EU proposes tweaks to global bank capital rules

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The European Commission has proposed new capital rules for banks in line with those agreed by global regulators but with several tweaks, in a sign of a growing fragmentation of financial rulebooks around the world.

The EU’s executive arm proposed adapting its rules on capital requirements and loss-absorbing buffers to agreements reached in the Basel Committee of global financial regulators, which oversees US, European and Japanese lenders.

But instead of simply replicating the rules agreed with its international partners, the Commission proposed changes and some new provisions that may upset non-EU banks and regulators.

After the 2007-2008 financial crisis, governments of major economies pledged to keep their banking rules closely harmonized.

But that close alignment is starting to fray, with the EU trying to reduce the impact of the rules on economic growth and the region’s beleaguered banking industry.