BRUSSELS, Nov 22 (Reuters) - Top American or Asian banks will have to hold enough capital buffers for their activities in the European Union to face crisis without help from their headquarters, a draft EU law says, according to officials familiar with it.
The provision is included in a reform of EU rules for banks’ capital requirements aimed at ensuring that large lenders are able to sustain significant losses without requiring a state bailout.
Non-EU global systemic banks or foreign lenders with EU assets of at least 30 billion euros will be required to set up an “intermediate parent undertaking” for their entities in the EU, which will need to abide by capital requirements as a stand-alone company, regardless of the financial soundness of its parent company, according to the draft proposals.
This is likely to increase costs for the EU operations of large U.S. banks, such as Citigroup, JPMorgan Chase or Goldman Sachs, and for their Japanese and Chinese counterparts with activities in the EU.
The plan, meant to increase banks’ safety and mirroring existing U.S. regulations, may also hit top British banks, such as Barclays or HSBC, after Britain quits the European Union.
The proposals will be unveiled by the European Commission on Wednesday and will need the backing of EU states and European lawmakers to become a law.
Reporting by Huw Jones and Francesco Guarascio; Editing by Raissa Kasolowsky