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
This week the Financial Times reported on a strange initiative of the European Commission. Its vice-president Valdis Dombrovskis spoke favourably of the introduction of a “green supporting” factor for banks that invest in green assets. Green is hot, especially on a planet that gets warmer by the day.* So, yes, offering green bank capital relief looks like… Read More Fifty shades of green bank capital
The EBA just published the results of the 2016 transparency exercise. Yay! The EBA decided to deliver on its promise to present more detailed data of individual banks. (I hope the EBA now forgives me for posting a critical note on their bank disclosure plans earlier this year.) I toyed a bit with the data… Read More Sovereign Holdings by EU Banks
This week, the Bank of England offered two highly readable publications, each for a different reason. The Financial Policy Committee launched a consultation on the design of a leverage ratio framework for the UK. This is a very insightful release, even though the consultation period is a tad short: The FPC consultation will close on 14… Read More BOE, the Leverage Ratio, and Capital.
Pipped to the post by EBA, now Basel offers a new look on bank disclosures, see the Review of the Pillar 3 disclosure requirements. I shall comment later, but please do not let me put you off from commenting: Disclosure rules offer a means of compelling banks to be more transparent. The deadline for comments is September… Read More Jay! Basel offers new ideas on disclosures – consultation paper
Will EBA will ever get it right when it comes to banks disclosures? After last week’s publication of proposed disclosure guidelines for banks, I am afraid that European bank disclosures will remain the wallflower of bank regulation … for some time at least. In the year of the AQR and the stress test, one would expect the… Read More EBA’s ongoing struggle with bank disclosures
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
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!
On January 29, the European Commission has proposed new rules to stop the biggest and most complex banks from engaging in the risky activity of proprietary trading. The new rules would also give supervisors the power to require those banks to separate certain potentially risky trading activities from their deposit-taking business if the pursuit of… Read More Structural reform of the EU banking sector, a proposal.
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