FBF welcomes the Capital Markets Union (CMU) initiative and the new priority to growth and employment. A proper financing of the economy is key to achieve these objectives. As a reminder, financing the economy, especially SME's is the number one strategic priority of French banks.
Is Europe finally going to give the keys to its financial markets only to the English and American banks in the City of London? This is the very issue at the EU Finance Ministers meeting (Ecofin) tomorrow on June 19 which will discuss the draft regulations on bank structural reform, submitted by the Latvian presidency.
French banks have taken note of the new rules for calculating the new solvency ratio that the Basel Committee has just presented. Banks will need to have 4.5% in core tier-one capital, plus a 2.5% "capital conservation" buffer, which de facto amounts to a total of 7% in total common equity requirements.
French banks are pleased that, during the recent Toronto summit, the G20 confirmed its objective of a "more resilient financial system (...) which is able to support solid and stable economic growth".
The revision of the Capital Requirements Directive (CRD) must be an opportunity to make progress on the supervision of cross-border banking groups. It must also help to strengthen financial stability in Europe and include initial responses to the crisis.
The Basel Committee is due to publish its recommendations in November 2003, while the "Mc Donough" ratio is set to replace the "Cooke" ratio at the end of 2006. Introduced over ten years ago, this ratio is no longer appropriate given the increasing sophistication of banking activities and the progress made in methods developed by banks to assess risk.