Barroso's plans a burden on banks

In his speech on the state of the European Union on Wednesday Commission President José Manuel Barroso presented a five-point plan for stability and growth. But his ideas could have the opposite effect, writes the business paper Les Echos: "The temptation to go too far in trying to regulate the crisis must be avoided. ... Traders take for granted that the recapitalisation of the banks will be done on the basis of a new minimum equity ration of nine percent, a threshold that far exceeds the norms set by Basel III which were already judged very high. By wanting to be overly virtuous the Union could achieve the opposite of what it wants to accomplish. That is, it could dissuade private investors from investing in these credit institutes which present limited perspectives for profit, thereby restricting their ability to finance the economy. A dismal prospect indeed."

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