The issue thus widely exceeds the banking sphere

Tension is mounting as the central bankers, in the Basel Committee, must decide this week the definition of the new solvency ratio of banks. Two meetings should set the new minimum threshold of own funds applied to banks. One was held yesterday and the second will be held Sunday. It is the key to the reform of Basel III, who, after the financial crisis, must set the new prudential standards for banks. The level of their own funds and their financial strength are at the centre of attention.

Now fixed at 2 for the ratio of hard equity or "core" Tier-1 (and 4 for the Tier-1 ratio, which includes subordinate securities), the threshold of the solvency ratio could hardly exceed 7 according to the analysts, which is little or less to the current requirements of the markets. In July, the scenario of the testing of resistance in Europe - under the leadership of the Committee of European supervisors, CEBS - had adopted a "core" Tier-1 of 6 threshold and only 7 of 91 tested banks had seen their funds own fall below this level for "stress". These tests, whose findings are regularly questioned across the Atlantic, were intended to restore confidence in European banks, weakened by the Greek crisis.

Fear for the competitiveness

But it seems that it is now in Basel that played the part. While US banks are already not applying the standards set by Basel II, the European institutions fear imposing excessive prudential rules. "Even more flexible, the recommendations of the Basel Committee's own funds are not acceptable", storm a banker. The iron arm then reached its paroxysm. European banks spooked to mobilize resources in capital higher than those required in the United States, which weaken them but also begin their lender at a crucial time ability to finance the economic recovery. The issue thus widely exceeds the banking sphere. Banks States that lend less than their competing European and who are facing the Dodd-Franck Act, would be less anxious to impose prudential additional standards, as the recovery proves to be softer than expected in the United States.

Monday, the German Banking Federation was concerned of the impact of the new regulatory framework, calculating that the largest banks in the country would need to raise up to EUR 105 billion to achieve compliance. BNP Paribas President Michel Pebereau has pressed the nail the next day. "The mentioned amounts up to 10 of own funds to the weighted average assets, would lead the French banks to raise additional capital EUR 150 billion", said on BFM. Or equivalent, in six years, the overall volume of the capital that have created and lifted the French banks since their creation, he added. Before you call the elders of the Basel to reason keep.

Everything depends on so the threshold that will be retained by the Basel Committee as well as the definition of own funds included in the "core" Tier-1 ratio, including the fate of some hybrid securities. Yesterday, the Bank values were chahutées in Paris. Société Générale has lost 3.85, BNP Paribas 2.17 and Credit Agricole SA 2.79.