Germany, UK say EU bank capital rules need tailoring for smaller lenders

LONDON: The European Union’s new bank capital rules are making it harder for smaller lenders to compete and should be changed, Germany and Britain say in an EU document seen by Reuters.

The 28-country bloc introduced tougher capital rules for lenders following the 2007-09 financial crisis that forced taxpayers to bail out undercapitalised banks.

“The overall complexity of the current framework has some potentially very serious and undesirable effects that we believe warrant a thorough discussion with a view to coming up with appropriate policy responses in the EU,” the document written by Germany and Britain said.

Complexity in the regulatory framework is a factor contributing to greater concentration in the sector and acting as a significant barrier to entry, thereby reducing diversity, it added.

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