Outcome of Ibfed Basel Wg Conference Call Meeting

1

D1761A-2010

7.10.2010

OUTCOME OF IBFED BASEL WG CONFERENCE CALL MEETING

-31 August 2010-

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The conference call meeting was chaired by MrSimonHILLS. Participants are listed at the end of this note.

1. APPROVAL OF THE MINUTES OF THE PREVIOUS MEETING

The Minutes of the conference call meeting that was held on 10 August 2010 and which were circulated by Secretariat message n° 0266 of 12 August 2010 were approved without amendment.

1. BASEL REGULATORY PACKAGE

Participants exchanged views on a chart that the Secretariat had prepared on the basis of contributions received by member associations and which clarified the preliminary views on the Basel III Package (Annex to the Press Release which the Group of Governors and Heads of Supervision of 26 July 2010).

The objective of the Chart had been to identify possible common views. However, the views held by members on many issues appeared to be diverging. Participants felt, therefore, that IBFed should restrain from commenting on the Press Release. The representatives from the American and Canadian associations announced that they intended to amend their input to the chart.

III.BASEL COMMITTEE’s CONSULTATION ON COUNTERCYCLICAL CAPITAL BUFFERS

There was an agreement amongst participants that the industry should advocate for a single, capital buffer.

The representative from the Japanese Association emphasised in particular that the “optimal capital level” – which serves as the basis for considering the capital buffer level to be added on to the minimum capital requirement – may differ by a country’s financial and economic system framework (asset size of major banks against GDP, etc.), degree of establishment of a safety net (deposit insurance system, bank failure procedure system, etc.), business model (whether there is stable acquisition of deposits from retail customers, complexity of banking operations or the banking structure, etc.), among others. It, therefore, strongly felt that the capital buffer level should be variable and, more particularly, be decided according to subsistent risks of each country and each bank.

He highlighted furthermore that countercyclical capital buffers should not be considered as a blunt instrument but rather as techniques that rely on the exercise of supervisory judgement, through the Pillar 2 process.

The other participants subscribed to this view.

It was agreed that the Secretariat would circulate a proposed draft positioning.

1. BASEL COMMITTEE LOSS ABSORBENCY PAPER

The main concern raised by participants was how the markets would react to the proposed measure. Will they indeed be prepared to accept the proposed embedded automatic re-capitalisation mechanism at the point of failure, including the proposed non-market driven trigger event? If they do, will there be a sufficient market appetite meeting the demand?

The Canadian association volunteered to prepare a first draft.

1. ANY OTHER BUSINESS

There had been no other business to discuss.

1. DATE OF THE NEXT CONFERENCE CALL

It was agreed to hold the next conference call meeting on Tuesday, 12 October 2010, at the usual time.

List of Participants

Chairman: SimonHILLS

Secretariat: Wilfried WILMS