EU promises banks regulatory pause in 2013

* 2012 EU bank stress test set to be tougher

* Goldman: regulators face Everest climb with sneakers

By Huw Jones

LONDON, May 10 (Reuters) – European banks already groaning under the weight of new laws face another two years of heavy rulemaking before regulators call it a day.

The worst financial crisis since the Great Depression has sparked frenzied rulemaking to ensure taxpayers won’t be needed to shore up banks again.

“We do foresee a regulatory pause in 2013,” Martin Merlin, head of financial services policy at the European Union’s executive European Commission said. The Commission has sole powers to propose EU financial rules and is fulfilling global pledges to crack down on derivatives, hedge funds, banks and credit rating agencies.

“By the beginning of 2013 the hope is that all the rules that are needed to be put in place in light of the crisis will already be applied in EU states,” Merlin told an Economist conference.

“That will be a crucial moment to do the evaluation of how all this works.”

EU Internal Market Commissioner Michel Barnier is due to present draft laws on tougher bank capital, bank crisis resolution and securities trading before the summer ends.

The EU executive also expects another health check of European banks next year as the current one is due to be completed next month.

“Next year a further round of banking stress tests should take place and they should hopefully be even tougher than the 2011 stress test,” Merlin said.

Gerald Corrigan, a managing director at Goldman Sachs (GS.N) bank, said markets were already checking how banks can meet new bank capital rules that are don’t start until 2013.

“This is a healthy thing,” Corrigan said, adding that four conditions were necessary for financial stability:

— strengthened bank capital and liquidity rules;

— workable bank “living wills” or contingency plans;

— effective bank resolution powers;

— better coordination and cooperation among supervisors.

Corrigan said achieving some of these was “a little bit like climbing mount Everest with sneakers on”.


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