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Barnier bites back at Basel III loophole rumours

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Michel Barnier has this afternoon insisted he will fully implement Basel III reforms after rumours emerged that EU draft legislation would see certain European banks able to sidestep the most stringent rules on capital requirements.

Speaking on Friday, the European Commissioner for the internal market said he would not be "swayed by various pressures" and slammed the criticisms as "unjustified" and "factually wrong".

Reports had suggested that banks with large insurance arms could escape the most stringent measures in the Basel III Accord by allowing them to count more capital held within their insurance arms towards the minimum capital levels they must hold. This would have given European banks an advantage over banks outside the bloc.

Seven EU member states also wrote to Barnier recently warning that using a regulation to push through the Basel III rules could prove too stringent and that a directive should be used instead to allow national differences in implementing the rules.

But Barnier has strongly refuted both criticisms. He said: "A few weeks ago, some people were accusing us of damaging the economic recovery by implementing rules which would be too tough for banks because they would impede their lending to the real economy.

"Europe will implement Basel III: we have said it before and I confirm it to you today, the commission's proposals to implement Basel III will respect the balance and level of ambition included in Basel III," Michel Barnier said in a statement.

The Financial Times reported Friday that EU banks could evade part of the tighter Basel III capital requirements under yet-to-be-released draft legislation implementing the new standards across the 27-member bloc.

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