* New article proposed for bank capital requirements reform
* Would favour banks who clear derivatives trades centrally
By Huw Jones
STRASBOURG, France, Feb 4 (Reuters) - Banks that centrally clear credit derivatives trades in the European Union could receive favourable capital requirements treatment, a top EU lawmaker said on Wednesday.
Pervenche Beres, chairman of the European Parliament's economic and monetary affairs committee, said she would propose inserting a new article into a draft reform of EU bank capital requirements rules being adopted by the assembly and EU states.
"It will favour banks that use central clearing," Beres said in an interview.
Banks that agree to use a central clearing house, rather than conduct transactions bilaterally as at present, would not have to tie up as much capital to cover risk, Beres said.
Parliament has joint decision-making powers with the bloc's member states in all EU financial rulemaking. So far, there has been no reaction from governments to her plan.
EU Internal Market Commissioner, Charlie McCreevy, said on Tuesday industry-led efforts to agree on central clearing of off-exchange traded credit derivatives by mid-2009 to cut risk had failed and legislation was needed.
Parliament should take the lead as part of wider efforts to apply lessons from the credit crunch, he said.
"As we were already amending the capital requirements directive, I saw there was a way to deal with this quickly and thought 'let's put it into the CRD'. It will improve visibility and cut risk," Beres said.
The economic affairs committee will vote on the capital requirements reform on March 2 or 9, with a full Parliament vote in April. The changes would come into force in 2010.
Dealers who trade in the $30 trillion sector on both sides of the Atlantic want just one clearing venue among those being set up in the United States to save costs.
EU policymakers and regulators insist European credit derivatives should be cleared on the bloc's soil to ensure proper oversight.
ECB AND SUPERVISION
The future shape of banking supervision in the EU is also becoming a hot topic and the European Commission has asked a group headed by former Bank of France Governor Jacques de Larosiere to make recommendations this month for EU leaders.
European Central Bank President Jean-Claude Trichet wants the ECB to have a role in banking supervision.
Beres, a French socialist, said de Larosiere would "propose something that will work" rather than be too ambitious and become bogged down in vested national interests.
"De Larosiere will not say the ECB will become the European banking supervisor. It's not possible, because Britain is outside the euro zone," Beres said.
"On the other hand, the crisis showed the central role of the ECB in ensuring liquidity in markets not only in the euro zone but also in the wider Europe," Beres said.
The ECB was the first central bank to inject liquidity into the financial system as the subprime crisis unfolded and some British-based banks used their euro zone subsidiaries to tap its funds.
"We have to draw lessons from that. I expect the ECB to have a role in the new financial architecture," Beres said.
The challenge will be what sort of bridge to put in place to link the macro prudential role of the ECB in the new architecture with day-to-day micro supervision, Beres said.
An ECB becoming a core part of banking supervision will also need a "political counterbalance", Beres said.
She also wants a fundamental reform of the Internatinal Monetary Fund with representation of emerging markets after its "failure to condemn asset bubbles" when they appeared. (Editing by Dan Lalor)