Regulation: New rules promote a shadow banking system
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BANKING

Regulation: New rules promote a shadow banking system

Basle III unpopular with bank bondholders; Regulators insist system will be safer

José María Roldán, director general of banking regulation at the Bank of Spain and chair of the standards implementation group of the Basle Committee on Banking Supervision

"We lack a lot of information on the shadow banking and financial system and it may be difficult to disentangle the interconnectedness to the regulated system"

José María Roldán, Bank of Spain

Last month José María Roldán, director general of banking regulation at the Bank of Spain and chair of the standards implementation group of the Basle Committee on Banking Supervision, spoke to Euromoney at a seminar in London on Basle III: The rules. Those attending, mainly investors and bankers as well as some policymakers, voiced many worries.

As the European Commission prepares to convert Basle III into a draft of CRD IV to be debated and approved by the European parliament later this year and then enacted into national laws in 2012, the time for debating new rules is fast running out. Soon they will be enacted. Industry concerns over unintended consequences and inconsistent application of the rules is reaching fever pitch. It falls to Roldán to address these.

Repercussions

The repercussions of any botch could be unpleasant. Concern over how the banking system will operate under a new regulatory system is already being felt in the market for bank equity and even more so for bank bonds, where access is intermittent for any but the largest banks, liquidity is drying up and uncertainties abound over the precise status of senior unsecured debt and how it will be bailed in to share losses with equity holders in the event of bank collapses.

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