years on from the financial crisis.

The regulator - the Basel Committee on Banking Supervision, - on Monday published suggestions on how to simplify its new regulations after an internal review of whether the rules, designed to safeguard the world's financial system, had become too complex.

Several policymakers, including the Bank of England's head of financial stability Andrew Haldane, had criticized them as such. Banks have also complained that the rapidly-expanding body of regulation is taking up too many resources.

The new rules aim, in part, to get banks to hold more capital to support lending and other activities and to cushion against losses. But implementing such a system across different banks and countries has created a complicated web of regulations.

In its review, the Basel Committee, made up of regulators from major financial centers, identified several areas where the complexity of regulations had produced negative effects, such as making it harder for banks to plan their capital needs and leading to less accurate assessments of risk.

"The fact that they're even thinking of simplifying it shows that they are at least aware of that (that it's an issue), which is good," said Patrick Fell, head of PricewaterhouseCoopers UK regulatory capital practice.

"Whether they will achieve that is a good question. It's a brave regulator that takes regulations away."

Basel Committee chairman Stefan Ingves said the regulators were "keenly aware" of the debate on whether the rules were too complex but had not yet decided whether they should be changed.   Continued...

 
Stefan Ingves, the head of Sweden's Central Bank, speaks to Reuters reporters during an interview in Stockholm June 16, 2011. REUTERS/Bob Strong