A Basel breather heard ’round the world

Posted by Tracy Alloway on Dec 16 11:19.

Has Christmas come early for the world’s banks, or are we witnessing a grasping of straws for anything resembling regulatory forbearance this Wednesday?
Banking shares in Japan and Europe are up this morning, and it’s all because of a single report from Japanese newspaper Nikkei. MarketWatch sums up the story:
The Nikkei business daily said in an unsourced report that the Swiss-based Basel Committee on Banking Supervision will stick to its plan to gradually introduce the new, stricter capital standards starting in 2012, but will establish a transition period of 10-20 years.
The proposed changes include raising the current 8% minimum capital ratio and focusing on a narrower definition of core capital, the report said
LOS ANGELES (MarketWatch) — New global capital-adequacy rules for large banks may be delayed by at least a decade during a “transition period,” according to a Japanese news report Wednesday.
And it looks like this story now has legs – albeit of mismatched lengths.
From Reuters:
TOKYO/FRANKFURT (Reuters) – Global regulators will give banks a grace period before forcing them to implement stricter capital rules, three people said on Wednesday, easing concerns that lenders might need to issue massive amounts of shares in the near future.
Shares of major Japanese banks surged on the news, with Mizuho Financial Group and Sumitomo Mitsui Financial Group both gaining more than 14 percent.
European bank shares rose a more modest 1.3 percent on relief that banks would have more time to adjust to new rules being drafted by the Basel Committee on Banking Supervision, made up of central bankers and regulators from nearly 30 countries.
The committee is expected to publish proposals this week for stricter financial regulations in response to the credit crisis, and there had been fears that if banks had to implement the new rules quickly, they would have to raise substantial capital.
The three people with knowledge of the matter said the committee would stick to its plan to gradually implement changes starting in 2012, but will give banks a transition period to help them adjust to the rules.
Regulators do not plan to set a specific time frame for the transition period, said the people, who were not authorized to speak publicly on the matter. Japan’s Nikkei newspaper said it would be at least 10 years.
Investors, however, seem not to be too bothered by the discrepancy in details just yet.
The share price action in selected banks this morning:

If the story proves untrue expect a massive comedown.
Related links:Banks help bourses make gains – FT
A Basel round-up for bonus-bugged bankers – FT Alphaville
Counting the costs of more bank capital – FT Alphaville