HSBC chairman Stephen Green said today he is confident the new Basel rules on bank regulation will be amended to take account of their impact on trade finance.
Firms say that at present the so-called Basel III rules will significantly push up the cost of trade finance due to the way they treat bank leverage. But HSBC's Green said he was confident the Basel committee would amend the rules to take account of this concern.
"Yes, I'm optimistic that we should reach a reasonable conclusion on that," he said during the G20 CEO summit in Seoul, speaking in his role as vice chairman of the International Chamber of Commerce.
However Mr Green added that this was a small part of the Basel III discussions and he was not calling for the whole package of reforms to be re-opened.
The new rules require banks to hold capital equivalent to the value of all off-balance sheet items in order to prevent a repeat of the financial crisis, when many banks hid toxic assets.
But documentary letters of credit - the short-term loans collateralised on cargoes that have formed the bulk of trade finance for centuries - are also held off balance sheets.
A requirement to fully capitalise such loans instead of providing capital at 10 or 20 per cent of their value as at present would make them much less profitable for the banks.
On the wider Basel III rules on capital and liquidity, Mr Green said it would lead to a stronger financial system but that there were still a number of issues which needed to be defined.
"There are still issues to be resolved, notably on liquidity. That is a discussion which is going to run into next year," he said.
Mr Green also told reporters after a press conference that he was confident HSBC's headquarters would remain in Britain despite the bank's CEO being located in Hong Kong.
Reuters