ECB Stands Firm on Bank Capital Requirements Amid Industry Pressure
ECB Defends Current Capital Rules Despite Industry and International Pressure
FRANKFURT, July 2 (Reuters) - The European Central Bank pushed back on industry calls for lower bank capital requirements on Thursday, arguing that the current requirements are needed for safety and do not constrain lending.
International Regulatory Context
The U.S. administration has been easing bank regulation for the past year, and European lenders have been calling on the ECB, which supervises more than 100 of the 21-nation euro zone's biggest lenders, to follow suit to keep the playing field level.
ECB's Response to Competitiveness Concerns
"Concerns that adequate capital requirements may undermine banks' competitiveness or lending are not borne out by the evidence," ECB supervisory chief Claudia Buch said.
Impact of Capital Requirements on Lending
She said the higher capital requirements since the financial crisis have not impaired banks' ability to lend and that strong capital positions are essential for them to function.
"There is no indication of credit supply being constrained by bank capital requirements," Buch told a European Parliament committee hearing in Brussels.
Capital Headroom and Payout Ratios
In fact, lenders have so much capital headroom, they have been able to maintain a payout ratio of around 50%, she said.
Potential Adjustments to Capital Requirement Calculations
While capital levels should not be lowered, the way requirements are calculated could be simplified and the number of various buffers could be reduced, Buch also said.
(Reporting by Balazs Koranyi; Editing by Tom Hogue)
