Basel’s damning report about EU’s definition of bank capital

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

The Italian DTAs

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

Bank of America, nothing complex, it’s noblesse oblige!

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!

Tight new rules for EU conglomerate solvency calculations are official

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

Jay! EBA publishes final draft technical standards on own funds (Part IV)

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)