Europe’s leading banks look generally well-placed to meet global standards on leverage to be implemented at the start of 2018, according to data compiled by Standard & Poor’s (S&P) Global Market Intelligence.
However, the credit ratings agency (CRA) cautions that compliance could be tested should regulators implement buffers for the biggest banks.
S&P reports sample of European lenders with over €100bn in assets with available data showed that all had at least the 3% ratio of capital to total assets that the Basel III capital adequacy regime will require from 2018. All of the selected banks also posted double-digit common equity Tier 1 ratios, which measure capital as a share of risk-weighted assets.
Globally systemically important banks (G-SIBs) will have to go beyond the 3% Basel minimum, but the format and quantum of the additional requirement have yet to be finalized.
Among the questions is whether banks will be set a higher minimum requirement or a buffer that would allow supervisors to impose restrictions in the event of a breach, notes S&P.
The Basel Committee on Banking Supervision (BCBS) is also yet to determine whether the add-on will be uniform for all G-SIBs or scaled based on the “buckets” used to calculate similar surcharges for the Core Tier 1 (CET1) ratio.
Despite objections from Germany, there will be greater powers to monitor testing and fine companies in the wake of the VW scandal.
A LexisNexis survey also suggests most financial crime professionals expect legacy technology to become a barrier to fighting financial crime over the next two years.
Domestic banks could feel the greatest impact from the trend, an East & Partners survey suggests.
The major oil producers have agreed a further reining-in of production in a bid to push the price higher.