EU talks on tougher bank capital rules go into overtime

European Union finance ministers struggled Wednesday to reach a deal on rules to shelter banks from future crises, as Britain and Sweden fought for the power to impose tougher defences.

The talks in Brussels went into overtime as the ministers sought to find a compromise after more than 12 hours of a debate pitting Britain, Sweden and some eastern European nations against France, Germany, Luxembourg and others.

The special meeting was called to find a common EU position on the Basel III regulation, which will require banks to increase their capital buffers to avoid a repeat of the massive bailouts they received in the 2008 financial crisis.

But Europeans were sharply divided, with Britain and Sweden seeking freedom to impose tougher capital requirements than under Basel while the Franco-German bloc wants all 27 EU nations to follow the same standards for more than 8,000 banks.

British finance minister George Osborne, whose country is home to Europe's biggest financial sector, used stark terms to say no to the latest compromise presented by Denmark, which chairs the EU rotating presidency.

"I'm not prepared to say something that is going to make me look like an idiot five minutes later," Osborne said.

He added that he was willing to miss a dinner for eight at his London home in order to reach a deal, raising the prospect that talks would go on past midnight.

German Finance Minister Wolfgang Schaeuble voiced concern that the EU may never reach an agreement if a deal was not found on Wednesday, warning that such an outcome would be "disastrous."

Paris and Berlin want a "maximum harmonisation" of the rules, fearing that allowing nations to set higher threshholds would spark a race for the biggest reserves that would divert funds away from investments and lending.

The heated discussion comes in the midst of concerns about the health of the Spanish banking sector, still reeling from a real estate bubble that burst in 2008.

The Basel III rules, which governments must start to implement in 2013, require all banks to raise total core reserves to 7.0 percent from 2.0 percent at the moment.

Denmark proposed a compromise that would allow governments to impose an extra 3.0 percent buffer. It later raised it to 5.0 percent with certain conditions attached to it.

France and Italy backed the compromise but Britain and Sweden stuck to their guns. London and Stockholm say governments have the right to set the standards they want and refuse to let the European Commission have a say in such decisions.

"We feel that it is very important that we have strong banks, and that means strong capital in the banks, so we are looking for a solution today," Swedish Finance Minister Anders Borg said before the talks started.

"Either we have strong banks or the taxpayers take the risk, and I prefer to have strong capital in the banks than to take risks with the taxpayers," he said.

Polish Finance Minister Jacek Rostowski pointed to the "sad example" of Ireland, which was bailed out after its public deficit blew up following a banking crisis.

"A group of countries including Poland, the Czech republic, Sweden and the UK are very determined to see that banking systems in the future should be kept as healthy as we expect the fiscal side, budgetary side, to be kept," he said.

"This crisis is a crisis in which fiscal and banking system crisis feed on each other. It's not enough to deal with one, you need to deal with both at the same time."

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • EU threatens Thailand with seafood ban over illegal fishing
    EU threatens Thailand with seafood ban over illegal fishing

    BRUSSELS (AP) — The European Union has given Thailand six months to drastically crack down on illegal and unregulated fishing or face an EU seafood import ban, but has lifted the threat of similar action against South Korea and the Philippines. …

  • Philippines accuses China of turning water cannon on its fishing boats

    Filipino activists denounced China's coast guard on Tuesday for turning water cannon on Philippine fishing boats in disputed waters, near where hundreds of Filipino and American Marines landed on a beach in a mock assault. The presidential palace in Manila said China's coast guard used water cannon on Monday to drive away a group of Filipino fishermen at Scarborough Shoal, damaging some of their wooden boats. …

  • Image of Asia: Training to storm a beach in the Philippines
    Image of Asia: Training to storm a beach in the Philippines

    In this photo by Bullit Marquez, a U.S. Navy amphibious assault vehicle with Philippine and U.S. troops on board storms the beach during a joint exercise at the Naval Education and Training Command center in Zambales province, northwest of Manila. The Zambales shore faces the disputed Scarborough Shoal, where Chinese vessels were reported to have driven away Filipino fishermen with a water cannon and seized some of their catch in early April. Philippine military officials say the maneuvers with …

  • Pinoy team wins global disaster preparedness competition

    The Philippines was one of the big winners at the 2015 Global Innovation Competition last week for a cloud-based information system for disaster. The project, called "Balangay," is the brainchild of cousins Frei Sangil and Paolo Sangil. …

  • How Asia uses Bitcoin in one color-coded map
    How Asia uses Bitcoin in one color-coded map

    Bitcoin is a global phenomenon, but not everyone around the world uses it in the same way. Here in Asia, the way a person from the Philippines uses bitcoin is probably very different from how it’s used in Thailand, and both are very different from the typical user in Taiwan. Despite bitcoin being hailed as …

  • Pacmania sweeps Philippines ahead of Mayweather clash
    Pacmania sweeps Philippines ahead of Mayweather clash

    Manny Pacquiao's face is on shirts, dolls and postage stamps, his life story is playing in movie houses and millions are getting ready to party as the Philippine boxing hero's "fight of the century" nears. Pacmania is sweeping the Southeast Asian nation of 100 million people ahead of the May 2 Las Vegas bout against unbeaten Floyd Mayweather to decide who is the best boxer of their generation. Of course, it's the fight of the century," Manila film producer Lucky Blanco told AFP. …

  • Manila 'cute little submissive' of US: China media
    Manila 'cute little submissive' of US: China media

    The Philippines is nothing more than the "cute little submissive" of the United States, a Chinese tabloid with close ties to the ruling Communist Party said on Tuesday, criticising Manila for military exercises with Washington. The English-language editorial came a day after the Philippines launched giant 10-day war games with the US and Australia, partly aimed as a warning shot to Beijing amid competing claims in the South China Sea, home to vital shipping routes. "Of all the countries …

  • Philippines seeks more military aid from US to counter China
    Philippines seeks more military aid from US to counter China

    The Philippines said Tuesday it would soon ask the United States for more military equipment and training to build its defences, as it faces Chinese "aggressiveness" in disputed waters. As hundreds of Filipino and American Marines simulated an amphibious assault to reclaim territory from invaders during annual war games, military chief General Gregorio Catapang told AFP he was drafting a "wish list" for US aid. Catapang said the Philippines would ask for "equipment and training", when Foreign …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options