Basel Regulators Consider 3% Surcharge On Biggest Banks

That's Sheila Bair in the background, while the Charlatan sleeps concentrates.

This is a very solid first step from Basel.  Anything that lowers leverage is a positive.  Josef Ackermann of Deutsche Bank is complaining as usual.

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Basel Said to Consider 3-Point Surcharge on Biggest Banks

Bloomberg -- Global regulators are considering a capital surcharge for the world’s largest banks that may force them to hold as much as three percentage points more reserves than other lenders, according to two people familiar with the discussions.

The Basel Committee on Banking Supervision is discussing forcing banks whose collapse would disrupt the global economy to surpass minimum standards agreed by world leaders in 2010. The levels under consideration range from more than one percentage point to as high as 3 percentage points of their common equity, said the people, who couldn’t be identified because the talks are private.

Governments and regulators are trying to avoid a repeat of the turmoil in financial markets that followed the 2008 collapse of Lehman Brothers and led to taxpayer-funded bailouts of lenders across the world. Switzerland has already proposed a surcharge for its two largest banks, UBS AG (UBSN) and Credit Suisse Group AG. (CSGN)

Sheila Bair, chairwoman of the U.S. Federal Deposit Insurance Corp., said she supports a 3 percentage point surcharge, which may bring the Basel group in line with the Swiss plans. “My personal view” is that “those are good numbers,” Bair said in a separate interview on March 22. The FDIC is a member of the Basel committee.

Deutsche Bank AG (DBK) Chief Executive Officer Josef Ackermann yesterday criticized efforts to force the world’s biggest lenders to hold extra reserves.  Listing banks eligible for the surcharge would be based on “spurious criteria, which, in turn, will create incentives to manipulate such lists for political reasons,” he said in a speech in Frankfurt.

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Basel II has largely left unchanged the question of how to actually define bank capital, which diverges from accounting equity in important respects. The Basel I definition, as modified up to the present, remains in place.