LONDON - Global banking standards issued this week by the Basel Committee on Banking Supervision offer little new, but may provide the impetus many countries need to improve their banking laws, British banking experts said.
But they added that the standards may conflict with European Community law.
The Basel Committee, made up of banking supervisors from the Group of 10 industrial countries plus Luxembourg, issued the standards on Monday.
Spelling It Out
The standards call for adequate home-country supervision of banks, approval from both home and host countries for a bank to open branches, and for governments to have the right to gather information needed for approval and to take action if standards are not met.
"It is the same old stuff," said Robin Hutton, director general of the British Merchant Banking and Securities Houses Association. "But what it does do is put down in writing what is expected of international regulators."
Richard Dale, professor of international banking at Britain's University of Southampton, said the measures merely formalized what had been agreed under the 1983 Basel Concordat, which also called for consolidated supervision.
"There is some tougher detail on exchanges of information." Mr. Dale noted, but "the very fact that they have come up with a document means they are talking about little else."
Formalization of Rules
Gerald Corrigan, president of the Federal Reserve Bank of New York and chairman of the Basel committee, conceded when he announced the standards on Monday that they contained little that was new. But he said formalizing and reinforcing current rules was important.
The standards were written to prevent a recurrence of a scandal of the kind at that occurred at the Bank of Credit and Commerce International, whose branches were closed worldwide a year ago after allegations of widespread fraud.
Regulators said it was difficult to supervise BCCI because it was based in Luxembourg and the Cayman Islands, both known for their lax control of banks.
But the new standards mean that if a country into which a bank wishes to expand - the host country - is unhappy about the home country's regulations, it can either supervise the branch itself or stop it from coming in. The new standards also mean that a single country has ultimate responsibility for a bank.
Possible Conflicts Seen
Rosa Greaves, a specialist in European Community law at the University of Southampton, said the requirement to assess a home country's supervision could conflict with the community's rules.
"In the E.C. you have this idea of no discrimination," she said. "This needs a closer look to see where there are any possible conflicts."
Anthony Shea, a specialist in banking regulation at the London law firm of Clifford Chance, said the European Community's law forbade any form of discrimination against another member. "It's politically impossible," he said.
But the standards conform with the community's law in other ways, Mr. Shea and Ms. Greaves said - especially with the community's Second Banking Directive, which comes into effect next year.
The directive will also require stricter supervisory control and its provisions must be incorporated into nationals laws.
Mr. Shea added that the United States had already changed national legislation on banks as a result of BCCI, and Britain was likely to do so as well.
"Countries will beef up their supervision and will be very cautious about letting in new banks to open branches," he said.
