Basel 'to set new capital securities criteria'

12 January 2011

A report has claimed that the Basel Committee on Banking Supervision is poised to set new rules on debt securities, in an effort to ensure that troubled lenders can be rescued without the need for taxpayer bailouts.

Bloomberg reports that the panel could this week outline proposals that debt securities should count as capital, allowing them to be converted to common equity or soak up losses to reduce the likelihood of financial firms edging close to the point of collapse.

Swedish central bank representative and Basel committee member Jonas Niemeyer revealed that the impending plan will feature largely similar content to a draft report which was published back in August.

"I can see from banks' point of view that investors want to know what type of criteria might be used," he told the news provider. "On the other hand, from the regulatory point of view it is very difficult to set fixed criteria."

The Financial Times claimed yesterday (January 10th) that worldwide capital requirements could be raised to counterbalance credit bubbles in individual nations as part of the Basel III reforms.

By Tony Aynsley

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