PARIS - The world's biggest bank isn't in the United States, where regulators banned lenders from proprietary trading, nor in Switzerland, which is doubling capital requirements. BNP Paribas is in France, which is doing neither. BNP Paribas' assets rose 34 percent in the three years through June, reaching $3.2 trillion, equal to the size of Bank of America Corp., the largest U.S. bank, and Morgan Stanley combined. The Paris-based company may also have one of the lowest capital ratios among major European banks under new Basel rules, Morgan Stanley analysts estimated. Regulators around the world are considering how to rein in their biggest banks to avoid future bailouts without stifling an economic recovery. France, which will hold the rotating chair of the Group of 20 nations in 2011, is taking a laissez-faire approach even as concerns persist that Europe's sovereign debt crisis may pose renewed risks to financial stability. 'The French are pretending not to see this,' said Carmen Reinhart, a senior fellow at the Washington-based Peterson Institute for International Economics and co-author of a 2009 book examining financial crises throughout history. 'What policy makers are doing is delaying the inevitable. But delaying malaise is not unique to the French.' The Basel Committee on Banking Supervision, which sets capital standards for banks worldwide, softened planned capital and liquidity requirements in September and gave lenders about a decade to comply. France and Germany led efforts to weaken regulations proposed by the committee in 2009, concerned that their banks and economies wouldn't be able to bear the burden of tougher rules until a recovery takes hold, according to bankers, regulators and lobbyists involved in the talks. The Basel committee agreed to increase the minimum common equity requirement to 7 percent of assets, weighted according to their risks, from 2 percent previously. Individual countries may enforce higher capital requirements for their biggest lenders. Switzerland, which pushed for tougher rules, is moving ahead with additional restrictions to curb risks from its biggest banks. A government-appointed committee proposed last month that UBS and Credit Suisse Group, the country's largest banks, should hold almost twice as much capital as required under the new Basel rules. Britain may follow with similar requirements, Morgan Stanley analysts said in an Oct. 20 report, while a British government commission is also examining whether the largest banks should be broken up. In the U.S., the Dodd-Frank Act, signed by President Barack Obama in July, prohibits banks such as New York-based Goldman Sachs from engaging in trading for their own account. Banks' size wasn't the main indicator of whether they posed a risk during the financial crisis, and regulators should be wary of making rules specifically targeting size, Bank of France Governor Christian Noyer said at a press conference with French Finance Minister Christine Lagarde in Paris on Oct. 15. 'Asking for more capital isn't necessarily more virtuous if it's simply the counterparty to more risk,' Noyer said. 'If banks in some countries have very risky profiles and regulators ask them to hold more capital, it's their problem. Don't conclude that everyone has to do exactly the same thing.' France last month passed a law to increase the power of supervisors over bonuses and rating companies. Starting next year, France will also introduce a 'systemic tax on big banks' riskiest activities,' according to the finance ministry. 'I see absolutely no reason whatsoever that we should be asked any capital surcharge,' BNP Paribas Chief Executive Officer Baudouin Prot, 59, said in an interview with Bloomberg Television. 'You should ask a capital surcharge from the banks whose business model, whose track record has been between bad and horrendous. And there have been a number of them, but not for BNP Paribas.' Frederic Oudea, the CEO of Societe Generale, France's No. 3 bank by assets, told a French parliament hearing this week that the financial crisis showed 'size isn't linked to risk.' Applying capital standards like those planned in Switzerland 'makes no sense' in France, and could curb lending or make it more expensive, he said. BNP Paribas spent about $43 billion on acquisitions since 2000, including the 2009 purchase of Fortis assets in Belgium and Luxembourg, data compiled by Bloomberg show, making it the biggest bank by deposits in the euro area. The number of employees has doubled to more than 200,000 since 2004. 'The French government clearly desires to defend and promote French banks' capacity to expand abroad,' said Nicolas Veron, a senior economist at Brussels- based economics research organization Bruegel. The fact that French banks did better in the last crisis 'doesn't mean that France has no systemic-risk problems. You must think about scenarios of future risks.' Because French banks had a 'milder' crisis, the country sees less reason for a change in regulation, said Reinhart, who co-wrote the 2009 book, 'This Time Is Different: Eight Centuries of Financial Folly' with Kenneth Rogoff, a Harvard professor. Even countries such as the U.S. that had a 'systemic crisis,' are doing less than they should, she said. France's four largest banks _ BNP Paribas, Credit Agricole, Societe Generale and Groupe BPCE _ passed European Union stress tests in July, as did all but seven of the 91 banks scrutinized by regulators. The French lenders, which taken together account for 80 percent of the nation's banking assets, have enough capital to outlast an economic slowdown and a sovereign-debt crisis, according to the tests. The French banks probably won't face stricter capital and liquidity requirements because of their importance for the economy, Dirk Hoffmann-Becking, a London- based analyst at Sanford C. Bernstein said. Introducing tougher rules would 'take away their livelihood and the guy who's going to pay for it is the French consumer on the street.' _ _ _ Elena Logutenkova reported from Zurich; with assistance from Yalman Onaran in New York and Mark Deen and Olivia Sterns in Paris. 