LONDON – The world's top banks will likely comply with new global rules forcing them to hold more capital well before the deadline at the end of 2018, global banking supervisors said on Tuesday.
The rules, known as Basel III, are the main global response to undercapitalised banks that had to be rescued by taxpayers in the 2007-09 financial crisis.
The Basel Committee, which drew up the rules, said in its report for world leaders meeting in September that in the six months to Dec. 2012, the average core capital buffer of big global banks rose from 8.5 percent of risk weighted assets to 9 percent.
Only two of the 27 committee members - Turkey and Indonesia - have yet to publish final, legally binding regulations to implement Basel III which requires all banks to have a core ratio of at least 7 percent by December 2018, tripling the amount of capital held before the crisis.
Banks have faced pressure from supervisors and investors to show they can comply early with Basel III as part of wider efforts to restore confidence in the banking sector.
The total capital shortfall for banks below the 7 per cent minimum core ratio was about 200 billion euros ($267.5 billion) in June 2012, but is now well below that, the Basel Committee said, without providing a specific figure.
"These are positive developments that will help build a resilient banking system and improve public confidence in regulatory ratios," Basel Committee Chairman Stefan Ingves said in a statement.
The rules apply to all banks, but they are mainly aimed at the big global banks.
The committee is also exploring what to do about "excessive" variation in how banks add up risks on their books to calculate their capital levels, Ingves said.
The world leaders, who will meet under the G20 umbrella group in Russia on Sept. 5-6, are expected to reiterate their pledge to implement Basel III.
Banks are coming under pressure in Britain, the United States and Switzerland to comply earlier with some of Basel III's other elements, in particular the leverage ratio or limit on balance sheet size relative to capital held. ($1 = 0.7477 euros) (Reporting by Huw Jones; Editing by Pravin Char)