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German banks launch last-minute attempt to relax Basel III rules

Germany’s biggest banks yesterday launched a last-minute attempt to relax the tough new proposals on capital requirements before today’s Basel Committee on Banking Supervision meeting to finalise the rules.

Germany’s banking industry warned that its top 10 banks will have to raise as much as £87bn of new capital under the new regulatory structure, according to a report in the FT.

The Bundesverband Deutscher Banken, the association of private banks in Germany, says the Basel III rules would limit the banks’ ability to function, would inhibit lending and undermine the German economy – the biggest in Europe.

Today’s meeting will attempt to define the capital ratios that banks would be expected to keep in reserve in case of a banking crisis. According to the report, it is expected the minimum of tier 1 capital ratio – the highest quality of capital and the main measure of a bank’s financial strength – is likely to be raised from 4 per cent to between 6 per cent and 8 per cent.

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