The EU has passed its banking package designed to transpose revisions to the Basel framework into EU law, but not everyone is happy with the result.
Capital
Is curbing compensation incentives the most powerful regulatory tool?
Could influencing the way bankers are compensated, namely around risk taking incentives, be key to tackling financial instability? It is a question a paper from the Atlanta Fed attempts to answer
Steve Eisman believes Canadian banks are under-estimating credit risks
Steve Eisman, who became world famous for his successful bet against US mortgage related CDOs in the run up to the 2007-9 global financial crisis has set his sights on Canada’s banks for his latest short selling punt
Think tank makes six recommendations to make Basel III work better for developing economies
There have long been complaints that the Basel III Framework with its emphasis on lowering risk inadvertently discriminates against developing economies and to address this a global think tank has come up with six recommendations.
Consultation on excluding large custody banks from parts of supplementary leverage ratio
Banks engaged mainly in custodial activities should be able to exclude deposits at central banks from their supplementary leverage ratio, according to the three main US prudential regulators.
Banks should think twice before diving head first into the data pool
Data pooling has emerged as a strong contender for meeting non-modellable risk factors in FRTB. However, it is far from being a perfect solution and at worst it could be a distraction
EU banking package could restrict AT1 capital payouts
The recently agreed EU risk reduction banking package could make it harder for global systemically important institutions (G-SIIs) to make payouts on their additional tier 1 (AT1) securities due to a leverage ratio buffer requirement, said Scope Ratings in a report.
Bond diversification may not break 'doom loop' for all European banks
Moves are afoot within the eurozone to force banks to diversify their holdings of bonds for regulatory capital to help end the 'doom loop' between banks and their host countries. However, a new paper argues that such efforts could be counterproductive
Standard setters give regulatory relief for some legacy swaps
Global standard setters said legacy non-centrally cleared derivative contracts do not need amending to address interest rate benchmark reforms and do not need to apply margin requirements.
US needs high bar to activate counter cyclical buffer
The bar for activating the counter cyclical capital buffer (CCyB) would have to be a high one as the US capital framework is designed to sustain high levels of capital, said Randal Quarles, vice chair for supervision at the US Federal Reserve Board.
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