Fed proposes placing banks into four risk categories

US Federal Reserve proposes classifying big US bank into one of four risk categories resulting in significant regulatory relief for the lowest risk banks while G-Sibs would see little change.

For sale sign

A rise in NPLs is not necessarily just down to fast credit growth

Rapid loan growth has turned out to be a good indicator regarding non-performing loans later on and is a warning for countries that have experienced fast credit expansion recently. But this relationship doesn’t have to hold true, as Justin Pugsley reports. 

European Central Bank

ECB paper finds negative interest rates may undermine financial stability

ECB paper finds that negative interest rates are particularly penalising for banks heavily reliant on deposits and could potentially create financial stability risks

EBA launches fifth annual EU transparency tests

EBA starts fifth annual transparency exercise gathering detailed data on the capital positions and exposures of around 130 EU banks

Scope Ratings challenges view that European banks are structurally under-capitalised

Europe’s larger banks are not under-capitalised versus other developed country peers as is popularly thought said Scope Ratings in a report 

Basel Committee discusses range of issues including regulatory arbitrage

At its meeting on Sept 19-20, the Basel Committee discussed bank window dressing of the leverage ratio, market risk frameworks and agreed to do a consultation on the leverage ratio’s impact on derivatives clearing

US flag

US tax reforms ‘could exacerbate bank cyclicality’

Recent changes to the US tax code involving less generous treatment on certain deductions could result in greater cyclicality of higher leveraged banks and non-financial firms making them more sensitive to swings in the economic cycle and potentially undermining bank capital buffers. By Justin Pugsley.

US dollar borrowing being driven by debt securities

US dollar credit to non-banks based outside the US continued to grow at a steady clip, driven by debt securities issuance

US regulatory framework for big banks to become more risk sensitive

US Federal Reserve vice chairman of supervision advocates a more risk sensitive approach to regulating and supervising big banks by taking more account of complexity and interconnectedness.

Constance Usherwood

FSB draws mixed responses over infrastructure finance findings

Market participants and industry associations have given mixed reactions to the FSB’s findings on the impact of regulation on infrastructure finance. By Farah Khalique.