Seven EU states fear 'diluted' Basel banking rules: source

(BRUSSELS) - Seven European states including Britain and Spain, where banks suffered heavily during the financial crisis, have demanded that new rules on banks' capital are not watered down when applied by Brussels.

Banks have until 2019 to reach full compliance under an eight-year transition laid out last year in Basel III international regulations aimed at shoring up banks against repeats of the 2007-2008 financial crisis.

The spokeswoman for EU financial services commissioner Michel Barnier said the European Union is to adopt its position within weeks, after the seven wrote Barnier seeking tougher application.

The Basel Committee on Banking supervision groups states' central bankers and financial regulators.

An EU source said seven countries feared a "dilution" of new rules drawn up for some 8,000 banks worldwide which call for capital worth seven percent of banks' holdings including debt to be in hard form, as opposed to two percent currently.