And a quick follow-up from Basel on capital shortfalls. (Click here for the report.) From the press release: “Data as of 31 December 2012 show that shortfalls in the risk-based capital of large internationally active banks continue to shrink. The aggregate shortfall of Common Equity Tier 1 (CET1) capital with respect to the 4.5% minimum has narrowed to €2.2 billion, which is €1.5 billion lower than on 30 June 2012.

At the CET1 target level of 7.0% (plus the surcharges on G-SIBs as applicable), the aggregate CET1 shortfall for Group 1 banks is €115.0 billion, which is €82.9 billion lower than previously. As a point of reference, the sum of after-tax profits prior to distributions across the same sample of Group 1 banks during 2012 was €419.4 billion.

Under the same assumptions, the capital shortfall for Group 2 banks included in the sample is estimated at €11.4 billion for the CET1 minimum of 4.5% and €25.6 billion for a CET1 target level of 7.0%. While this represents an increase compared to the previous period, this is mainly due to some Group 2 banks that are included for the first time (ie the sample has been expanded in size) together with a very small part of the sample that has posted an increase in shortfalls. The sum of Group 2 bank after-tax profits prior to distributions in 2012 was €29.5 billion.

The average CET1 capital ratios under the Basel III framework across the same sample of banks are 9.2% for Group 1 banks and 8.6% for Group 2 banks. This compares with the fully phased-in CET1 minimum requirement of 4.5% and a CET1 target level of 7.0%.”