European Parliament Adopts Stricter Bank Rules
The European Parliament (EP) has adopted stricter rules on the activities of the banks, including the establishment of committees to oversee transnational banks to prevent a new crisis in financial system.
The new rules will come into force at the end of next year. “It is clearly a first step, a response to the financial crisis, but will not be enough“; said Austrian parliamentary Othmar Karas, who has held the measure in PE.
Banks will have to retain 5% of the guaranteed financial instruments that emit and sell. The new rules limit the amounts that banks can lend to each other and establish oversight committees to transnational banking groups.
Also, the new regulations limit the ability to 25% from the exposure of a bank, from their funds, to a single customer or group of customers, but not more than 150 million.
Guaranteed financial instruments, especially those with mortgages, were at the origin of the global financial crisis and despite of the raised stock were shortly untraded, forcing banks to ask support from the state.
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