France and Germany are to call for a relaxation of global bank capital rules to prevent lending to the real economy being choked off, setting them at odds with the UK’s stricter approach to banks. A joint paper by Wolfgang Schäuble, German finance minister, and his French counterpart, François Baroin, will on Monday call for important elements of the Basel III rules to be watered down to mitigate any “negative effect” on growth. A draft of the paper seen by the FT calls for special treatment for banks that own insurance companies – a particular point of friction, as tweaks backed by France and Brussels will boost the capital of Société Générale and Crédit Agricole, which both own insurance companies. The draft also looks set to open a new faultline by suggesting the deadline to publish leverage ratios – the ratio of top-quality capital to total assets – should be pushed back from 2015 to 2018. That contrasts with UK regulators who have proposed that banks disclose the ratio as soon as next year, well in advance of the Basel III timetable requirement.

This entry was posted by Kate Mackenzie on Monday, January 23rd, 2012 at 2:52 and is featured in The 6am Cut London (23 Jan 2012) . Tagged with Basel III, credit agricole, france, germany, leverage ratios, societe generale, UK banks. Edit this entry.