Jay, the EBA and BCBS Basel III monitoring results are out!

It is that time of the year: the Basel III monitoring reports are out. The Basel report can be found here. The EBA report can be found here.

Highlights from the EBA report:

CET1 ratios are steadily increasing – Compared with the previous exercise (reference date June 2014), the average CET1 ratio of Group 1 banks increased by 0.5 percentage points:

CET1

Capital shortfalls are on the decrease:

Shortfall

Although the press worries about AT1 CoCos, the amount of Tier 1 appears limited, but Tier 2 is on the rise.

Capital over time

The leverage increase increases too – Group 1 banks show a LR of 4.2%, while the ratio for Group 2 banks is 5.0% as of December 2014. As of 31 December 2014, approximately 90% of both Group 1 and Group 2 banks would fulfil the preliminary target LR requirement of 3.0%.

Evolution LR

But … the Leverage Ratio remains a constraint:

Binding LR

In particular for G-SIBs:

LR constraint

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