EU escalates stand-off with US on global bank-capital rules

Vienna

THE European Union (EU) upped the ante in its battle with the US over changes to global bank-capital rules, calling for a key plank of the reforms to be scrapped.

The EU, home to nearly half of the world's biggest banks, opposes the introduction of capital floors, a restriction on firms' use of their own statistical models to measure asset risk that would drive up their capital requirements, an EU official said.

The US, by contrast, has said regulators should consider discarding the internal-model approach altogether because it creates the potential for banks to game the rules.

The Basel Committee is racing to finish work on the post-crisis capital framework known as Basel III by the end of the year, and it's under instructions not to increase overall capital requirements significantly in the process. That promise, f…