Basel iii: soft, spat and inadequate

Inadequate financial market regulation lags below the requirements

On sunday, 27 lander in basel has agreed on a compilation of global capital standards for banks. Exactly two years after the collapse of the us investmentbank lehman brothers, the previous low core capital ratio according to basel ii is to rise so that banks are allegedly crisis-resistant. For this, every bank should create an additional buffer. This does not sound so bad at first, but it may be doubted that well-to-do financial crises are prevented. Especially germany pushed himself against the demands of a significantly higher capital ceiling and continued long transitional periods. The entire capital of hedge funds remains excluded anyway, as the trillion, for which the coarse us real estate financiers were found excluded.

Already a look through the blatterwald of the international business press is sufficient to state one thing: one is somewhat consecrated in agreement that basel iii will mitigate the risks from financial crises at best. That’s all. Like the international parquet, despite the dangers in the financial world, which lose the taxpayers for a long time trillion-heavy on the bag, only a tenth and limited answer has been found. Furthermost, it seems to be a success that the previous equity ratio (tier-1) of the banks, ie risk-weighted assets, should increase from 4% to 6%. The minimum capitalization of the banks with hard core capital (core tier-1), to which in addition to the money of the shareholders also pay the profit relief, should even increase from 2% to 4.5%

But the first problem is that the quotas should be raised only slowly. Only from 2013 is to increase the core capital ratio of 4% to 4.5%. 3.5% must then be kept as hard core capital from 2013. By 2015, the odds should be raised to 6% (tier-1) and 4.5% (core tier-1). Banks, which are allegedly regarded as the hypo real estate (hre) as a system-relevant, are intended to require high requirements than others with lower systemic dangers. However, there are no concrete provisions. Even from 2016, banks have to build another capital buffer from additional 2.5% with hard core capital until 2018. This buffer is intended to prevent in future crises that the institutes prevent their capital too fast. But the buffer may be fallen below in times of crisis, is approved as an exception, but the banks should describe the dividend. All this only applies if the package is adopted at the next g-20 summit and there are the individual countries in laws.

Ultimately, one has agreed with the core capital ratio to the 6%, which already applied to the eu banking stress test (the little stressful stress test). Because of the problem banks such as the hypo real estate (hre), some countries involved in the agreement race on bitter resistance from germany. In the test, a core capital ratio of 4.7% was determined for hre. She probably still fulfilled the claims which should apply from 2013. So the bankridge is not a bankrank after the new rules? Why did the munchner real estate financier had to demand from the confederation, despite everything for the weekend, to increase state states by 40 billion euros to 142 billion? Once again, a minister of finance was surprised by the capital requirement of the institute. Such a situation shows how little effective even the new rules will be.

This may be lacking why even the us and great britain had poured on significantly higher equity rules and urged over short transition periods. That in germany not only the hre has huge problems, not least jurge made great significantly. The chief volkswirt of the european central bank (ecb) holds the capital ceiling of the german banks for too low and leads mainly to the landesbanken. But he actually also wants to privatize the savings banks. Ironically, foundations were laid with the agreement and thus a sector that has mastered this crisis without coarse problems.

Germany has enforced here that silent deposits, for example, banks have been given as a state aid, even can be credited until 2019. Germany had even more highly poked and even longer transitional periods required for the preservation of state aid to banks. Silent deposits, which have flowed as a state aid, for example, to the partial national sheet commerzbank, continue to apply until 2018. This will not suggest anything good for german taxpayers. And therefore, for example, the british financial times criticizes that at basel iii the capital ratios "are smaller than they could have" and even not being implemented until 2019. Therefore, the sheet notes that it is certainly not a good rules, if you "waiting for almost a decade" wants to loose the problems of the subcircifying of banks.

Is planned to privatize the savings banks

If the transition periods make sense to make a short time in return, in return, the largely crisis-resistant system of german savings banks, the german delegates did not come to mind. Finally, there are silent deposits not only for banking rescue, but they are also available at landesbanken and sparkassen. They are not enthusiastic about the rules. In particular, however, the hard-strained landesbanken. As "regulatory flashing flight" denotes the federal association of public banks (vob) the agreement. "The german delegation is obviously not successful to successfully represent the peculiarities of the german banking system, especially in the silent deposits", declared the main fuel of karl-heinz boos.

Similarly, the prassident also looked at the german sparkassen- und giroverband (dsgv). "The new regulations take into account the differences in the banking industry insufficient", explained heinrich haasis. He calls for a stronger regulation of the market or financial institutions outside banks and a more targeted focus on actual risk positions of a bank. Instead, only flat-rate regulations are planned across the entire banking industry. He also addresses that, for example, the hedge funds from the rules are excluded, while the situation for the small savings banks and volksbanks worsens. But a roggan who thinks boses. To be transparent is the concern to privatize the savings banks on the future capital requirement, as spain is already open and the ecb chief economist also buried exclusively.

Sparkassen and volksbanken will have to comply with their profits much stronger to comply with the rules, which will contribute the lending. The chairman of the cdu sme association, josef schlarmann, starred that this "right away" throwing the middle class. Schlarmann emphasizes that these institutes in the crisis "stabilization factor" were, they suffered now disadvantages, because they are with coarse banks "be shorn about a crest", which the crisis had drawn. The prestigious economist max otte sees particularly critical "other financial market actors such as hedge funds and private equity companies" laid out. The professor of the university of applied sciences worms rates the agreement as "very disadvantageous for the german economy ", especially because the savings banks and cooperative banks should be abolished.

No real protection against art finance crises

And not only hedge funds and private equity companies, which now were now allowed to outsource risks, are a stumbling block of basel iii. For example, the wall street journal ames that these rules will not free the world from future financial crises. The sheet criticizes that institutes such as the coarse real estate financiers fannie mae and freddie mac have been excluded. It is actually absurd absurd to exclude the area where the current crisis took its starting point. For example, the two institutes had to be nationalized two years ago in order to avoid the supergau on the financial market (the largest real estate financiers of the us under state control). $ 143 billion, the us taxpayers have recently sunk in fannie and freddie for their leading salvation. About 400 billion were allowed to be in the next ten years, calculating experts in the us congress. The dimension alone that the two financiers for half of all us mortgages in the total value of zwolf trillion dollars holds the dimension of the problem clearly that was simply excluded.

You could continue the list of the reviews for a long time. For example, for example, that the leverage limit (leverage ratio) is also flasked as expected. In doing so, the core capital is set to the balance sheet total and it should be at the afternet of 1 to 33. Then there were also the short and long-term liquidity provision (net liquidity ratio and net stable fund ratio). Two values very significant in a crisis, should only be made from 2011 "observed" and only in a few years. As a crisis in banks such as bear stearns, northern rock or just at anglo irish bank had not been proven that an institute next to equity also needs cash to pay off its customers. One could rub the sentence under the nose here the basel committee, which finds itself in one of his internal papers: "during the crisis, many banks have difficult to keep adequate liquidity levels." the realization that the "financial crisis showed how quickly such a risk can crystallize, "but was not taken into account in the agreement.

Hopes that banks with basel iii no longer have to throw themselves into the saving arms of taxpayers, so they should not be done in the face of this rules. Also the problem that an institute "too big to fail" is not solved. It is more likely to spark. This not only has to do with the problem of savings banks and volksbanks, but generally expects that the concentration continues to increase by associations.

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