European Banks to profit from Basel rule change

After global authorities decided to regard the euro area as a single market for determining capital requirements for its top lenders, European banks led by BNP Paribas SA expect to benefit.

According to documents obtained by Bloomberg from the Basel Committee on Banking Supervision, banks located in Europe’s banking union, which mostly includes euro-area countries, cross-border exposures within the bloc would be classed as local exposures, which are considered less hazardous.

Because BNP Paribas has the largest surcharge of all systemically significant lenders in the bloc, it stands to earn the most from the lowering in capital requirements.

The proposed changes, which are anticipated to be disclosed as soon as Tuesday, might make cross-border takeovers easier by allowing banks to undertake deals within the EU without having to worry about tighter capital requirements.