Banks’ hopes rise for Basel III relief…briefly

Bank stocks have jumped after hints that some of the toughest bits of the Basel III regulations could be lifted. Apparently they might not be forced to go to their shareholders and beg for more cash. It’s the uncertainty over how much equity banks will have to raise to meet the new regulations that’s been depressing the outlook for profits in the banking sector.

Hold your horses! says the European Union’s internal market commissioner Michel Barnier. Basel III will NOT be watered down. His statement reads as follows:

A few weeks ago, some people were accusing us of damaging the economic recovery by implementing rules which would be too tough for banks because they would impede their lending to the real economy.

Today, others seem to accuse us of the opposite with suggestions Europe would not be implementing Basel properly, thus not learning all the lessons from the crisis. Both criticisms are unjustified and simply factually wrong. And they will not affect my determination. I will not be swayed by various pressures.

Europe will implement Basel III: we have said it before and I confirm it to you today, the Commission’s proposals to implement Basel III will respect the balance and level of ambition included in Basel 3

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