G20 finance chiefs to delay introducing new rules on bank capital
GROUP of 20 finance chiefs have signalled they will delay introducing new rules aimed at forcing banks to raise the quality and quantity of capital they hold to buffer against financial crisis.
Finance ministers and central bankers concluded talks in Busan, South Korea, yesterday in agreement that banks needed to keep more assets on hand, yet split over the scale and timing of capital increases.
With euro-area officials expressing concern that haste would hurt economic growth, UK Chancellor of the Exchequer George Osborne echoed US Treasury Secretary Timothy Geithner in pushing for the new rules to be agreed this year, with the provision that enactment be delayed.
"Implementation is a variable," Canadian finance minister Jim Flaherty, who is co-chair of this weekend's meeting, said. "I think that can be worked out over time."
At stake for banks is the potential need to raise as much as $375bn (€313bn) in fresh capital under the proposals being discussed, according to estimates by UBS.
Companies from Deutsche Bank to Bank of America warned that forcing them to build up reserves quickly could lead them to cut lending -- threatening their profits and endangering global recovery.
Leaders are scheduled to meet again in South Korea in November, the new target for a deal agreed to by Mr Geithner yesterday.
Mr Geithner told South Korean finance minister Yoon Jeung-hyun that he backed crafting a final framework by then, a local report said.