HANDELSBLATT EXCLUSIVE

Top German Bank Regulator Says Basel Negotiations May Fail

Germany, Frankfurt: Raimund Roeseler, Executive Director Banking Supervision of the BaFin
Raimund Röseler fears a race to the bottom. Picture Source: Picture Alliance

Raimund Röseler, the chief bank regulator at Germany’s Federal Financial Supervisory Authority, or Bafin, has said international agreement on banks’ capital requirements is urgently needed to avoid a “regulatory race to the bottom” with dangerous consequences for the global financial system.

Speaking in an exclusive interview with Handelsblatt, Mr. Röseler said the election of U.S. President Donald Trump meant there were now people on the American side who would prefer to abolish many tougher regulations. But it remained unclear how this would impact the Basel negotiations, he added.

Talks between the world’s major regulators on revamping global capital rules have stalled in recent months. Mr. Röseler said there were still significant differences on regulations that would take banks’ different risk profiles into account.

“The idea that we somehow are acting as lobbyists for the European banks in the Basel talks is simply false. ”

Raimund Röseler, Executive Director, BaFin

Failure to agree would be “close to a disaster” for the Basel framework, he said, since it took the lead in setting global standards. “But the different parties’ positions seem quite hardened, and I don’t know if we will succeed in finding agreement,” he added.

Mr. Röseler said European regulators did not seek favorable treatment for European banks: “The idea that we somehow are acting as lobbyists for the European banks in the Basel talks is simply false” He said European regulators could accept a compromise which would see substantial increases in capital requirements for larger banks, possibly as much as 20 percent.

On failing banks, Mr. Röseler said there had been radical changes since the financial crisis. “I have the impression that the authorities would now liquidate banks we wouldn’t have in 2008, including larger banks.”

More generally, he said he had seen profound changes in the culture and behavior of banks since the crisis, but the financial regulator remained committed to investigate when misconduct came to light.

For example, the authority is examining documents from all banks accused of misusing offshore companies in the Panama Papers scandal, Mr. Röseler said, and would take the necessary measures.

In the case of the “dividend-stripping” scandal, in which numerous German banks were accused of malpractice and fraud, he said Bafin had received new information thanks to cooperation with public prosecutors. Its investigations could lead to bank directors being forced to resign their positions.

Read the full interview.

 

Michael Maisch is the deputy chief of Handelsblatt’s finance desk and is based in Frankfurt, Germany’s financial capital. Yasmin Osman is a financial editor with Handelsblatt’s banking team in Frankfurt. To contact the authors: osman@handelsblatt.com, maisch@handelsblatt.com

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