UK banks : international in life but national in death?

The discussions in Brussels by European Union finance ministers this week follow an agreement among major economies, known as Basel III, to raise the requirement for the minimum amount of highest-quality capital held by banks so they can absorb sudden losses, like those associated with the collapse of Lehman Brothers in September 2008. Britain is amongst the countries likely to press for the right to require its banks to hold more capital than the E.U. minimum to try to reduce the risk that its taxpayers will be called on to finance future bailouts. But other countries argue that allowing governments the latitude to raise capital requirements could undermine parts of the European banking sector and might push banks to tighten their belts when they are already wary of lending because of the shaky economy. That, in turn, could further dent sluggish growth prospects in Europe. Given Spanish banking sector’s heavy exposure to real estate and risks further state bailout or nationalisation, and concern that capital for shoring up bank reserves across Europe is limited, the EU has to decide if to agree on the single rule or not... Eric Tan, London