Tuesday, July 27, 2010

Basel Capital update - The Group of Governors and Heads of Supervision reach broad agreement on Basel Committee capital

·         Basel Capital update - The Group of Governors and Heads of Supervision reach broad agreement on Basel Committee capital and liquidity reform package   See full details at this link: http://www.bis.org/press/p100726/annex.pdf.  This hit the tape at 1pmET on Mon and was viewed as a positive for the banks as Basel softens some banking capital rules.  Germany was the lone holdout on Monday – the country refused to sign onto the accord for now.  Some clarifications on capital: 1) minorities of bank subsidiaries will not be deducted (this was expected, but a pos. nonetheless); 2) DTAs and MSRs will not be fully deducted (can represent up to 10% of core tier-1); 3) the net stable funding ratio is diluted down a bit; 4) the leverage-ratio is quantified at 3% tier-1leverage ratio (this won’t take effect until ’18).  WSJ  http://online.wsj.com/article/SB10001424052748704700404575391363493008400.html?mod=ITP_moneyandinvesting_0  
·         European bank stress tests – banks in EU could seek to raise a total of EU30B - Results announced on Friday showed the seven that failed need to raise just 3.5 billion euros ($4.5 billion), far less than expected.  But if the minimum pass mark had been set at a Tier 1 capital ratio of 8 percent, rather than 6 percent, banks would have needed an extra 27 billion euros ($35 billion) – Reuters

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