PA ragmatism justified by economic imperatives or a regulatory battle of the highest bidder? Interpretations differ according to points of view following the recent announcements by the North American and British financial authorities on the application of new international financial regulation standards, known as “Basel III”, aimed at strengthening the balance sheets of international banks to avoid new crises. financial. crisis.
In the United States, it was the speech given on September 9 by the vice president of the Federal Reserve (Fed), Michael Barr, that had an impact. At the end of the consultation process required before any reform, he explained that “widespread and important changes” were necessary in relation to the initial proposals. This evolution could lead to an increase limited to 9% in the equity ratio set for the eight main American banks, that is, 10 points less than initially planned. A change that is difficult to digest for comparable European banks in terms of the size of their balance sheet and their international presence, for which this ratio will increase to 21.5%.
The positions presented by Barr were seen by many observers as a resounding victory for the Washington banking lobby, led by Jamie Dimon, the head of the giant JPMorganChase.
Successive adaptations
Three days after Barr’s speech, the Prudential Regulatory Authority, the division of the Bank of England responsible for supervision, published a report on the status of the transposition of the new rules known as “Basel 3.1”, promising, among other things, that The same ratio, which supposedly measures the ability of banks to withstand a possible crisis, would ultimately be “practically unchanged” compared to its current level.
It is difficult, seen from the European Union (EU), not to suspect, behind these Anglo-Saxon announcements, a desire to ease the new restrictions imposed on American and British banks, with the consequence of limiting the strengthening of the banks’ soundness. global financial system… and widen the gap with its EU competitors.
The reality is undoubtedly more complex. Because the European authorities also know how to demonstrate a pragmatism favorable to banks, as demonstrated by the European Commission’s proposal to postpone for one year, until 2026, the application of the FRTB regulation (Fundamental Review of the Trading Book), called to regulate management . of market risks, or the calendar that extends until 2032 the final implementation of the “production floor” rule, which aims to limit the benefits that banks can obtain from the use of their own risk assessment models.
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