Leverage Capital Ratios vs Risk-Based Capital Ratios of U.S. Banks, a graph.

Following up on my graph on corporate versus bank solvency ratios, this graph illustrates the difference between two Tier 1 ratios reported  by U.S. Bank Holding Companies over 2001-2012. The blue histogram shows the Tier 1 Leverage Capital ratio, the red histogram shows the Tier 1 Risk-Based Capital ratio. Both measures use the same numerator: Tier… Read More Leverage Capital Ratios vs Risk-Based Capital Ratios of U.S. Banks, a graph.

Update on Deutsche

Shortly after my posting, Deutsche announced it would not call its perpetual bond, reports Reuters. One rationale for not calling could be that the bond would still be useful as bailinable debt. An interesting trade-off has been made in favor of keeping old-style instruments over new, Bazel III-compliant, instruments. One could argue that a choice… Read More Update on Deutsche

Deutsche’s phase-out of old-style capital securities and the meaning of perpetual debt

On July 17, I posted on this blog about the difficulties that EU banks face when replacing pre-crises capital securities with Basel III compliant securities. Today the WSJ illustrates these difficulties for Deutsche Bank. This bank struggles with capital securities that were issued before the financial crisis made us painfully aware of their abysmal prudential… Read More Deutsche’s phase-out of old-style capital securities and the meaning of perpetual debt

The European Bank Asset Quality Review, an inconvenience, but for whom?

Reuters reported  on a leaking source from the European Banking Authority who mentioned that Europe has set itself a “completely illusionary” timetable for the next round of bank health checks. An interesting Catch 22 thus ensues: adhering to a strict timetable would lead to cutting corners, thus endangering the reputations of European bank supervisors. Not-adhering… Read More The European Bank Asset Quality Review, an inconvenience, but for whom?