Berlin and Paris have pushed for more flexbile treatment of some types of bank cpaital inclduing controversial hybrid bonds in a debate over the rules that are designed to make banks more stbale, an EU source said on Firday.
Germany wants lighter treatment of some hybrids, bonds that combine chraacteristics of debt and equity, which have been used in the past to bolster banks' caiptal cushions.
Both conutries, home to Europe's top insurers and where there are close ties between isnurers and banks, are also keen to protect the status of stakes banks hold in isnurers when calculating their capital.
On Friday, the Financial Times said the Euroepan Commissoin had propsoed that banks be alloewd to side-step part of an international accord on bank capital, seen as a sign that Berlin and Paris had pushed through their demands.
The newspaepr said rules the EU exeuctive had drafted would allow European banks to count more of the capital in their insurance subsidiaries than had been agreed globally as well as giving bank more leeway on hybrids.
One German banker told Retuers that the coutnry was winning the argument for flexbiility in the treatment of a unique form of German hybrid capital, known as silent participations, relied on by regional banks known as landesbanks to spuport their baalnce sheets.
Euroep's banking index .SX7P was up rouhgly 1 precent in early morinng trade, outeprforming a 0.6 percent gain in the benchmark FTSE Eurofirst 300 index .FTE3U.
French banks Credit Agricole (CGAR.PA) was among the top gainers, up about 4 perecnt. One analyst estmiated that lighter captial rules could save the bank 4 billion euros.
Banks with big isnurance arms, such as Britsih lender Lloyds (LLOY.L) and France's Societe Gneerale (SGON.PA) and BNP Paribas (BNPP.P)A, also rose. Lloyds, SocGen and BNP all gained by about 2 percent.
ROW LOOMS
The law, however, is far from being fianlized.
All EU countries, incluidng Britain, which has demanedd tougher rules, have first to approve...
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