LONDON: Some of the world’s biggest banks will have to set aside $77 billion in extra capital from 2019 under new trading book rules unveiled on Thursday by global regulators hoping to prevent another financial crisis.

In the latest sign of how regulators are being more accommodative as policymakers emphasise the need to help economies grow, the Basel Committee of banking supervisors has eased its initial proposal for a hike in capital requirements.

Banks had warned that overly burdensome demands would make trading uneconomic, crimp lending and thin already stressed liquidity in markets.

Basel did not name the banks likely to be effected, but major US trading firms such as JP Morgan as well as European players such as Deutsche Bank are likely to be in the frame.

While the new rules won’t represent a huge overall hike in capital requirements, it could dampen ambitions at lenders to expand trading. Under its final, long-awaited rules on how much capital banks must hold in case stocks, bonds and other markets turn sour as they did in 2007-09, Basel has raised the trading book assets of a bank’s total risk-weighted assets to around 10 per cent from 2019 from about 6pc.

Each percentage point difference is equivalent to less than 20bn euros in extra capital, and an impact study by Basel study shows that for most lenders there will be little change, if any, in capital requirements.

Published in Dawn, January 15th, 2016