THE GROUP of 20 (G20) finance ministers are set to delay the implementation of tougher regulations for the world’s banks as splits emerge over the scope of the new rules.

Officials and ministers from the G20 group of industrialised nations, meeting in Busan, South Korea, acknowledged there were still big differences on the “Basel III” proposals due to be finalised by November.

Disagreements cover the scale, scope and timing of the increases in capital and liquidity banks will need to hold, as well as the leverage to be allowed.

In response to the splits, the UK and the US are offering to delay implementation of the Basel reforms to ensure the principles do not get watered down.

Speaking yesterday on the sidelines of the G20 finance ministers’ meeting, UK finance minister George Osborne said: “One of the things I will be pressing for is that the agreements that were reached last year on capital, leverage and liquidity are now concluded. We want an end to the uncertainty.”

An aide to Mr Osborne said the UK was adamant there needed to be no dilution of the principle that common equity should form the basis of new capital rules and that other forms of hybrid capital should not be allowed to count, under those new rules, as being the same.

But the aide added that if this was agreed, it would be possible to discuss the length of the transition period before banks had to meet the new standards.

The UK position chimes with the US and Canada.

French finance minister Christine Lagarde denied that France was trying to delay the process and said she hoped the reforms would be completed on schedule.

Ms Lagarde also said France and Germany agreed on the principle of banning naked short selling, striking a conciliatory note after initial friction following Berlin’s surprise move on the issue.

Germany roiled markets and surprised its EU partners last month by announcing a unilateral ban on speculative trades in top financial stocks, euro-zone government bonds and related credit default swaps.

“There’s much more convergence than there is difference between France and Germany, I can assure you,” Ms Lagarde said. – (Copyright The Financial Times Limited 2010, Reuters)