Stockholm, Oct 15: New international rules governing how much capital banks must set aside to cover risks will probably speed up consolidation in the financial industry, a top executive at Dutch bank ABN Amro said on Tuesday. Global regulators over the weekend agreed to overhaul the capital rules, known as Basel-II, by mid-’04 in a move expected to force sweeping changes to the banking business and increase pressure on smaller banks to join forces.
“Basel-II will lead to further consolidation between less sophisticated banks,” ABN Amro’s chief financial officer Tom De Swaan said in a speech. New risk management tools expected to be required for compliance with the new rules would be so costly that many smaller banks may opt to join forces to share the burden, he said, speaking at a seminar for Nordic investors.

ABN Amro, Europe’s 13th biggest bank by market value, owns Alfred Berg, a leading Nordic investment bank and brokerage house. De Swaan said he expected regulators to delay their target date for banks to implement the Basel-II accord. Bureau Report