Basel rules could cause SME 'credit drought' warn banks - papers

Banks have warned they would be forced to halt lending to small businesses by tighter international regulations they say are being rushed in.

In a seemingly co-ordinated response, Britain's bailed-out banks warned the Basel Committee for Banking Supervision's proposals for a stricter regulatory environment could stifle economic recovery, the Daily Mail reports.

Lloyds Banking Group, which is 41% taxpayer-owned, says the international banking enforcer's proposals risk ‘very serious damage to our fragile economic recovery, especially if implemented within the proposed timetable'.

It would become 'uneconomic' to lend to small firms, and proposed minimum liquidity standards, which would require lenders to significantly bolster their balance sheets, were a particular concern, it says.

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GERMAN FINANCE minister Wolfgang Schauble has pleaded with his country's citizens to back a joint EU-IMF bail out for Greece worth up to €45bn (£40bn), or risk it turning turn into a "second Lehman Brothers", the Telegraph reports.

"Greece's debts are all in euros, but it isn't clear who holds how much of those debts. The consequences of a national bankruptcy would be incalculable. Greece is just as systemically important as a major bank," he told Germany's Der Spiegel newspaper.

German backing failed to stop spreads on 10-year Greek bonds surging to 454 basis points over German Bunds, the highest since the launch of the euro.

An administrator of China's foreign exchange fund SAFE - the world's top investor - has said the country is concerned Greece may set off a chain reaction in the eurozone, and that some states with big debts may default.

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AIG, THE US government-controlled insurer, is considering pursuing Goldman Sachs over losses incurred on $6bn of insurance deals on mortgage-backed securities similar to the one that led to fraud charges against the US bank, the Financial Times reports.

AIG's move over the deals that caused it a loss of about $2bn is a sign Friday's decision by the Securities and Exchange Commission to file civil fraud charges against Goldman could spark actions from investors who lost money on mortgage-backed securities.

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SUPERMARKET GIANT TESCO reported continued international expansion and a surge in sales of toys and clothing in the UK, helped buoy full-year sales at the company, as the group cut debt faster than expected and invested further in its loyalty card scheme, the Financial Times reports.

Pre-tax profits were up 9% to £3.2bn, with sales rising 6% to £56.9bn.

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