The European Commission’s proposal to accelerate the reduction of non-performing loans

This week the EC presented concrete steps to tackle non-performing loans, see this page. Ouch One and Ouch Two Two reasons why this is an interesting proposal. First, it forces banks to deduct any provisioning shortfalls directly from Common Equity Tier 1. Ouch! Second, the proposal amends the CRR, which is a Regulation. And we… Read More The European Commission’s proposal to accelerate the reduction of non-performing loans

Basel’s damning report about EU’s definition of bank capital

Here is the Basel III RCAP report. On first sight, it looks bad: “In view of this, the prudential regulatory framework in the EU and the nine Member States was evaluated to be materially non-compliant with the minimum standards prescribed under the Basel framework.” However, how bad is it? Having skimmed trough the report with… Read More Basel’s damning report about EU’s definition of bank capital

Bank of America, nothing complex, it’s noblesse oblige!

What surprised me this week about the capital calculation cock-up of Bank of America Meryll Linch were the reactions of the press. The financial press responded to this gaffe by highlighting the difficulties of calculating capital. Reuters, for example wrote: “The announcement illustrates how difficult it is to determine appropriate capital levels for the biggest banks.” Capital… Read More Bank of America, nothing complex, it’s noblesse oblige!

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

BOE Announces its Position on Capital under CRR IV

Last week BOE’s Prudential Regulation Authority presented its Statement on Strengthening capital standards; which provides clarity on bank capital rules after the consultation of August last year. It was about time, given that the new capital rules under CRR IV enter into force in about one month from now. With a 7% CET1 requirement, the BOE presents a… Read More BOE Announces its Position on Capital under CRR IV