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| Margrethe Vestager, Danish minister for economics: "Healthy and regulated financial sector is important" |
The
European Union has agreed strict new rules for banks, intended to make them
safer and eliminate the need for future bailouts.
All EU
banks will have to hold more "top-quality capital", broadly meeting new
international standards, the 27 nations of the EU unanimously agreed.
Under
pressure from the UK, EU states can impose even stricter capital requirements
on top of the new rules.
The new
rules will now go before the European Parliament.
It is
expected the new regulations will come into force in June.
The
agreement comes as there is lingering uncertainty over the euro, with fears
that Spain and Italy could need bailouts and Greece may exit altogether.
"Our
overall objective remains to strengthen the resilience of the banking sector in
the EU while ensuring that banks continue to finance economic activity and
growth," said EU Internal Markets Commissioner Michel Barnier.
"The
final compromise must contribute to financial stability, the necessary basis
for growth and employment."
Basel III
The new
rules meet the standards set by Basel III, agreed by the G20 group of
wealthiest nations, that strengthen the regulation and supervision of the
global banking sector.
When the
new EU rules are passed, banks will have to hold more of the least-risky Tier 1
capital - 4.5% compared to 2% under current rules.
Two new
capital buffers will be introduced, including one designed to avoid
"excessive lending".
On top of
these, each member state may impose another capital buffer, depending on
approval from the European Commission.
Speaking
before the decision, UK Chancellor George Osborne said "uncertainty is
undermining the entire European recovery".
"And I
think we're reaching a point where we've got to make a decision to see the
eurozone stand behind their currency.
"A
very important part of that, of course, is strengthening the entire European
banking system. And that is what we intend to do today."
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