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EVCA launches new attack on Basel rules

The European Private Equity and Venture Capital Association (EVCA) has launched a new attack on the proposed Basel rules on banking regulation. EVCA claims that European companies could lose between E5bn and E10bn in equity finance if the new rules on bank capital adequacy are implemented in their present form.

The new Basel II rules are intended to match the amount of capital banks are required to hold by regulators more closely with the risks they take in their businesses. But EVCA says the rules could lead to banks turning their backs on private equity due to the proposed changes in risk weightings, according to the Financial Times.

Banks are the source of 25 per cent of all funds raised by private equity firms in Europe, according to EVCA.

EVCA is adding its voice to that of a number of groups representing the banks themselves. These include the European Banking Federation, the British Banker's Association, the US-based Securities Industry Association and the Institute of International Finance.

The Basel II rules are currently undergoing a period of consultation in both Europe and the US and are due to be finalised by the end of the year. The rules are scheduled to be implemented in 2007.

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