According to calculations by the Bundesbank, the new capital regulations for banks would hardly burden small and medium-sized businesses.
According to calculations by the Bundesbank, Germany’s medium-sized companies do not have to fear a significant increase in the cost of credit as a result of the tightened capital regulations for banks.
The Bundesbank does not see financing made more difficult by the EU Commission’s proposal to implement the “Basel III” reform, writes the central bank in an article published on Friday, which the “Handelsblatt” had previously reported on.
At the end of October, the EU Commission presented its legislative proposals to implement the rules agreed at international level after the 2008/2009 financial crisis. According to this, banks in the European Union should increase their capital buffers by up to 8.4 percent by 2030 in order to better cushion possible risks.
Loans to companies that are not rated by rating agencies are to be secured by the EU Commission with more equity. Institutions may only use their own calculation models to a limited extent to calculate risks. The measures should take effect from 2025. Before the package comes into force, the European Parliament and the EU states must agree.
No own models
The majority of German institutions do not use their own models, but a standard approach, explains the Bundesbank. “The approximately 1,300 German institutions that primarily finance small and medium-sized companies and use the standard approach will hardly be affected by increasing capital requirements,” explained Bundesbank board member Joachim Wuermeling. The Bundesbank put the market share of such banks in the financing of small and medium-sized companies at almost 70 percent.
The Association of German Banks (BdB) pointed out that many German medium-sized companies do not have an external rating and warned that the new set of rules for banks would make corporate financing more difficult.
According to the Bundesbank’s calculations, the effects of the new requirements on SME loans from larger banks would also be limited: If these institutions passed on their increased capital requirements in full to corporate customers, this would result in a surcharge of 0.25 percent on their lending rates from 2033 onwards.
Source From: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
