Banking association welcomes European Parliament decision on Basel II
Weber: Comitology must be continued

28 September 2005 – The European Parliament today adopted the directive implementing Basel II on its first reading. “The private commercial banks welcome the European Parliament’s decision. This means that once the Council has given its approval there is nothing to stop the new capital rules being applied punctually by the European banking industry from the beginning of 2007”, said Manfred Weber, General Manager and Member of the Board of Directors of the Association of German Banks. “Our banks have prepared very well for Basel II in step with the timetable. They have invested a lot of money in improved risk management systems. In doing so, they are making an important contribution towards strengthening financial market stability.”

Against this background, Mr Weber said it was annoying that there were now some voices in the US suggesting that the US side was possibly intending to introduce Basel II later. However, no time should be lost in pressing ahead with the project as planned, also as a coordinated international effort. Any softening of the timetable would damage the credibility of the members of the Basel Committee, who had set the rules for banks.

Mr Weber added that the limitation of the comitology procedure at European level to april 2008 was unsatisfactory. “This approach falls short”, he said. The Association of German Banks regards the comitolgy procedure as indispensable if the Basel II rules are to be adapted flexibly and quickly in the future as well. “It is now up to the Parliament, the Council and the Commission to find a basic solution within the next two years as to how the comitology procedure can be continued”.

One of the aims of Basel II was to create a level playing field for all market players in Europe and the rest of the world. This was, however, obstructed by the large number of exceptions provided for in the directive. “It is up to national legislators and supervisors to make sure that the directive is transposed without affecting competition and implemented uniformly”,
Mr Weber continued. Looking at Germany, uniform rules by legislators on exemption from capital requirements within institutional protection schemes were called for in particular. Overall, the “options problem” showed that Europe had to press further ahead with harmonisation of its legislation.