The UK’s bank lobby and Germany’s regulators have added to warnings against planned US rules that would force large foreign banks to strengthen the capital base of their local businesses.
The British Bankers’ Association said in a submission to the Federal Reserve on Monday that the proposals would cause significant disruption to many foreign banks and fuel a further fragmentation of global banking and its regulation.
“These proposals would effectively require foreign banks to meet US minimum risk-based capital and leverage ratios greater than those required under Basel III,” the BBA said in the submission.
The comments came on the same day as German banking regulators Bundesbank and Bafin warned the planned rules would have a “negative impact on international cooperation since it does not take appropriate account of consolidated supervision”.
“Solo approaches will not appropriately mirror the complex risks taken by internationally active banks and will create a conglomerate of fragmented supervisory approaches,” the German central bank and financial services regulator said in a joint letter to the Fed.
This came days after Michel Barnier, the EU commissioner in charge of financial services, warned that the rules would be a threat to harmonious global regulation and risk “a protectionist reaction” against US banks.
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