* More regulatory forbearance to help economy grow faster
* Some leeway also expected on net stable funding ratio
By Huw Jones
LONDON, Jan 10 (Reuters) - Global regulators will make iteasier for lenders to feed credit to the economy by relaxing anew rule on Sunday designed to limit risk on banks balancesheets, regulatory and banking industry sources said.
The rule is among the final elements of a global accord onbank capital, known as Basel III, which forms the world's coreregulatory response to the 2007-09 financial crisis that sawundercapitalised lenders being rescued by taxpayers.
Central bankers from the Group of 20 leading economies andother countries will meet in Basel, Switzerland to endorse thefinal version of the so-called leverage ratio that banks willhave to comply with from January 2018.
It measures a bank's capital against all of its assets, suchas loans, without adjusting them for risk, and acts as abackstop to a lender's core risk-weighted capital requirements.
It has been set at 3 percent, meaning a bank must holdcapital equivalent to 3 percent of its total assets.
Reuters reported on Dec. 3 the rule will be eased aftercomplaints from banks that the draft version was too harsh inthe way it forced lenders to add up derivatives positions on agross basis.
This would mean, for example, U.S. banks like Morgan Stanley or Goldman Sachs losing the benefit they haveunder U.S. accounting rules from totting up derivatives on asmaller, netted basis.
"Banks will be able to net short-term financing transactionsto have the benefits of netting. It will have a significantimpact," a European banking industry official said on conditionof anonymity ahead of the announcement by the Group of Governorsand Heads of Supervision (GHOS).
If all assets were treated equally, banks may be tempted toditch some loans or stop providing new ones. Central bankreserves held by banks could also be excluded from leverageratio exposures calculations.
GHOS, chaired by European Central Bank President MarioDraghi, is the body that oversees the Basel Committee, thecollection of banking supervisors from across the world whowrite bank capital standards.
The anticipated easing of the leverage rule follows adecision by Basel to scale back its bank liquidity rule toreflect a shift in focus by politicians from cracking down hardon banks to encouraging more credit to aid economic recovery.
The GHOS is set to revise for public consultation a ruleknown as a net stable funding ratio or NSFR.
From the start of 2018 this rule will force lenders to holdenough liquidity to cover longer term liabilities held by thebank to limit dependence on short-term funding.
The banking industry official expects the revision to easethe way the rule treats mortgages, an issue seen of particularinterest to Australia and South Africa.