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EU bankers call for postponement to Basel IV rules due to coronavirus pandemic


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EU bankers call for postponement to Basel IV rules due to coronavirus pandemic

The European Banking Federation called on European lawmakers to postpone the implementation of postcrisis rules requiring banks to hold more capital until the economic impact of the coronavirus is fully known.

In a Nov. 20 statement, the Federation, which represents 32 banking associations from all over Europe, said the transposition of the rules, commonly known as Basel IV, into EU law should take European standards into account and thus let banks fully take part in the economic recovery.

The board also asked lawmakers to free up additional lending for the banks, including a cap on the single resolution fund, designed to finance failed or ailing banks. The fund was supposed to total about €55 billion but has grown to €70 billion — a rise that does not "correspond with the underlying risks," the federation said.

New tools to tackle nonperforming loans such as a review of the NPL backstop regulation, a securitization framework to boost a secondary NPL market and a consistent framework for asset managers need to be considered, the federation said.

"European banks are strong and face the crisis generated by COVID-19 with high capital levels. The sector is making a tremendous effort to encourage recovery while putting in place preemptive actions to manage loan loss provisions," EBF President Jean Pierre Mustier said in a statement. Mustier is also CEO of Italian bank UniCredit SpA.

"The focus must remain on supporting the real economy, ensuring that clients and communities are equally successful in facing these unprecedented challenges. The role of the EBF is key in making sure that the regulatory environment continues to allow banks to remain an important part of the solution."

The U.K.'s transition agreement with the EU ends on Dec. 31, and the EBF said UK Finance would cease to be a full EBF member as a result. It aims to create a new category of membership to allow the UK association to continue to work with the EBF.

The EBF also called on regulators to complete a European banking union, a long-delayed project which has yet to be finalized.