Yesterday I noted that the Basel Committee and the Financial Stability Board had issued reports challenging the complaints of bankers that stricter bank capital and liquidity rules and demonstrating the the proposed rules would make for healthier economic growth. I asked the question whether this might signal progress in banking regulation in the face of industry opposition.
Well go ahead–just call me Mr. Naïve! Today’s Financial Times reports, in an article candidly titled “US banks receive Basel III boost,” that analysts at Barclays Capital’s debt capital markets group estimate that “the 35 largest US banks will only have to come up with half as much new capital as had been expected following last month’s rewrite of proposed requirements by the Basel Committee on Banking Supervision.” The Financial Times goes on to report that analysts at Nomura Securities also “calculated earlier this month that the top 16 European banks would also gain a sizeable, though slightly smaller, benefit.” Furthermore, it remains possible, according to the Financial Times report, that the Committee might even decide to lower the capital ratio from 8% to 6%. The gory details of the negotiations between the Committee and the banks are described today in another Financial Times report. (Unfortunately all this content is only available to paid subscribers.)
Commentators interpret the changes the Basel Committee has made to capital definitions as a major victory for lenders. Plus ça change . . .
