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
I used the stress test data to compute the gap between the leverage ratio and the risk-weighted ratio (CET1 ratio). The ECB data offers the leverage ratio data inputs. To measure the ratios by country, I used the totals of A3 and A4 for the CET1 ratio and the totals for A3 and A5 for Leverage… Read More EU Leverage Ratio Gap
The EBA’s stress test data is can be downloaded from their site, but it is spread around across several files. For your convenience, please click here for an Excel file that offers a flat file with combined data. Click here to download the same file, but with pivot tables for your convenience.
With the EBA and the ECB announcing results of the stress test and the AQR next week, and with feeble banks shivering, you may consider setting aside a couple of hours this week to read the terms and conditions of bank capital instruments. Maybe your investment in capital securities of EU banks is at risk, maybe not.… Read More Homework for the upcoming week: EU bank capital rules.
Today the Wall Street Journal reported on an alleged loophole in EU bank capital rules. The loophole pertains to deferred tax assets (DTAs), a regulatory area where tax rules and accounting rules meet. Apparently some countries exploit a DTA loophole: Italy, Spain, Portugal and Greece. Uh oh, these countries, the usual suspects. There is something really wrong here.… Read More The Italian DTAs
Today both the EBA and the Basel committee published their Basel III monitoring reports. These reports measure the progress banks make regarding the implementation of the new bank capital rules. The results look encouraging, banks have added capital since the April 2009 G20, shortfalls are lower than before, and not near the voodoo stories… Read More Bank capital on track
BPCE (A2/A/A) announced a benchmark USD RegS/144A dated Tier 2 transaction with IPTs of UST+230bps area. HSBC Bank Plc (Aa3/AA-/AA-) is expected to issue its inaugural multi-currency AT1 transaction this week following a global investor roadshow. Credit Agricole (A2/A/A) is holding investor meetings in the US and Europe starting from 8 September for a possible… Read More The market for hybrids is open for business!
Last week, the three European financial regulators warned financial institutions that they should tread carefully when it comes to marketing CoCos: capital securities that may convert or be written off when a bank gets into trouble. The warning may have been prompted by the failure of UK’s Co-operative bank or Dutch bank SNS. These failures bailed-in… Read More Caveat emptor? We should probably do more than tell banks how to sell CoCos.
Good to see Canada responding to the Group of 20 (G-20) initiative made in the wake of the recent global financial crisis. Yesterday Finance Minister Joe Oliver launched a public consultation on bail-in for Canada’s domestic systemically important banks. Canada joins the jurisdictions that have incorporated bail powers into their resolution regimes, e.g. Denmark, the United Kingdom, Switzerland and… Read More Canada moves into bail-in territory
The European Banking Authority published its final draft Implementing Technical Standards (ITS) on disclosure for the leverage ratio. These draft ITS include all the items that are relevant for leverage ratio disclosure under EU bank rules, in line with the Basel disclosure framework. The disclosure framework offers four templates: a template reconciling the figures of the… Read More EBA publishes leverage ratio disclosure templates