September 19, 2012 / 4:08 PM / 6 years ago

German banks gain extra six months to apply Basel rules: sources

FRANKFURT (Reuters) - Germany’s banks will be given more time to prepare before the tighter global capital and liquidity requirements of Basel III are imposed, supervisory sources told Reuters.

The Bundesbank and banking supervisor Bafin will give banks in Europe’s largest economy until mid-2013, six months after the target starting date, to get reporting and controlling structures in place as well as adjust information technology systems, the sources said.

“We won’t be demanding anything of the banks that they are unable to supply,” one of the sources told Reuters.

The decision could open the door for other national regulators to grant their banks more leeway in meeting Basel III requirements, giving rise to the question of whether the EU may officially delay its start.

The Basel III rules are supposed to come into force worldwide at the start of 2013, but late agreement on many details and complaints that the deadline is too near to make any back-office adjustments, has left many banks unprepared.

Germany will have to apply the Basel standards as adopted in a European Union law, which has taken longer than expected to put in place, with final details likely to be nailed down in Brussels by the end of October at the earliest.

Banks in the region have warned that they would need about six months to recalculate valuations for their securities portfolios under the new rules.

Britain’s watchdog, the Financial Services Authority (FSA), has already said it would begin collating data from July.

The Bundesbank and Bafin declined to comment on their timetables on Wednesday.

But an informal pledge from regulators is unlikely to satisfy the country’s banks, who are demanding a definitive timetable.

“Quality is far more important than the timetable and banks must have a realistic chance and sufficient time to put these new complex rules into effect,” Hans Reckers, managing director of Germany’s powerful association of public sector banks VOEB said.

At a minimum, banks need to have a clear date before which the Basel rules would not be applied, for planning and legal certainty, Reckers said.

The Basel III rules are aimed at making banks less susceptible to failure by requiring them to build progressively higher amounts of loss-absorbing capital buffers over the next six years, to gird themselves against financial downturns.

Banks must have a core capital buffer equivalent of at least 7 percent of their risk-weighted assets by 2019.

In practice, some delays would make little difference as markets and investors expect lenders, such as Germany’s top two players Deutsche Bank (DBKGn.DE) and Commerzbank (CBKG.DE), to meet or even exceed the tougher capital requirements almost immediately.

DELAYS

The EU’s European Banking Authority has said that given delays in final approval of a law implementing Basel III across the 27-country bloc, some of its new reporting requirements will be delayed a year until January 2014.

The EBA is expected to formally acknowledge delays in some Basel elements by issuing a revised timetable for introducing the different constituents.

Some parts of Basel, such as the leverage ratio and new liquidity buffers have yet to be finalized at the global level and are meeting some pushback.

Europe is also keeping a close eye on how implementation is proceeding in the United States where a senior regulatory official said last week the country should ditch Basel unless it was radically simplified.

Additional reporting by Huw Jones in London, writing by Jonathan Gould; Editing by Mike Nesbit

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