Banks likely to get more time to adapt stricter capital rules

ZURICH: Banks worldwide will be given more time to adapt to stricter rules on the amount of capital they have to hold, government officials in Japan and Europe said. The transition period for tighter capital requirements will probably start in 2012 or 2013, according to officials who declined to be identified because the Basel Committee on Banking Supervision’s deliberations are private. Bank stocks in Asia and Europe rallied.

By delaying the introduction of stricter standards, regulators give banks longer to repair balance sheets weakened by $1.71 trillion of losses and writedowns during the credit crisis. The Group of 20 Nations agreed in April that banks should hold more and better quality capital to reduce risks to the financial system.

“The issue this raises is whether effective coordinated cross-border regulation can be achieved,” said Simon Willis, an analyst at NCB Stockbrokers in London.