Banking International Spectre: Economic Holocaust delayed

Basel trading book rules delayed by year

Jun 18, 2010 12:06pm EDT

* Co-ordinated start date of not later than Dec. 31, 2011

* United States was not ready to apply rules

(Adds more details, background, reaction)

FRANKFURT, June 18 (Reuters) - The Basel Committee of central bankers and supervisors agreed to delay its tough new capital requirements on bank trading books by one year, it said on Friday.

"The Committee agreed to a coordinated start-date of not later than Dec. 31, 2011 for all elements of the July 2009 trading book package," it said in a statement.

"As a result of these revisions, market risk capital requirements will increase by an estimated average of three to four times for large internationally active banks."

Capital requirements for a bank's trading book are lower than for the main book, which has encouraged banks to shift some assets to the trading book to escape higher capital charges.

The delay comes after banks argued they need more time because the United States was not ready to apply the rules earlier, and the European Union and the U.S. said the implementation should be done jointly in both regions.

The Association for Financial Markets in Europe, a banking lobby that represents some of the world's biggest banks, said in April the end of 2010 start date for the rules was unrealistic and that the United States did not appear ready.

"It's a welcome move and it's a sign the committee has been listening very carefully to what people have said and we are pleased with that," an AFME spokesman said on Friday.

Deutsche Bank (DBKGn.DE) Chief Executive Josef Ackermann urged regulators last week to coordinate the tougher trading book rules.

"We believe the implementation of Basel 3 trading book proposals should be simultaneous, symmetrical, and comparable across all major financial markets," Ackermann said.

Banks also expect the Basel Committee to be more flexible in implementing its wider Basel III reform of bank capital and liquidity requirements.

The Group of 20 leading countries agreed last year this should be implemented by the end of 2012 but G20 finance ministers said this month there is likely to be a long phase in for some Basel III elements. (Reporting by Huw Jones and Sakari Suoninen; Editing by Ron Askew)