#banksonbasel: Thomas Köntgen
How does Basel III place far greater burdens on German banks than on their US counterparts?
Unlike in Europe, where the greater part of loans remains on the lending bank’s balance sheet, it is mostly only a small part in the US – the greater part is placed in the capital market or is guaranteed by government institutions. Whereas the Basel Committee is assuming that capital requirements for European banks would increase by 17.5%, an additional burden is calculated for US banks of only 3.9%. Thus, the Basel III rules do not take into consideration the different structures of the two markets. This development would ultimately lead to a worsening of financing conditions for European customers and put European banks at a competitive disadvantage at the international level.