You are here

Basel watchdog shifts emphasis to fine-tuning bank rules

[DOHA] International regulators who have overseen a major shake-up of banking sector rules since the global financial crisis can now focus more on fine-tuning them, the group's secretary-general said on Sunday.

Tighter regulation has been cheered on by lawmakers and backed by financiers since the banking excesses of the 2000s pushed the global economy into its worst recession since the Great Depression of the 1930s.

The Basel Committee on Banking Supervision has helped set down the new rules, aimed at strengthening the capital reserves of banks to make them better prepared for crises and reducing the amount of risk that banks are allowed to take on.

But the focus of the committee is now evolving, its secretary-general William Coen told a financial conference in Doha. "The new framework, we think, is in place," he said, adding there were still bits of work needed to finalise rules on leverage ratios and implementing a stricter "floor" on the capital which banks must hold. "We're now at the state where we can take a step back and look to see how those matrixes fit together. Are they really meshed as we had expected or are there areas of conflict where they don't interact."

Coen said the discussions needed to be data-driven where possible, showing quantitative evidence of the impact of regulation as well as using feedback from banks and trade bodies.

Such a focus represents a significant change of pace to the last few years, with Coen admitting that both banks and regulators were experiencing a certain amount of regulation fatigue.

Much of the effectiveness of global regulation is more down to the people operating in the sector, as opposed to the rules prescribed, Coen said, adding the Basel Committee would publish a paper later this year on corporate governance.

The culture of banking has been often criticised by lawmakers, most recently over allegations that HSBC's private bank in Switzerland helped customers dodge tax. "What we're trying to do is not only to raise the bar but to talk about the specific responsibilities of the board and their relationship with senior management," Coen said, adding the paper would also focus on the role of banks' risk officers and supervisors in the industry.