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UPDATE 1-UK's Osborne urges G20 bank capital deal

Published 06/04/2010, 06:16 AM
Updated 06/04/2010, 06:19 AM

By David Milliken

BUSAN, South Korea, June 4 (Reuters) - The world's leading countries should end uncertainty over introducing tough new bank capital rules that were agreed in principle a year ago, British finance minister George Osborne said on Friday.

"One of the things I'll be pressing for is that the agreements that were reached last year on capital leverage and liquidity are now concluded. We want to end the uncertainty," Osborne said in remarks distributed by his staff.

Osborne is meeting other finance ministers from the G20 group of developed and emerging economies in the South Korean port city of Busan to broker a deal on bank regulation and policies to boost economic growth.

G20 leaders agreed last September that banks must hold far more capital and liquidity by the end of 2012 so they are less likely to need more taxpayer handouts in the next crisis.

Banks are lobbying hard to have the new rules phased in over a longer period and tough new capital rules on bank trading books due in January already appear set to be delayed.

Britain is concerned that some European countries are attempting to weaken tough new rules about the capital banks are required to hold as a buffer against losses by allowing hybrid mixes of debt and equity to count towards required levels.

Britain sees scope for negotiation over when the rules come into effect but not over their essential content, though many details have yet to be finalised.

Global agreement on this is seen as more urgent for Britain than a deal on bank taxes -- which is also proving difficult -- as capital rules posed a greater risk of banks locating business to areas where rules are looser, a G20 source said.

Nonetheless, Osborne said boosting global growth was the top priority for the G20 meeting in Busan.

"Countries with high budget deficits must show that they can deal with them. Equally surplus countries such as china must show that they too can support economic growth going forward," he said. (Editing by Tomasz Janowski)

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