As Basel Panel Meets, Key Questions Remain on Timing, Capital Buffers

By Donna Borak

While bankers and financial markets anxiously await details that could come as early as this weekend on how high international regulators plan to raise capital standards, it remains unclear if the industry will get all the answers it wants. Negotiators for the Basel Committee on Banking Supervision met Tuesday to work out further details of a proposed capital framework ahead of Sunday’s meeting in Switzerland with the group of governors and heads of supervision. It appears officials are close to signing off on a broad agreement, but sources close to the situation said some key details remain in flux, raising concerns of how markets will react if critical elements are not disclosed by Monday. To be sure, the Basel Committee is expected to give some sense of how far negotiations have progressed. Industry observers are hoping for details on final Tier 1 capital requirements, the size of a conservation buffer to protect the largest institutions from a financial crisis and how quickly Basel III will be implemented.  But even if the committee releases all those details, articulating the impact on individual banks will be difficult, observers said. “You need to do it dynamically, not just based on today, or 2007 numbers, but rather in terms of looking ahead where the banks will put their assets in a still recovering financial market,” said Karen Shaw Petrou, a partner at Federal Financial Analytics.