Under the umbrella of the Single Rulebook, the European Banking Authority (EBA) launched the interactive Single Rulebook, an on-line tool designed to facilitate navigation through the single set of harmonised prudential rules in the EU banking sector. This is a neat initiative, as it combines presentation of the rules with the Q&A’s and the technical… Read More EBA publishes an interactive, comprehensive, version of EU bank regulation
Following on from an earlier post on conglomerate capital rules, the EU now made the conglomerate rules official. This is EU’s answer to criticism on its watered down implementation of Basel III. But it may never become clear why the EU uses conglomerate rules to compensate for weaknesses in bank rules. It looks like a costly… Read More Tight new rules for EU conglomerate solvency calculations are official
Following on from my earlier post on multiples, EBA just published its last draft technical standards on bank capital (own funds). EBA looked into two dimensions of payments on own funds instruments: one related to multiple distributions and the other to preferential distributions. According to EBA, preferential distributions exist when holders of CET1 instruments have… Read More Jay! EBA publishes final draft technical standards on own funds (Part IV)
On a lighter side, this presentation is really worth a read: Paul Pfleiderer demonstrates the weaknesses of some established bank finance papers, click here for an informative and entertaining read.
It has become an old refrain. The Basel Committee on Banking Supervision proposes guidelines to improve banking sector safety. Banks and their lobbies with vast resources mightily fight back. The Basel Committee – which, due to its large, diverse membership, is highly politicized – weakens its proposed guidelines. This is a repost from the post… Read More Basel’s New Leverage Ratio: One Step Forward, Two Steps Back – Repost
Adding to my backlog of actions to comment on, EBA parcels out one interesting feature after the other. It just posted the results of the EU-wide transparency exercise. It provides updated information on the European banks that were part of the recapitalisation exercise in 2012. The information covers data on banks’ composition of capital, composition… Read More Even better: EBA presents its EU-wide Transparency Exercise Results
Following up on my graph on corporate versus bank solvency ratios, this graph illustrates the difference between two Tier 1 ratios reported by U.S. Bank Holding Companies over 2001-2012. The blue histogram shows the Tier 1 Leverage Capital ratio, the red histogram shows the Tier 1 Risk-Based Capital ratio. Both measures use the same numerator: Tier… Read More Leverage Capital Ratios vs Risk-Based Capital Ratios of U.S. Banks, a graph.
Yesterday the Dutch government announced that it asked ABN Amro to prepare for re-floating on the stock market. The Dutch bank was nationalized in 2008 after the collapse of Fortis. With EU requirements on State support for ABN Amro expiring next year, the bank could be freed from the State as soon as next year. According to the… Read More ABN Amro’s dodgy spin-off readiness
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?
One way a bank can manage its solvency is by changing the denominator of its solvency ratio, in this case of its BIS ratio. (The BIS ratio is the ratio of capital divided by Risk Weighted Assets often refereed to as RWA). The plot below shows holdings of assets that are categorized as available for… Read More Solvency management by the denominators