Sept 13 (Reuters) - Banks will have to more than triple to 7 percent the amount of top quality capital they hold to withstand future shocks, global regulators and central bankers agreed on Sunday.
The agreement, known as "Basel III", will force banks to set aside far more capital to withstand market shocks in future in a bid to lessen the need for bailouts by governments seen during the financial crisis.
Following are some reactions and official statements issued after the agreement:
XIAO GANG, CHAIRMAN, BANK OF CHINA
"It will take a long time to implement Basel III rules. It is still early to examine the impact of the new rules on specific banks. It's also difficult to say when China will implement this rule vbecause we havent exercised Basel II yet."
ZHU MIN, IMF SPECIAL ADVISER AND FORMER DEPUTY GOVERNOR OF CHINESE CENTRAL BANK
"The concern is that if everybody in the world applies different levels at the same time, it may cause international arbitrage in the regulatory framework," adding that further discussions were needed on how to mitigate these concerns.
MULIAMAN D. HADAD, DEPUTY GOVERNOR OF INDONESIAN CENTRAL BANK
"The capital adequacy ratio of our banking sector is quite strong. The figures have included all risks including operational risks, which means they are quite realistic to describe the capital strength. What has been decided by Basel has been anticipated by us, and there is no problem. Capital and liquidity of each bank are two issues which developments we prioritise and monitor closely."
SIMON BURGE, EXECUTIVE DIRECTOR AT ATI FUNDS MANAGEMENT
"Australian banks have been preparing for the new rules by building up surplus capital. They will not need to raise more capital. On the contrary in a couple of years when rules are clearer they may be placed to return capital to shareholders in some form, either higher dividend or buy backs."
SHINICHI INA, BANKING ANALYST AT CREDIT SUISSE, TOKYO
"Based on the expected level of new capital requirement, I had already thought Japan's big banks would not need to raise fresh capital but I had thought there would be risks of some having to curb their dividend payout. But now as I look at the rules, I think there are improved chances of these banks able to keep their current dividend payout ratio."
CHINESE CENTRAL BANK
In a brief statement on the website of the People's Bank of China, http://www.pbc.gov.cn, the central bank said the new Basel agreement "will be an important financial reform measure in the post-crisis era along with global liquidity standards".
TIM RYAN, CEO THE SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION
"The Committee's proposals appear to move in the same direction as the requirements enacted into law by the Dodd-Frank Act, while providing a reasonable time frame for implementation.
Yet we believe a number of issues must be resolved if these proposals are to support stability without constraining the supply of capital which is essential to support economic growth and job creation."
ROB McIVOR, DIRECTOR OF COMMUNICATIONS, ASSOCIATION OF FINANCIAL MARKETS IN EUROPE
"It appears that the Committee has recognised the importance of ensuring that, in the transition to the new regime, recapitalisation timing does not undermine the banks' ability to meet their customers' credit requirements.
"However, even now, there remain significant concerns, particularly the proposal to designate some firms as systemically important and therefore burdened with additional requirements.
"We believe this would be fraught with difficulty -- as, in other contexts, the Basel Committee has recognised -- and unnecessary.
"Disproportionate requirements would be damaging for both the financial sector and the wider economy. Continuing uncertainty over what is required could have a negative impact on the banks' ability to plan ahead, which in turn will act as a brake on recovery in European economies."
RICHARD BARFIELD, DIRECTOR, PRICEWATERHOUSECOOPERS
"One of the features of the phasing in they are proposing is that in the later stages you will get an accelerated effect with the deductions and increase in ratios.
"I expect that what will happen is that the larger banks will move towards these figures ahead of the timetable.
"Apart from a consistent worldwide application, it's important that capital is just part of the process of improving financial stability, and the other key factors are improved supervision, improved risk management, and making those things happen as well is the difficult challenge.
"There is also a risk in the approaches. In terms of the countercyclical buffer, you have a bald number to protect against excess credit, but bubbles tend to affect individual asset classes at different points in time so it's a blunt instrument. To manage risk you have to be more targeted."
U.S. TREASURY SECRETARY TIMOTHY GEITHNER
"We welcome this next step on the way to strong global financial reforms and look forward to reviewing the details of these proposed reforms to global capital requirements.
"We remain committed to reaching agreement by the time of the G20 meeting in Seoul on a strong set of reforms that will reduce the costs of future financial crises, provide certainty to the markets and secure a level playing field for U.S. financial institutions."
ROBBERT VAN BATENBURG, HEAD OF EQUITY RESEARCH, LOUIS CAPITAL MARKETS, NEW YORK
"It's a mixed blessing for the banks but I'm sure investors will be happy to get some clarity and allow the market to move on.
"I don't think there are any nasty surprises and there's a time frame to allow for plenty of time to raise capital if needed. The best thing is it removes the uncertainty that was hanging over the market... The markets should take this favourably."
MOHAMED EL-ERIAN, CO-CHIEF INVESTMENT OFFICER, PIMCO
"The phasing-in period for the new capital requirements is surprisingly long, which will add to the scepticism about the robustness of the bank capital enhancement efforts."
SIMON HILLS, DIRECTOR, BRITISH BANKERS ASSOCIATION
"I think it's broadly in line with what we expected.
"The question is how much monitoring there will be while the changes are being introduced. It's important there is ongoing monitoring and reassessment to make sure it's doing what we expect it to do and not have any unintended consequences we are nervous about.
"I think the banking sector can live with this deal. The capital conservation buffer is a bit lower than we had feared.
"There has been a tremendous focus on getting this done quickly and it has been done to the G20 timeframe which is why we need this ongoing monitoring and ability for mid-course corrections."
CHRIS WHEELER, ANALYST, MEDIOBANCA, LONDON
"It is clear that as a result of concerns about the anaemic economic environment, Basel is trying to balance the need for tougher regulation with supporting the banks' inevitable role in the recovery. Hence the long implementation time frame."
BOARD OF GOVERNORS, U.S. FEDERAL RESERVE SYSTEM
"The agreement represents a significant step forward in reducing the incidence and severity of future financial crises, providing for a more stable banking system that is less prone to excessive risk-taking, and better able to absorb losses while continuing to perform its essential function of providing credit to creditworthy households and businesses."
DANIEL ZUBERBUEHLER, VICE CHAIRMAN, BOARD OF DIRECTORS, SWISS REGULATOR FINMA, ALSO A MEMBER OF BASEL COMMITTEE
"This will enable them (banks) to withstand larger shocks without relying on government support. As a result, the global financial system will be more resilient to shocks.
"In light of the current crisis that highlighted the fragility of the banking sector such a reform was indispensable. To make sure that their implementation supports economic recovery, capital and liquidity requirements will be introduced gradually over the next decade.
"The FINMA and SNB strongly support these efforts."
PHILIPP HILDEBRAND, CHAIRMAN OF THE GOVERNING BOARD OF THE SWISS NATIONAL BANK (SNB)
"The reform package will ensure that, going forward, banks will hold much larger buffers of higher quality capital and liquidity. This will make the global financial system more resilient to future shocks. Gradual implementation of the new standards will support the economic recovery.
"While the reform package is far-reaching, it does not yet comprehensively address the TBTF ("too big to fail") problem. Further efforts will be required in that area at the international and at the national level."
UBS
"For UBS the relevant standards are mainly set by the Swiss financial supervisory authority FINMA. UBS will comply with the regulatory changes within the given time frame." (Reporting by Steve Slater, Huw Jones, Mark Felsenthal, Jennifer Ablan, Catherine Bosley, Sakari Suoninen and Natsuko Waki; Compiled by Hugh Lawson and Alex Richardson)