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Basel
Ja, då kanske vi inte är fullt så överkapitaliserade som ögat tycker,
säger Annika Falkengren, SvD Näringsliv 6 oktober 2011
This week Europe’s banks had to tell the European Banking Authority how they plan to raise money to fill the holes on their balance sheets.
The numbers are huge. Greece’s banks have to find €30bn by June, Spain’s €26bn and Italy’s €15bn.
In total, the region’s banks have a shortfall of €115bn.
Financial Times, 20 January 2012
Would Northern Rock or Lehman Brothers have survived if they had had more capital?
Sadly not.
For the reality is that it is not the amount of capital a bank holds that protects it in a crisis,
but its ability to access ready cash for its immediate needs.
Financial Times, 20 January 2012
Italy
UniCredit shares fell nearly 15pc today on the size of the larger-than-expected discount, 43 procent
which is designed to help the bank meet a new minimum core capital requirement imposed by the European Banking Authority.
Harry Wilson, Banking Correspondent, Daily Telegraph, 4 Jan 2012
UniCredit shares tumbled 14.5pc to €5.42 as investors digested the surprise 43pc discount at which the new shares are being offered as part of a capital-raising programme.
Last month, the European Central Bank revealed that a total of €489bn was taken up through its new long-term refinancing operation (LTRO), which offered banks running out of eligible collateral the option to borrow three-year money.
Where is the ECB Printing Press?
European regulators allowed their banks to leverage up to 450 to 1 on their capital,
on the theory that sovereign nations in an enlightened Europe could not default, and therefore no reserves need to be kept for “investing” in government debt. And with those rules, banks borrowed massively and invested it in government debt, making the spread.
It was an awesome free profit machine. Until Greece became a road bump. Now it is a nightmare.
Even if you only invested 4% of your bank’s assets in Greek debt, if that is more than your capital then you are bankrupt.
John Mauldin, 12 Nov 2011
The banks are under massive pressure to raise their core Tier 1 capital ratios to 9pc by next June.
This requires a €2.5 trillion adjustment according to the BIS’s Global Stability Board.
Most of that is going to be done by slashing loan books – deleveraging in the jargon –
since they cannot raise fresh capital at a viable cost and don’t wish to be nationalised.
Ambrose Evans-Pritchard, December 21st, 2011
So will this extra €200bn be used to buy Italian and Spanish bonds, or instead to plug a frightening number of leaks across the financial system?
Funding - Deleveraging - Europakten
Fed's decision to accept the rules laid out by regulators in Basel that could come before Christmas
is a defeat for giant U.S. banks that argued the guidelines needn't be so strict.
could prompt them to reduce lending and hurt the economy
Wall Street Journal, 19 December 2011
At the same time, it isn't clear the bigger capital buffers will accomplish what regulators set out to do in the Dodd-Frank financial overhaul and other recent moves: end the "too big to fail" syndrome that paved the way for the government bailouts of the 2008-09 financial crisis.
How to Escape Basel III Doom Loop
What has been the biggest economic policy error of the post-Lehman era?
I used to think the answer was obvious. The euro zone's decision to impose losses on holders of Greek government bonds has been an unmitigated disaster, an entirely self-inflicted wound that has gravely destabilized the global economy.
But even as the euro-zone crisis unfolds, a potentially bigger man-made disaster looms. The Basel III global capital and liquidity rules
Simon Nixon, WSJ 7 October 2011
From the moment euro-zone leaders first agreed at their Deauville summit in October 2010 that bondholder losses would be a condition of any euro-zone bailout after 2013 — breaking the unwritten rule that sovereign bonds from a developed economy are risk-free — the bloc has been dragged into a vortex of despair from which it has so far found no escape, as first government bond markets, then bank funding markets and now ordinary bank lending to companies have seized up
As the euro-zone crisis unfolds, a potentially bigger man-made disaster looms. The Basel III global capital and liquidity rules were agreed at great speed and with much fanfare over the past three years at a time of premature post-Lehman triumphalism.
