(Reuters) - Banks will have to more than triple to 7 percent the amount of top quality capital they hold to withstand future shocks, global regulators and central bankers agreed on Sunday.
The agreement, known as "Basel III," will force banks to set aside far more capital to withstand market shocks in future in a bid to lessen the need for bailouts by governments seen during the financial crisis.
Following are some reactions and official statements issued after the agreement:
U.S. TREASURY SECRETARY TIMOTHY GEITHNER
"We welcome this next step on the way to strong global financial reforms and look forward to reviewing the details of these proposed reforms to global capital requirements.
"We remain committed to reaching agreement by the time of the G20 meeting in Seoul on a strong set of reforms that will reduce the costs of future financial crises, provide certainty to the markets and secure a level playing field for U.S. financial institutions."
ROBBERT VAN BATENBURG, HEAD OF EQUITY RESEARCH, LOUIS CAPITAL MARKETS, NEW YORK
"It's a mixed blessing for the banks but I'm sure investors will be happy to get some clarity and allow the market to move on.
"I don't think there are any nasty surprises and there's a time frame to allow for plenty of time to raise capital if needed. The best thing is it removes the uncertainty that was hanging over the market... The markets should take this favorably."
MOHAMED EL-ERIAN, CO-CHIEF INVESTMENT OFFICER, PIMCO
"The phasing-in period for the new capital requirements is surprisingly long, which will add to the skepticism about the robustness of the bank capital enhancement efforts."
SIMON HILLS, DIRECTOR, BRITISH BANKERS ASSOCIATION
"I think it's broadly in line with what we expected.
"The question is how much monitoring there will be while the changes are being introduced. It's important there is ongoing monitoring and reassessment to make sure it's doing what we expect it to do and not have any unintended consequences we are nervous about.
"It looks like a good step toward increasing resilience of the banking system.
"What is important is that the Basel Committee starts work now to make sure there are globally accepted policies and procedures in place to make sure these rules are implemented in a harmonized way.
"I think the banking sector can live with this deal. The capital conservation buffer is a bit lower than we had feared.
"There has been a tremendous focus on getting this done quickly and it has been done to the G20 timeframe which is why we need this ongoing monitoring and ability for mid-course corrections."
CHRIS WHEELER, ANALYST, MEDIOBANCA, LONDON
"It is clear that as a result of concerns about the anemic economic environment, Basel is trying to balance the need for tougher regulation with supporting the banks' inevitable role in the recovery. Hence the long implementation time frame."
BOARD OF GOVERNORS, U.S. FEDERAL RESERVE SYSTEM
"The agreement represents a significant step forward in reducing the incidence and severity of future financial crises, providing for a more stable banking system that is less prone to excessive risk-taking, and better able to absorb losses while continuing to perform its essential function of providing credit to creditworthy households and businesses."
DANIEL ZUBERBUEHLER, VICE CHAIRMAN, BOARD OF DIRECTORS, SWISS REGULATOR FINMA, ALSO A MEMBER OF BASEL COMMITTEE
"This will enable them (banks) to withstand larger shocks without relying on government support. As a result, the global financial system will be more resilient to shocks.
"In light of the current crisis that highlighted the fragility of the banking sector such a reform was indispensable. To make sure that their implementation supports economic recovery, capital and liquidity requirements will be introduced gradually over the next decade.
"The FINMA and SNB strongly support these efforts.
"At the domestic level, we remain confident that the commission of experts can build on today's agreement and submit a set of proposals to the government. It is our responsibility to do all we can to ensure that in the future:
* systemic banks will be significantly more resilient than the other banks
* they have incentives to reduce their systemic importance
* the resolvability of large banks with cross-border activities is facilitated"
PHILIPP HILDEBRAND, CHAIRMAN OF THE GOVERNING BOARD OF THE SWISS NATIONAL BANK (SNB)
"The reform package will ensure that, going forward, banks will hold much larger buffers of higher quality capital and liquidity. This will make the global financial system more resilient to future shocks. Gradual implementation of the new standards will support the economic recovery.
"While the reform package is far-reaching, it does not yet comprehensively address the TBTF ("too big to fail") problem. Further efforts will be required in that area at the international and at the national level.
"For Switzerland, the Basel III reform package provides a solid foundation on which to build a comprehensive national regulatory response to the TBTF problem."
UBS
"UBS took note of the recommendations issued by the Basel Committee today. The Basel Committee set the international minimum standards, which have to be implemented by national regulatory authorities.
"For UBS the relevant standards are mainly set by the Swiss financial supervisory authority FINMA. UBS will comply with the regulatory changes within the given time frame."
(Reporting by Steve Slater, Huw Jones, Mark Felsenthal, Jennifer Ablan, Catherine Bosley, Sakari Suoninen and Natsuko Waki)
