EU finance ministers meeting in Brussels have agreed tougher capital rules for banks, resolving years of sparring between Britain and the rest of the EU.
The deal, aimed at making the bloc’s 8000 or so banks safer, should become effective from next year.
Britain had wanted tougher capital rules but agreed to compromise after gaining assurances it would be given a certain amount of flexibility in setting its own limits.
EU Internal Market Commissioner said: ‘‘Many of those taking part in the talks underlined the need to be careful about the potential consequences that one country’s decisions have on neighbouring countries, the fact that an increase in capital requirements in one country could reduce credit for businesses in a neighbouring economy.
Under the latest draft version Britain will be allowed to raise the minimum capital banks hold from 7 percent- set by the so called Basel III code -to 10 percent. Above this, it may need approval from the European Commission.
Sweden was another country pushing for tougher rules.
“I think they realise that at the end of the day it’s either capital requirement, or tax payers money. And in that choice I think it’s very easy to go to higher capital requirements,” Swedish Anders Borg said.
A final version of the latest agreement must still go to the European Parliament before it can come into effect.