MNI: ECB Nouy: Must End Basel III Fast; Banks Must Consolidate

By Christian Vits

     FRANKFURT (MNI) - European banks need to consolidate as the region is

overbanked and at the same time Basel III should be finalised as soon as

possible, European Central Bank banking supervision chief Daniele Nouy said

Wednesday.

     The banking sector in Europe may well have reached a point where it has

grown too large, she said in a speech in Basel. "We could say that Europe is

overbanked." Against this background "banks need to deal with: consolidation."

     With a view to the rulebook for banks, Nouy said that banking is global in

scope and requires global rules. "This prevents regulatory arbitrage and ensures

that banks worldwide can compete on a level playing field. The ongoing work on

Basel III aims to provide exactly that: a harmonised set of global rules," she

noted.

     Still, risks loom on the horizon: "The consensus in favour of global rules

has been weakening lately. In some countries, national tendencies are gaining

the upper hand, and important elements of the rulebook might be postponed or

dropped altogether," Nouy said. 

     "This is not good, of course. It increases the risk of another crisis - not

just in one country but in all countries. That's why we have to finalise Basel

III as quickly as possible," she added.

--MNI Frankfurt Bureau; +49 69 97782671; email: christian.vits@marketnews.com