Global banking regulator hints at simplifying complex new bank rules

Several policymakers,including the Bank of Englands head of financial stability Andrew Haldane,had criticised them as such. Banks have also complained that the rapidly-expanding body of regulation is taking up too many resources.

The new rules aim,in part,to get banks to hold more capital to support lending and other activities and to cushion against losses. But implementing such a system across different banks and countries has created a complicated web of regulations.

In its review,the Basel Committee,made up of regulators from major financial centers,identified several areas where the complexity of regulations had produced negative effects,such as making it harder for banks to plan their capital needs and leading to less accurate

assessments of risk.

The fact that theyre even thinking of simplifying it shows that they are at least aware of that that its an issue,which is good, said Patrick Fell,head of PricewaterhouseCoopers UK regulatory capital practice.

Basel Committee chairman Stefan Ingves said the regulators were keenly aware of the debate on whether the rules were too complex but had not yet decided whether they should be changed. The Committee believes that it would benefit from further input on this critical issue before deciding on the merits of any specific changes to the current framework, he said.

But the regulator still believes that a risk-based system,which inevitably involves some level of complexity,should remain at the heart of financial regulation since it takes account of risk more precisely than a more broad-brush approach.

The Basel Committee task force charged with examining complexity in global bank rules,set out a range of potential ideas to improve them in a 27-page document.

These included compelling banks to standardise disclosure of information and limiting the discretion of national supervisors,since this makes it harder for investors and other interested parties to compare banks across countries.