Comments on RBNZ’s second capital review paper: What should qualify as bank capital?

The RBNZ wants to redefine capital. My comments are below. In short: don’t let perfection be the enemy of the good. The RBNZ runs the risk of achieving just what it does not want by going it alone. A DIY-definition of capital makes the Reserve Bank vulnerable to structuring. Moreover, the problems signalled by the Reserve […]

That feeling when you notice that EU leverage ratio requirements are at risk

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 […]

Is the European Commission phasing out MREL?

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 […]

Results of EU consultation on bank financing are out

Following up on an earlier post, the EC now published the answers on its consultation on long term finance. Thought the topic is hot, only 87 responses were submitted*, of which only two by academics. One by Martin Hellwig, the other by Martien Lubberink. The low public participation by academics is depressing, given that they called […]

FYI some documentation on the Leverage Ratio for EU banks

My post on EU leverage ratios yesterday attracted some comments on twitter, which may haven been triggered by misunderstandings. The CRR offers a short and clear summary of the Leverage Ratio definition in Article 429.1: “The leverage ratio shall be calculated as an institution’s capital measure divided by that institution’s total exposure measure and shall […]

Yay! EBA presents the 2015 EU-wide transparency exercise results

Today, the EBA presented the 2015 EU-wide transparency exercise results. I am reading the data, which shows improvements in the resilience of the EU banking sector, covers around 70% of total EU banking assets for the reference dates of 31 December 2014 and 30 June 2015. (Some banks have not even published their capital positions […]

Basel Committee Consults on TLAC

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. […]

ECB goes soft on capital requirement harmonisation

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 […]

Five years after the first Basel III coco issuance, the Netherlands “gets” CoCos.

Uh oh, Jeroen Dijsselbloem form the Netherlands got into rough water this week: Dutch newspaper NRC had a nice scoop that showed how he relied on ING word smiths for writing a tax rule that renders bank capital instruments (CoCos) tax deductible, see full freedom of information documentation here. How bad is this? End 2013, […]