Failure to adopt Basel III norms may attract sanctions: Mexican official

Failure on the part of nations to implement new rules aimed at safeguarding the global banking system from another financial crisis would attract sanctions, a senior Mexican finance official said.

New rules forcing banks to roughly triple the size of capital buffers held by them would be phased out in over six years starting in January, after each country had finalised its own version.

However, the US and Europe, home to most of the world's largest banks, were still at the drafting stage, prompting speculation over the postponement of the Basel III timetable.

According to Juan Manuel Valle, head of banking supervision at the Mexican Treasury, no country had suggested a delay but any that failed to meet the deadline would face pressure from their peers.

He told Retuers on the sidelines of Group of 20 meeting that for the countries that did not have regulations in place in January, the question would be what kind of punishment they would face. He added that details would only be worked out following non-compliance by countries.

G20 countries in 2010 agreed on Basel III rules to ensure there were enough resources to shield against future crises. The rules had, however, come under heavy criticism from the US and British regulators who had joined banks in calling for a massive re-think.