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The Swedish banks should be subjected to higher capital adequacy requirements than those stipulated in Basel III

Stefan IngvesSwedish banks’ earnings have improved and loan losses have declined. The banks have good access to market funding and are well-capitalised in an international comparison. The Riksbank therefore assesses that the Swedish banks’ resilience to a poorer economic outcome is good.

Barnier bites back at Basel III loophole rumours

Michel Barnier has this afternoon insisted he will fully implement Basel III reforms after rumours emerged that EU draft legislation would see certain European banks able to sidestep the most stringent rules on capital requirements.

Speaking on Friday, the European Commissioner for the internal market said he would not be "swayed by various pressures" and slammed the criticisms as "unjustified" and "factually wrong".

Reports had suggested that banks with large insurance arms could escape the most stringent measures in the Basel III Accord by allowing them to count more capital held within their insurance arms towards the minimum capital levels they must hold. This would have given European banks an advantage over banks outside the bloc.

Basel III Is Just the Beginning

There’s a widespread view the 2008 banking crisis is over. It’s not. At least not in Europe. And the eventual fallout could result in a significant shrinkage of the financial services industry.

To see the scale of the problem, it’s important to start with Europe’s rolling sovereign-debt crisis. Core European countries, led by Germany, are hammering out an expanded bailout facility for a “periphery” sinking under the weight of unmanageable debt.

ECB's Weber says Basel III bank capital rules must be flexible

European Central Bank policymaker Axel Weber called on Wednesday for local wriggle room to implement globally agreed rules like the tougher Basel III capital requirements for banks.

"At a general level, there is no doubt that an internationally harmonized approach is necessary," Weber, who is president of Germany's Bundesbank until May, told a financial regulation conference in Frankfurt.

"Nonetheless, uniform international principles have to be adapted to heterogeneous national structures," he added.

Tougher Capital Requirements Under Basel III Could Raise The Costs Of Securitization

Table Of Contents

  • Credit Risk: Minimum Regulatory Capital Requirements For Securitization Exposures
  • Credit Risk: Supervisory Haircuts On Securitization Collateral
  • Market Risk: Securitization Exposures
  • The Cost Of Securitization Is Likely To Rise
  • Appendix: Summary of Changes

Tougher Capital Requirements Under Basel III Could Raise The Costs Of Securitization

Commerzbank Sells Shares, Plans Debt Buyback to Prepare for Basel III

Commerzbank AG, Germany’s second- biggest lender, plans to boost capital by buying back debt as it prepares for new banking regulation. The lender raised 626 million euros ($833 million) by selling 118 million new shares at 5.30 euros apiece to fund the debt purchase, it said in a statement. Commerzbank will buy back hybrid equity instruments at prices below par in a tender offer managed by Credit Suisse Group AG, the company said.

A Developing issue in Macro-Econometric Modeling: Stress Testing

There is a developing issue in Macro-Econometric Modeling right now. It has been burning for about a year; we at asymptotix have some practical engagement with it which is reflected in our essay called 'Crowding Out 2'. That essay and its related comments simply document our experience at the client coal-face where we naively found ourselves addressing in a commercial engagement a great intellectual challenge of our time, probably way ahead of the academic curve. At a much more global and higher media oriented level this issue is documented in what is known as the Krugman / Ferguson debate or put more crudely (cf Niall Ferguson) the Keynesians versus the Monetarists (or more strictly the Classicists or Neo-Classicists).

Basel III rules text and results of the quantitative impact study QIS issued by the Basel Committee

 

This is the Basel III / CRDIV rules & stipulations page

 

there are 2 related TAGs or TOPICs on asymptotix (collections of pieces by subject)

BASEL3 & CRD4

 

Banks across the world will need to raise nearly €600 billion ($793 billion) in extra capital as a result of new rules designed to prevent another global financial crisis, the Bank for International Settlement said Thursday.

The Riksbank: Basel III - tougher rules for banks

The Basel Committee recently presented a new regulatory framework for banks, the so-called Basel III. Essentially, it covers new and tougher rules for capital and liquidity in the banking sector. These more stringent rules are aimed at strengthening banks’ capacity to absorb risks and reduce the risk of new banking crises arising in the future. This box presents Basel III, together with the findings of two studies regarding the macroeconomic consequences of the more stringent regulations. The new regulations entail that the banks must maintain more and considerably better capital and that rules covering banks’ liquidity will be introduced. The main message of this box is that the Swedish banks are well-capitalised and are already complying with the new regulatory framework, in all essentials. Consequently, the implications of the new regulations for both the macroeconomy and monetary policy in Sweden will be minor.

The financial crisis exposed a series of shortcomings in existing regulations and in the supervision of thefinancial sector, as well as in financial companies’ ability to bear and manage risks. Above all, this was a matter of the banks having neither sufficient high-quality capital to cover the losses in their operations nor sufficiently extensive liquidity buffers to manage their funding in a period in which confidence in the banks was being questioned and several financial markets had collapsed. In addition, supervision and regulation previously paid too little attention to systemic risks. This means that supervision and regulation were excessively focused on ensuring that individual financial companies were sufficiently capitalised and resilient. However, this was not enough to capture the overall risks that had built up in the system as a whole. In September 2009, the Basel Committee therefore initiated extensive efforts to strengthen capital requirements for banks, to introduce minimum liquidity requirements for banks, and to formulate new regulatory tools to manage systemic risks. The Basel Committee on Banking Supervision is a committee under the Bank for International Settlements (BIS) which, among other tasks, develops international standards for the regulation and supervision of banks. The BIS has no mandate to introduce regulations, but coordinates the regulatory frameworks of the 27 participating countries, including Sweden.

Basel III, what is currently being implemented?

In September of this year, the Basel Committee reached agreement on the principles by which the new, more stringent minimum regulations for banks’ liquidity should be formulated, as well as a timetable for the introduction of the new regulations. The new regulations will be phased in gradually. The new, more stringent capital requirements will be introduced successively, starting in January 2013, and are to have been fully introduced by January 2019. The start of the introduction of the liquidity regulations is planned for 2015, and these are to have been fully introduced by 2018.

IMPOSING A SYSTEMIC RISK CHARGE: the Issing Commission

Criteria for a workable approach towards bank levies and bank restructuring

Otmar Issing (Chairman), Jan Pieter Krahnen, Klaus Regling, William White

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