In March 2009, the International Accounting Standards Board started an ambitious plan to make accounting for banks easier to understand. In no less than 97 pages, the IABS laid out its plan to reduce complexity in the reporting of financial instruments.* At the time, the IASB did the right thing. The standard in force was too complex.… Read More No battle plan survives first contact with the enemy
Last week, the UK Prudential Regulation Authority (PRA) published a consultation paper on group policy and double leverage, in which the PRA wants to limit the risks arising from excessive double leverage. The consultation paper and the associated speech by Sam Woods received some coverage, though the ECM addendum on Non-Performing Loans probably attracted more… Read More Double leverage, a regulatory tribulation
Kiwibank’s capital cock-up took an unexpected turn this week when the bank made another extraordinary announcement. On Friday, the bank let us know that its parents will bail out the bank with an infusion of $247 million of common equity. Sheesh, I thought only Italy did bail-outs! Infusing equity capital is the last thing a… Read More Kiwibank puts its money where its mouth should be
On 15 March, New Zealand Kiwibank issued two odd statements regarding their Basel III compliant (or is it compliant) capital instruments. The announcements raised the prospect of disqualification of two capital instruments: the Tier 2 convertible subordinated bond issued on 6 June 2014 (Tier 2 Bond); and the Additional Tier 1 perpetual bond issued on 27 May… Read More Free rider problems and tax bills? The Kiwibank capital cock-up
Please find here the EBA 2016 stress test data in a handy format that allows quick comparison with data of the 2015 Transparency exercise. This allows you to compare data from December 2014 to December 2015. I stuck to only the data from the “Other” template, but it does cover all scenarios. I replaced variable… Read More The EBA Stress Test Data in Handy Format
This week, the EBA and BCBS published the Basel III monitoring results. They show a further improvement of European banks’ capital positions, largely fulfilling the future regulatory capital requirements, with only a very small number of banks suffering from potential capital shortfalls. I found Figure 9 of the EBA report interesting. It shows the evolution… Read More That feeling when you notice that EU leverage ratio requirements are at risk
It spooked the markets for good reasons, but the leaked EC document on the merger of TLAC and MREL did not receive the attention that it deserves. Yes, Reuters reported on the leaked Information Note from the Commission Services for the European Commission Expert Group on Banking, Payments and Insurance. However I am not sure… Read More Is the European Commission phasing out MREL?
The EBA transparency exercise results offer a wealth of data. They will keep researchers busy for some months to come. The table below shows a couple of highlights, where all numbers are in %, and the data is sorted on 2015 Leverage ratio values: CET1 and Leverage Ratios are increasing. This is encouraging for sure.… Read More Dutch CET1 and Leverage ratios
It ain’t over till it’s over: the Basel Committee on Banking Supervision churns out new regulatory initiatives like there’s no tomorrow. Last week, the Committee issued a consultation on TLAC. The good thing is that the BCBS does consult. And the Basel TLAC consultation deserves support: it proposes to deduct TLAC holdings from regulatory capital.… Read More Basel Committee Consults on TLAC
The ECB just published their plans to harmonise Options and Discretions in the CCR available to Euro-zone banks. Initially, the ECB set promising expectations. It had identified a whopping 160 Options and Discretions, many of which were meant to be chopped. See this interview with a very confident Ignazio Angeloni some weeks ago. But the… Read More ECB goes soft on capital requirement harmonisation
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