Global regulators to meet next month to ease capital burden on banks

Regulators will meet on November to discuss steps on easing pressure on global banks that hold unnecessarily large levels of capital in every country they operate, the Financial Stability Board (FSB) said on Wednesday.

Banks have complained of having to “ring fence” large amounts of capital and liquidity at every foreign branch due to local regulators not trusting the lender’s home authority in a crisis to free up capital being held at group level.

The distrust allows capital markets to remain fragmented, bringing up costs for banks and their clients.

The FSB said that its meeting on November 30 will discuss “actions” that could be taken to “prevent detrimental ring-fencing and fragmentation” of capital and liquidity.

It will also “facilitate cross-border cooperation and communication, and other actions to promote confidence in times of crisis”.

These could include a greater use of “memorandums of understanding” between regulators.

The FSB coordinates financial rules for the Group of 20 economies (G20), whose finance ministers meet this week.