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Cyprus Finance Minister Vassos Shiarly Philippos Christou/AP/Press Association Images

EU says deal on Basel III bank rules possible next month

Cyprus says it hopes to see a deal in December on new Basel III rules for regulating banks.

CYPRUS, WHICH HOLDS the rotating EU presidency, today said it hoped to see a deal in December on new Basel III rules for regulating banks although problems remain, notably on bankers’ bonuses.

“I hope to be able to announce a political deal on this issue at the next meeting” of European Union finance ministers on December 4, said Cypriot Finance Minister Vassos Shiarly at the close of talks between the 27 ministers.

Negotiations on the rules have slowed down in Europe since the United States has said it will not implement the rules.

EU governments are currently in talks with the European parliament on regulations to strengthen banks in case of a new crisis, with the rules due to come into effect in Europe between 2013 and 2019.

One of the problems remaining is the amount of flexibility each state will have regarding requiring bank to keep additional capital buffers.

“My concern is to build a clear and simple system that avoids arbitrage between member states operating in the same single market,” said Financial Services Commissioner Michel Barnier.

Barnier said there was also friction over bonus payments to bankers, with the parliament calling for a “one on one ratio between fixed and variable payments” to senior bankers.

The commissioner said he favoured the system but some member states were reticent.

“Bankers are not outside of society, they must be attentive to certain bonuses that no one can explain or justify,” he added.

- © AFP, 2012

Read: Barroso’s banking plan could mean more countries opting for bailout>

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