Central bankers and regulators mistook a prolonged period of robust global re-stocking, fueled by quantitative easing and a massive fiscal stimulus, for evidence that they had tamed the crisis.
Instead, with the economy now slowing, regulators may have trapped the world financial system in a highly deflationary doom-loop, in which banks are forced to shrink their balance sheets in a futile effort to meet ever-retreating capital-ratio targets.
En bank får låna ut 10–20 gånger sitt egna kapital.
Förlorar banken en miljard måste den alltså kräva låntagarna på 10–20 miljarder.
Det får konsekvenser i den reala ekonomin.
Tomas Fischer, Fokus 19/12 2008
Att en bank får lägre egetkapital har sina effekter.
Rolf Englund blog 1 sept 2011
Sammanlagt sitter banker i EU på cirka 30 procent av alla europeiska statspapper.
I flera länder är siffran högre. I det finansiellt skakiga Spanien ägs över 50 procent av statens skuld av banker, framförallt landets egna.
I de nya kapitalreglerna för banker, Basel III på finansfikonspråk, som är tänkta att tämja bankernas spekulation, klassas alla statspapper som helt riskfria.
Att låna ut till en stat anses så säkert att det inte kräver någon kapitalbuffert alls, något som gett bankerna skäl att köpa på sig ännu fler obligationer.
Andreas Cervenka, SvD 28 augusti 2011
Marcus Wallenberg vill inte se strängare eller tidigarelagda regler för svenska banker.
Anders Borgs utspel om att Sverige ska gå i bräschen för införandet av ett nytt regelverk för banker, har inte tagits emot med någon större glädje av de svenska storbankerna.
DI 24/3 2011
Finansministern har dessutom flaggat för hårdare regler för Sverige än för övriga EU, något som bland annat mött kritik från Bankföreningens vd Kerstin af Jochnick.
Basel
Svenska bankföreningen har varnat för att svenska bankmodellen
med mycket bolån i balansräkningen
kan få problem om det införs ett absolut kapitalkrav i form av ett "hävstångsmått",
framräknat utan klassificering av bankernas utlåning i olika riskklasser.
DI/TT 2010-09-12
Martin Andersson, chef för svenska Finansinspektionen, säger att han inte delar föreningens åsikter, att svenska banker har god kapitaltäckning och påpekar att ett "hävstångsmått" möjligen kan bli infört tidigast 2018, med föregående beslut 2017.
...
Baselkommittén
Dåliga nyheter för SEB, Swedbank, Handelsbanken och Nordea.
De svenska bankerna har väldigt bra kvalitet på sina tillgångar, exempelvis mycket bostadsutlåning.
Men det får man alltså inte tillgodoräkna sig i det nya måttet.
SvD/e24 2009-12-18
Regulators want big, complex banks to hold larger buffers of capital to protect the financial system.
Big banks argue this is unnecessary because risk is diversified across their larger balance sheets.
Who is right? Natural sciences – especially epidemiology, ecology and genetics – provide clues.
The writers are executive director for financial stability at the Bank of England,
and a professor of zoology at Oxford University and former British chief scientific adviser
FT February 20 2011
From Basel III to Bern I
Patrick Raaflaub, Wall Street Journal 12 october 2010
Basel
Banks will also have to subtract items such as goodwill, some tax credits and minority investments from equity and retained earnings.
The aim is to make this key measure of capital reflect the equity that would be available to absorb losses in a crisis.
The real impact of the change could be equivalent to raising the minimum capital requirement from 2 per cent to 10 per cent for many banks.
The deductions are likely to cut many banks’ equity totals by between 30 per cent and 40 per cent, according to people who have seen the data.
Brooke Masters, FT September 16 2010
The handling of the current financial crisis has reinforced too big to fail doctrine.
So how can one reduce moral hazard and reduce expectations of future bail-outs?
