Banks set to win reprieve over capital requirements

The embattled banking sector is set to get a reprieve from the Basel Committee on Banking Supervision this weekend. 

UK banks in particular were seen as being under threat from the Basel III reforms, which had been expected to order the banks to set aside billions of pounds to shore up balance sheets to offer protection against future financial crises.

According to the Financial Times, regulators are set to water down the rules after facing stiff objection from the likes of Canada where the banking sector came out of the crisis relatively unscathed.

Basel III, in tandem with stringent taxation on banks, was expected to have a severe impact on banks’ profitability. Earlier this week chancellor George Osborne hinted that UK banks might face further tax bills, over and above the £2 billion levy announced in the emergency Budget.

Last night US House financial services committee chairman Barney Frank said banks and hedge funds would be forced to fork out $19 billion in costs associated with financial reform.

A draft of the revised Basel III proposals will be unveiled at this weekend’s G20 summit in Toronto.