European companies will pay as much as €50 billion (Dh244.49 billion) a year in additional borrowing costs under new capital rules for banks and insurers, more than triple the amount for US borrowers, Standard and Poor's said.

Higher funding costs, shortened loan maturities and a lower equity investor base may push up the cost of credit by €30 billion to €50 billion a year once Basel III and Solvency II are implemented fully by 2018, Blaise Ganguin, S&P's chief credit officer for Europe, wrote in a report. US borrowers will see costs increase by $9 billion (Dh33.05 billion) to $14 billion.

"The introduction of stricter regulatory frameworks for banks and insurers is likely to result, at best, in a repricing and, at worst, in a rationing of credit for corporate globally," Ganguin wrote. "European corporates will feel the effect more harshly than their US counterparts because they typically rely more heavily on banks for funding relative to capital market sources."

Surcharges

Basel III imposes a global regulatory standard on the capital adequacy and liquidity of banks, while Solvency II is designed to boost insurers' reserves. The euro region crisis has left European lenders with as much as €300 billion of credit risk, according to the International Monetary Fund. The new rules will lead to a 10 per cent to 20 per cent increase over current interest costs for corporate borrowers in Europe and the US, depending on banks' return on equity targets of 8 per cent to 15 per cent, according to S&P. The regulations are due to start in 2013, with the final stages of the banking reform introduced in 2018.

The Basel Committee on Banking Supervision said on Monday they will stick to planned capital surcharges for the world's biggest banks amid criticisms from lenders including BNP Paribas and Citigroup Inc. that the measures may stymie the financial system's recovery.

Clashes

Under the surcharge proposals, lenders whose failure could damage the financial system would face stricter minimum capital requirements on top of an already-announced tripling in the amount of core capital that all internationally active banks must hold.

The Basel group of bank regulators from 27 countries also said they will accelerate work on a minimum liquidity rule to provide "greater market certainty" about details of the measures. Basel III's so-called liquidity coverage ratio requires banks to hold enough easily saleable assets to survive a 30-day credit crunch.

Bank watchdogs have clashed with some banks over the additional capital rules, which were released for public comment in July. Jamie Dimon, chief executive officer of JPMorgan Chase & Co., has said that the US should consider withdrawing from the Basel committee and that the rules it sets are "anti-American."