Living wills to curtail too-big-to-fail, perhaps even thereby allowing systemically important banks, such as Citigroup, Goldman Sachs or Barclays, to fail or, at least, to be unwound.
Charles Goodhart and Dirk Schoenmaker, FT August 9 2010
The aim is to put in place, ex ante, conditions that would allow a wider range of options beyond having the whole bank rescued.
Robert Peston is one om my gurus
Click here for more gurus
Regulators agree 7% capital ratio for banks
Stiff resistance from a number of countries, led by Germany, many of whose banks typically have much lower stocks of core capital in the form of equity and retained earnings
- and will have great difficulty meeting the new standard.
Robert Peston, BBC 9 September 2010
Banks must have a minimum core tier one capital ratio, including a new so-called "buffer" to protect against extreme economic conditions
This is considerably lower than was wanted by the "hawks", the US, UK and Switzerland. They wanted a core tier one capital ratio of 8 to 9% including buffer, which is what British banks currently have to maintain. In fact most British banks currently have a core tier one ratio of around 10%.
Although this new 7% minimum ratio of core capital (in the form of equity and retained earnings) to assets (loans and investments) as measured on a risk-weighted basis represents a significant increase, some will argue that the ratio is still too low.
One reason for this is that the absolute minimum capital ratio, without buffer, will be around 4%, or double the previous minimum.
...
Basel
What happened in 2008, the collapse and rescue of the worldwide banking system, touched all of us: it turned a gentle recession into the worst recession since the 1930s; and we'll be living with the consequences, in the form of lower growth and squeezed living standards, for years.
Now imagine that the equivalent disaster had occurred in the airline industry, that almost every aeroplane came within a few seconds of dropping out of the skies.
In the aftermath, and however complex the engineering of a plane may be and irrespective of the intricacies of traffic control, the effort to mend and reform air transport would be conducted in full public gaze, using ideas and phrases understandable to all.
As citizens, we wouldn't tolerate anything else - and nor would politicians and regulators believe for an instant that they could get away with stitching up some ostensible solution in private.
So what is it about banking regulation that makes it inappropriate for discussion in front of the children?
Robert Preston, the BBC's business editor, 2 August 2010
So the clever clogs executives who run banks will be able to carry on as they have been doing for the past 30 years of globalised financial capitalism, which is to see the Basel strictures as the rules of a game to be exploited for vast profit.
That's the big message underlying the gobbledegook in the Basel Committee document I made you read at the outset. I'll translate three parts for you.
Basel
Sheila Bair, chairman of the Federal Deposit Insurance Corporation, has said some members of the committee setting international capital standards are “succumbing” to “disingenuous” lobbying from large banks. In an interview with the Financial Times, Ms Bair also said she would not hesitate to use newly acquired powers to break up an institution if it could not provide a credible “living will”
describing how it could be wound up in the event of failure.
FT July 20 2010
Sheila Bair
Chairman Bair received a bachelor's degree from the University of Kansas
Not any more
Basel
Global banking regulators have reached a breakthrough agreement to tighten capital requirements and impose new worldwide liquidity and leverage standards,
but softened some of their proposals and delayed others to at least 2018.
FT July 26 2010
The The Basel Committee on Banking Supervision said on Monday that all but one of the 27 member countries had signed up to the new principles, which limit what banks can count as so-called tier-one capital – the only kind that can be counted on to absorb losses. The lone hold-out, said by people familiar with the situation to be Germany, said it would decide whether to sign on later this year.
The FT Deutschland column, Das Kapital, is perhaps most negative on the stress tests. It began the comment with a note that
only a fraction of Deutsche Bank’s tier one capital is genuine equity capital.
Most of it comes in the form of hybrid capital – which is still officially counts as tier one capital, which was an impressive 11.2% of total assets.
If you only look at equity capital, the ratio would fall to 1.3%.
The situation in the Landesbanken and the Spanish Cajas is even worse.
Eurointelligence 26/7 2010