Investors and sovereign advisers warn that proposals to restructure debt before IMF lending are too rigid By Philip Alexander

Conservative line on capital prompts question of whether the Fed is supporting loan growth

A selection of news items generated by the American regulatory reform agenda

ESMA pleas for more time rejected by Commission as markets struggle with uncertainty over trade reporting rules By David Wigan

BASEL – The Financial Stability Board (FSB) has published an amended list of Global Systemically Important Banks (G-SIBs) that face a supplementary capital buffer to protect against their failure. For the first time, a Chinese bank – Industrial and Commercial Bank of China (ICBC) – joins the list in the lowest bucket, with a 1.0% capital ratio surcharge on top of the 7% target level for tier 1 capital ratios. The bank already meets this requirement comfortably, with a Basel tier 1 capital ratio of 10.6% at end-2012. ICBC became the largest bank in the world by tier 1 capital in the 2013 Top 1000 World Banks ranking compiled by The Banker magazine.

BRUSSELS – A meeting of the Economic and Monetary Affairs Committee (ECON) of the European Parliament on 5 December 2013 approved the appointment of Daniele Nouy as the first chair of the European Single Supervisory Mechanism (SSM). The SSM will oversee banks in the 17 countries that have so far signed up to banking union, all of them members of the eurozone. It will directly supervise 128 of the largest banks initially, with the possibility to add any other banks deemed appropriate, and will indirectly oversee all smaller banks in cooperation with national competent authorities.

ABU DHABI – Stefan Ingves, chair of the Basel Committee on Banking Supervision (BCBS), has promised “supervisory action” to address sharp variations in the calculations of risk-weighted assets (RWAs) between different banks. RWAs are used to calculate banks’ Basel capital ratios, currently the most important tool of prudential regulation. Speaking at a high-level meeting for the Middle East and North Africa organised jointly by the BCBS and Arab Monetary Fund, he cited the need for ‘truth in advertising’.

BRUSSELS – Agreement on the establishment of a single resolution board and fund – together forming the single resolution mechanism (SRM) moved closer following a series of compromise proposals by the Lithuanian presidency of the Council of the European Union (EU), the fourth being published on 2 December 2013. These proposals will be discussed by the EU economic and finance ministers (Ecofin) with a view to closing a deal before year-end.

PARIS – The European Securities and Markets Authority published a report in early December that claimed to have found “a number of deficiencies in the processes for producing and issuing sovereign ratings” at the three large credit ratings agencies (CRAs) Fitch, Moody’s and Standard & Poor’s. This followed a research period from February to October 2013, to address concerns about “potential conflicts of interests, the impact of sovereign ratings on other types of ratings, CRAs’ capacity to cope with the number of rating actions during a period of high volatility, the use of bulk rating actions, and issues around the confidentiality and timing of rating actions.”

BASEL – The Bank for International Settlements (BIS) quarterly review published in December 2013 warned on divergences between national supervisors in their application of rules on how banks account for sovereign risk in the Basel capital framework. The review noted that Basel III calls for “minimum capital requirements commensurate with the underlying credit risk, in line with the objective of ensuring risk sensitivity.”