“Europe is about to set in stone a first set of standards designed to strengthen banks” reports Le Figaro. Finance ministers from the 27 member states are meeting today (May 2) put into law the international standards, known as “Basel 3”, developed to strengthen the banking sector. The daily newspaper says:

The directive drastically tightens the definition of a bank’s capital reserves and hugely increases the level they are required to have, so that each institution has a cushion of funds to absorb violent economic shocks. According to the European Banking Authority, the hundred largest European banks would need to find some 485 billion euros of capital in order to comply with the new Basel 3 requirements.

The bill provides that each bank keeps 7% of its equity capital in reserve. The UK wants to increase this requirement to solidify its deposit banks. France, however, wants the funds involved in insurance subsidiaries to be excluded. Le Figaro says:

The debates will likely be very heated and may lead to adoption of the text being postponed until May 15. However, failure seems forbidden, as Europe needs to prove today that it is moving forward on the path to strengthen its banking system.

Last week, Le Monde reported that the European Commissioner for Internal Market, Michel Barnier, wants to ask banks how they have used the 1,000 billion euros, which were injected by the European Central Bank to avoid the credit crunch.

Courtesy of Press Europe: http://www.presseurop.eu/en/content/news-brief/1911441-london-and-paris-clash-over-banks