BASEL, Switzerland -- The world's top bank regulators agreed Sunday on far-reaching new rules intended to strengthen the global banking industry and shield it against future financial disasters.

The new requirements more than tripled the amount of capital banks must hold in reserve, an effort to bolster their financial strength and provide a cushion against potential losses. They come two years after the collapse of Lehman Brothers set off a worldwide banking crisis that required billions in government bailouts. But the rules could also reduce bank profits, strain weaker institutions and raise the cost of borrowing for businesses and consumers.

The rules require banks to raise the amount of common equity they hold -- considered the least risky form of capital -- to 7 percent of assets from 2 percent.

"The agreements reached today are a fundamental strengthening of global capital standards," Jean-Claude Trichet, president of the European Central Bank and chairman of the group, which included financial officials from 27 countries.

While some banking groups have claimed the rules will require them to curtail credit and cripple economic growth, Mr. Trichet took the opposite view, saying in a statement that the rules' "contribution to long-term financial stability and growth will be substantial."

Others said that the modest effect on growth or borrowing costs was a small price to pay for a less combustible financial system.

"It will make banks less profitable, probably," said Joe Peek, professor of international banking and financial economics at the University of Kentucky. "But it will make the system safer, because there will be more of a cushion from insolvency, so banks can withstand more of a hit and still walk away alive."

The recommendations by the group, which includes Federal Reserve Chairman Ben Bernanke, are subject to approval in November by the G-20 nations and then enactment by individual nations before they become binding. The group set a deadline of Jan. 1, 2013, for member nations to adopt the rules, known as Basel III.

Some bankers expressed support for the new regulations. "Banks will unarguably be safer institutions," said Anders Kvist, head of group treasury at SEB, a bank based in Stockholm that has operations throughout Europe.

Many banks, however, have warned that the new rules would tighten the credit available to borrowers.

"This high capital level will decrease the ability of banks to lend," said Scott E. Talbott of the Financial Services Roundtable, which represents the largest American banks.

While the new rules require a substantial increase in capital reserves, they are not as severe as some analysts had predicted. Officials who participated in the meetings said the United States would have liked even stricter capital requirements and a shorter transition time, but were satisfied that this was an effective accord that could attract international support.

The group, the Basel Committee on Banking Supervision, stuck with plans to impose a so-called leverage ratio despite objections from some in the industry. The new requirement would oblige banks to maintain reserves of at least 3 percent of their total assets, including derivatives or other instruments that they might not carry on their balance sheets.

The leverage ratio is an attempt to require banks to hold reserves against all their money at risk, with no leeway to play games with accounting rules.

Common equity refers to the amount of money that shareholders have invested in a company's stock, as well as retained earnings -- profits that are not paid out as dividends. The new 7 percent minimum requirement refers to the amount of these conservative assets banks must hold in relation to so-called risk-weighted assets.

The requirement includes a 2.5 percent buffer that banks could draw down in times of crisis. But if they dipped into that money they would face restrictions on how much they could pay executives or distribute to shareholders.

Some countries were pushing for an additional "boom time" buffer of 2.5 percent, for a total of 9.5 percent, to be imposed when there were signs of economic overheating. But the Basel group could not agree on the measure and left it up to individual countries whether to implement it.

The rules would be phased in gradually to give banks time to adjust, with some provisions not taking full effect until the beginning of 2019. Banks would have to begin raising their common equity levels in 2013.

Deutsche Bank in Frankfurt said on Sunday that it would sell shares worth 9.8 billion euros beginning at the end of this month, primarily to finance the acquisition of Deutsche Postbank, a German retail bank, but also to bolster its reserves.

European banks in particular may need to raise more money, either by holding on to profits that they may have otherwise distributed to shareholders or by selling new stock.

First Published: September 13, 2010, 4:00 a.m.