New Basel rules could have "big impact" on Danish banks: government

ECB President Mario Draghi attends a press conference on the Basel III framework reforms agreed in Frankfurt Main Germany | Armando Babani  EPA

ECB President Mario Draghi attends a press conference on the Basel III framework reforms agreed in Frankfurt Main Germany | Armando Babani EPA

Global bank regulators broke a year-long deadlock and closed the book on Basel III, a sweeping set of capital rules begun in the aftermath of the 2008 financial crisis.

The Basel Committee on Banking Supervision said it would set a so-called output floor of 72.5 percent to be gradually phased in by January 1, 2027.

A key part of the rules is a limit on how far banks should be allowed to diverge from regulators' assessments of how risky their holdings are.

"Today's endorsement of the Basel III reforms represents a major milestone that will make the capital framework more robust and improve confidence in banking systems", Mario Draghi, chairman of the Group of Central Bank Governors and Heads of Supervision and president of the European Central Bank, said in a statement.

The committee rules, dubbed Basel III, have been an ongoing worldwide response to the 2007-2009 financial crisis. They increased the amount of capital banks had to hold as a financial buffer, as measured against the risks they had taken by extending loans like mortgages.

The first set of Basel III rules were published in 2010.

He added that a "key policy lever" of Thursday's agreement was a rule that banks' judgement of their own capital requirements can not vary too far from the regulator's view. This means a bank's internally modelled risk-weighted assets can not be less than 72.5 percent of their value using the standard approach established by regulators.

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