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German central bank urges lighter touch regulation for small banks

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German central bank urges lighter touch regulation for small banks

A stalled agreement on finalizing global bank capital rules should leave smaller lenders facing less onerous requirements, a board member of Germany's central bank said Feb. 2.

Andreas Dombret said operational and compliance burdens should be cut for smaller lenders, even if they are still subject to the same capital and liquidity requirements as other banks. He also said the Deutsche Bundesbank is keen that an agreement on finalizing the Basel III package of measures should not lead to any additional capital burden.

"The motto must be: we'd rather have no agreement in Basel than a bad one," he added.

Negotiations over changes to the way banks calculate the riskiness of their assets, dubbed "Basel IV" because of their sweeping nature, have stalled amid European resistance to the measures and the change of administration in the U.S. New President Donald Trump has pledged to roll back post-crisis bank regulation.

Dombret also said applying the full spectrum of rules only to the world's largest banks would make negotiations easier, given that regulators would not have to take account of the differences between countries' banking systems.