Banks set to face tougher capital rules in the EU

Source: Reuters

HUW JONES
Reuters
October 1, 2008 at 7:06 AM EDT

BRUSSELS — Banks will have to tie up more capital to cover risky operations in future under European Union rules due to be unveiled on Wednesday as policymakers seek to limit contagion from the U.S. financial crisis.

The executive European Commission wants to apply lessons learnt from the credit crunch, which this week claimed more bank victims in Fortis and Dexia in Belgium and Bradford & Bingley in Britain.

While European officials insist the continent does not need a bailout plan of the scale under debate in the United States, EU president France called for stronger policing of EU financial markets and said an Oct. 15 meeting of EU leaders in Brussels would largely focus on the bloc's response to the crisis.

“We must go towards (having) a European policeman regarding how markets function, the supervision of banks and insurers. It would mean a reinforcement of European regulators in all that is related to financial mechanisms,” France's minister for European affairs, Jean-Pierre Jouyet, told France Inter radio ...

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