EBA advises Europe to overturn Basel III rule on unrealized gains

Among the many publications that the EBA posted on its website last week, the Technical advice to the Commission (EC) on the treatment of unrealized gains deserves attention. Not only because of its content, but also because of the clarity, depth, and breadth of covering the issue of unrealized gains. Here is the context: EBA’s advice… Read More EBA advises Europe to overturn Basel III rule on unrealized gains

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?

Spot the differences: Tier 1 versus Equity for U.S. Bank Holding Companies

I embarked on a nice research result that may feed into the Basel discussion on the risk-based solvency framework (clik here for the DP). One would think that Tier 1 capital serves a solvency purpose, and therefore it would present a more conservative picture of a bank’s solvency. For U.S. Bank Holding Companies over 2001-2012,… Read More Spot the differences: Tier 1 versus Equity for U.S. Bank Holding Companies