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 […]

ABN Amro’s dodgy spin-off readiness

Yesterday the Dutch government announced that it asked ABN Amro to prepare for re-floating on the stock market. The Dutch bank was nationalized in 2008 after the collapse of Fortis. With EU requirements on State support for ABN Amro expiring next year, the bank could be freed from the State as soon as next year. According to the […]

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 […]

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 […]

Leverage of U.S. Banks and Corporates, a graph.

There is lots of talk going on about bank leverage. But how does it look? The plot below shows solvency ratios for U.S. banks (red) and U.S. corporates (blue). It looks different. Note, these are observations for the U.S. over years 1985-2012. Solvency is defined as accounting equity divided by total assets. Graphs are made […]