Last week, the RBNZ released the three independent international experts’ assessments of the New Zealand Capital Review. The RBNZ commissioned three international experts in May as part of the bank capital review. The reports by Cummings, Miles and Levine offer interesting views on bank capital. The reports are different in substance and style. However, they… Read More My two cents on Ross Levine’s expert report: deep thinking on incentives, dynamics, and moral hazard.
Yesterday, the RBNZ announced the release of submissions on the last capital review paper. A whopping 161 submitters shared their views on the Reserve Bank’s capital proposals. This is significant for sure. It also confirms how interesting bank capital regulation is! I quickly found my own contributions. Three this time, but I wonder why the… Read More The international financial institution that the RBNZ ignored
The idea that financial markets are efficient is fascinating. A compelling story about market efficiency is the one about the Space Shuttle Challenger disaster. The Challenger broke apart within minutes after its launch on 28 January 1986. I remember it very well. It was a cold day, I was in Groningen, the Netherlands. I cycled back home… Read More The wisdom of crowds
Today, I submitted my comments on our Reserve Bank’s 4th capital consultation paper. The RBNZ wants banks to meet stiff new capital requirements. For common equity, the ratio requirement will increase by a whopping 5 percent, with a 1.5 percent countercyclical buffer requirement on top. Total capital requirements will be 17 percent. There will be… Read More Are the Reserve Bank capital plans really about conduct risk?
Agreed, a bit late to the party, but here are some links to the set of revised rules aimed at reducing risks in the EU banking sector: Presser Text of the political agreement on the capital requirements regulation (EU) 575/2013 Text of the political agreement on the capital requirements directive 2013/36/EU Text of the political… Read More CRD V update
“He is the problem.” the investment banker said on a sunny afternoon some weeks ago over a plate of Shed 5 fish & chips. I agreed, it’s the governance of the process, or the lack thereof, that puts the capital plans of the Reserve Bank at risk. The investment banker had spent the entire Christmas… Read More The Governance of the Reserve Bank Capital Plans
The Bank of England stress test results are out. A comprehensive report covering this exercise can be found here. The report surprised me a bit, because its repeatedly mentions the countercyclical capital buffer requirement. The BOE decided to keep at 1 percent. Hardly newsworthy, that percentage was announced a year ago. Still, the report mentions… Read More Are UK’s countercyclical capital buffers high?
Orr’s monologue on bank capital at the Financial Stability Review presentation this week was a freshening surprise. No longer the wallflower of kiwi prudential supervision, Orr elevated bank capital to the top spot of priorities. Reinforcing Orr’s FSR rant monologue, the reserve bank published a short and clear speech, announcing its position on bank capital: “… New… Read More RBNZ takes position on bank capital
Just to illustrate my previous post on NZ bank capital, the recent dashboard has shown a drop in CET1 capital ratios. The September size adjusted Net CET1 ratio was 11.35%, down from 11.43% in June. Contributing to the drop are, in particular, big banks ANZ and Westpac. Unfortunately, the recent FSR report spins the ratios: “Bank capital… Read More Updated NZ capital ratios
“You guys are little bit philosophical: the Netherlands and France are the only two countries in Europe that haven’t taken a position on capital requirements.” That was Emil from Nomura, who, in early 2012, queried me about the Dutch position on minimal capital requirements. The Swedish bank authorities had just announced that capital ratios should be… Read More Has the reserve bank become too philosophical about bank capital?